How computer-assisted wagering became horse racing’s insider trading

AWith the Thoroughbred horse racing industry in America disappearing, I think back to when this was my life. I think a lot about what has become of the thousands of horses I have trained. As I find myself locked in that headspace, the face of a friendly little gelding haunts me. Dodgen Bullets, a Bob Baffert trainee, was not a star and would never be as much as he was rumored to be, but he was willing and, like all racehorses, painfully innocent. We were young on the coast in late summer at the Del Mar race track, which is hosting this year’s weekend Breeders’ Cup. I trained him for his first race, a Maiden Special Weight for two-year-olds, which he won decisively. His connections pocketed more than $50,000 in purse money and, not counting the $12 a day I earned training him, I collected almost $500 betting on his victory. As he was led back to the barn, sweaty and perhaps scared, I was clinking champagne and high on dopamine. These many years later I see how distorted my expression of gratitude towards him was.

Despite that victory, I had no interest in gambling, I was unaware of the whole procedure and I was afraid of losing what little money I had. While I didn’t do my part on the handle, many other race trackers did on a daily basis. It’s a way for underpaid bottom-line workers to shore up low wages. Over the past decade, while poverty at the back end has not improved much, and while horses continue to be churned endlessly by the industry without any mandatory lifetime protection, track operators are exploiting the system to manage a more financially attractive landscape for themselves. Numbers like Del Mar serve their retail customers, everyday gamblers, with computer-aided betting teams (CAW teams) that use the betting pools that customers create like a parasite does a host, and operate on the basis of deals with big numbers with the tracks. Industry heavyweights such as The Stronach Group, New York Racing Association and Churchill Downs own the platforms on which these teams gamble. Scott Daruty, president of Stronach-owned gambling entities Monarch Content Management and Elite Turf Club, said he sees no conflict because ownership of track operators provides “a direct relationship with our largest customers,” and “an understanding that we don’t were intermediaries who were conducting this activity,” so it is “in my opinion the right thing to do,” he told California Horse Racing Board commissioners.

The biggest advantage these nerd cliques get over the weekend gambling grandparents, the poor college student, or the bottom-of-the-road worker is the special rates and significant discounts associated with their track deals. According to Pat Cummings, executive director of the National Thoroughbred Alliance, who spoke to riders at a panel in JulyCAWs use “finely honed systems, algorithms that detect enormous amounts of data and place their bets very quickly, often just before the race starts… they are able to bet in batches”. The average gambler’s weakness is the CAW’s profit target, but it is an equilibrium because without the average gambler maintaining the pool, the CAW model fails.

While the CAW game has grown in recent years, regular betting has not. In fact, non-CAW betting has fallen by two-thirds in the past two decades, while a dozen “high-frequency bettors” make up about a third of all U.S. thoroughbred racing bets, Cummings said at a meeting. Jockey Club panel discussion. Cummings says his research indicates there are “10 to 12 top players in America using this approach. …Those 10 to 12 players probably represent somewhere between $2 billion and $3 billion of the $11.6 billion wagered on American thoroughbred racing last year [2023].” Many bettors say they think these are conservative estimates. Another strongly shared belief among average bettors is that CAWs also receive internal pool information that further increases their benefits. It is an area ripe for investigation into possible violations of gambling laws, and therefore also a circuit.

Horse racing as it exists in North America is dying and as one track friend grimly described, the tracks invite “vultures to pick the bones from the carcass.” It’s hard to know what US numbers would look like fiscally if CAW play stopped. Going forward, there isn’t nearly enough public love to revive this relic of a sport back to its former self. Shrinkage is evident everywhere, from the long-term trend of declining foal harvests, to the shortening of fields and the reduction in the number of racing dates, and the subsequent closure of racecourses across the country. Even the famous Santa Anita Park is sounding its death rattle.

The future for American horse racing is likely boutique. The New York and Churchill Downs tracks will survive on select expensive race days within short events. It’s a shame for the horses, but racing in a few states like Louisiana will likely continue simply because they operate with unapologetic lawlessness.

Dodgen Bullets ran a total of 17 races, winning three and earning just over $80,000. His career saw a slow descent to the sport’s lower ranks with his last race at the low-cost Los Alamitos Quarter Horse Track in 2011, less than four years after his stellar Del Mar debut. He finished last in a $7,000 claiming race. That’s a far cry from running to the barn of one of the most famous racehorse trainers in history. His fate after that day is anyone’s guess. No horse from my past sticks with me as much as he does, and I admit I’m ashamed to bury his memory in an article about gambling. But it was the world we shared. He was an everyday racehorse who, like the everyday gambler, kept thoroughbred racing alive despite himself. But like those gamblers, he would never end up ahead, because the game is designed to last until there is nothing left but to turn your back on the ruin and move on.