Special Report: Let It Ride?
Sports betting is becoming legal across much of the nation. Here’s how the motorsports industry is gearing up to catch the wave.
Life is a gamble, especially in motorsports. Every time drivers suit up, they are playing the odds—calculating their chances to win, while not letting themselves get distracted by the odds of making it to the end of the race unscathed. Increasingly, though, fans are now able to have some skin in the game, with the ability to wager on the action taking place on the track. Over the past four years, a growing number of states have legalized sports betting. The motorsports industry is in the unaccustomed position of being a backmarker as stick-and-ball sports rush to embrace the gambling wave. But legal sports betting will soon be coming to a track near you...if it isn’t already.
What has changed? In decades past, encouraging gambling was seen as unwise public policy, as gambling had a (mostly earned) reputation for preying on the most vulnerable as well as inviting corruption. Sports betting had long been corralled into gambling outposts like Nevada.
Consequently, most wagering on sporting events went underground. In the motorsports world, betting has thrived in late-night contests conducted away from the bright lights of the authorities, although if the volume of YouTube street/grudge racing videos is any indication, there is big money changing hands, and the gamblers aren’t working too hard to conceal it.
More and more, however, motorsports fans will not need to conduct their wagering in the shadows, as states have had a change of heart on the issue of gambling. Over time, the pot of potential tax revenue that gambling generates has proven irresistible to state legislatures. Once lotteries were adopted by most states, the moral high ground was ceded, and arguments against legalized sports betting sounded increasingly hollow.
What opened the floodgates for the current round of legalized sports betting was a 2018 Supreme Court decision that ruled in Murphy vs. National Collegiate Athletic Association that the Professional and Amateur Sports Protection Act that outlawed most sports betting was unconstitutional, thus freeing states to set their own rules. The process of legalizing and regulating sports betting has been working its way through state legislatures ever since.
As it stands today, some states allow in-person-only betting, but most are legalizing online sports betting as well. Indiana, Iowa, and Pennsylvania were early adopters of online sports betting in 2019. Colorado and Illinois joined the party in 2020. Arizona legalized sports betting in April 2021, even going as far as to allow in-stadium sportsbooks. Louisiana legalized online sportsbooks in January 2022, as did New York. Arkansas legalized sports betting in February 2022. Ohio is set to go legal on January 1, 2023.
Other states either have sports betting on the ballot for voters to decide in upcoming referendum elections (California) or have legislation working its way through the process (Massachusetts). In Florida, legislation allowing sports betting was signed into law, although that law is tied up in legal challenges that may not be untangled until 2023.
Even as legalized sports wagering becomes more commonplace across the US, it still likely won’t be nationwide. Some states, such as Utah, Hawaii, and South Carolina, for historic, religious, or cultural reasons, won’t allow legalized gambling of any sort. Texas is the big prize still on the board for the gaming industry, but the state has historically been hostile ground for gambling interests. Despite high-profile backing by the state’s major league sports teams, the last attempt in the 2021 legislative session to legalize gambling went nowhere. Adding to the challenge is the fact that making sports betting legal would require an amendment to the state constitution.
Still, the trend is clear, and that trend shows more sports betting. The American Gaming Association (AGA) has a Revenue Tracker that collects data from brick-and-mortar casinos as well as Internet-based sportsbooks and casinos. “Despite macroeconomic challenges and increasingly tougher year-over-year comparisons, March, April, and May 2022 have been the three best gaming months in industry history—each surpassing gaming revenue of $5 billion,” the AGA stated in its May 2022 Revenue Tracker report.
Of that total, sportsbooks account for a growing percentage. “Land-based and online sportsbooks generated $555.0 million in May revenue from commercial operations in 26 states. This is a 78.2% gain from 2021 when commercial sports betting markets were live across 20 states and the District of Columbia compared to 30 states and DC today. (More states are legalizing sports betting, but not all are going active or reporting at the same time, which accounts for the varied reported number of states above.) Through the first five months of 2022, commercial sports betting revenue stands at $2.70 billion, 78.0% ahead of the same period last year,” the AGA reported.
Certainly, the top levels of American motorsports appear to be on board with the expansion of sports betting. In May, the Indianapolis Motor Speedway (IMS) announced that it had signed with Caesars Sportsbook to be an Official Sports Betting Partner of the Indy 500 and IMS. As part of that partnership, a new betting lounge was opened in Pagoda Plaza at the Speedway.
Take a trip to NASCAR’s website and you’ll find a BetCenter page that includes a Betting 101 tutorial for beginners, betting odds for the drivers, sports betting calculators, and links to sportsbook apps. For NASCAR races, sportsbooks typically offer bets on futures, which is who will win the race, or driver matchups, or group matchups. Even individual teams are getting involved. In 2021, Richard Childress Racing (RCR) became the first NASCAR team to form a partnership with a sports betting operator when it signed a deal with BetMGM.
Call or Fold
The Big Boys may be making moves in the wagering field, but support for sports betting on racing is uneven. In many states, the laws and regulations are new and untested, and the gambling infrastructure is not yet fully in place. For every RCR ready to dive in, there are other organizations taking a more cautious approach. Knoxville Raceway in Knoxville, Iowa, is a sprint car hotbed where the action is fast and furious. But when it comes to sports betting, “We’re definitely taking a ‘wait and see’ attitude,” stated John McCoy of Knoxville Raceway. “If it does come up, we would take a look at it, of course.”
Donald Long of Duck X Promotions in Zephyrhills, Florida, promotes races in Georgia and Alabama, two states where sports betting is not yet legal, so it is not a front burner issue. Even so, Long said he has been contacted by gaming interests pitching their programs and establishing networks. He’s open to the idea but can’t entirely set aside the shadier aspects of betting on sports.
“I can’t really say that I’m for or against it. I hate to be neutral, usually I’m black and white on something,” he said. “It could benefit the sport on the one side, but then on the other side there are a lot of people who don’t like gambling. There are a lot of Christians and others who might be completely against gambling. Then you have the companies that are represented.”
It’s also the case that some forms of motorsports are probably better fits for wagering than others. Winlight Bets, a sports betting mobile app for drag racing fans, was formed two years ago and was set to go live as we were assembling this article.
“What we believe is that there is a real opportunity in the drag racing market specifically, and also in the grassroots motorsports, to incorporate legalized gaming so that it assists all of motorsports,” said Rex Simmermaker of Winlight Bets. “In our case specifically, drag racing gains more eyeballs, more interest, and then turns revenue back into the tracks, the associations, and the racers themselves.”
Simmermaker believes there is a lot more at stake than merely the injection of more money into the sport, however. “There’s a really fluid arc of what is called ‘fan interaction.’ And the ultimate end of fan interaction is sports wagering,” he said. “That’s the ultimate interaction you can have with an event—your hard-earned US dollars being wagered on the event.
“At the beginning of that arc is what is called the ‘free-to-play’ model,” Simmermaker continued. “There’s fantasy sports, there’s a lot of free-to-play opportunities that allow you to have fan interaction. At this point, Winlight Bets is merely a fan interaction model that allows fans and drivers themselves to have interaction with the event. Legally what we have operating is a free-to-play model. Ultimately, we will get to a legalization of it, which will in turn allow us to push some of the handle back to the tracks, associations, and racers themselves. We’ve got a detailed plan to do that. Today, it all revolves around the fan interaction model, which starts with the free-to-play.”
What makes drag racing such fertile ground for sports wagering? “Drag racing is really the slot machine of sports betting,” Simmermaker said. “It is a chance to bet every 45 seconds to a minute, which is ultimately really pretty exciting to do. There are going to be options for us in the grassroots motorsports world, but because my history and experience is around drag racing, we started there. We know there is huge opportunity, given the fanbase and the amount of illegal action that has already taken place.
“It all revolves around the fact it is fast action, and your reward is pretty quick in the process. What we know in the gaming world is that legalized gaming is spiking. The industry says there is going to be a 40-times increase over the next 10 years in sports gaming, and 70% of that is going to be in what’s called the ‘in-game play,’” which is also referred to as in-play or live betting.
“Well, drag racing, every pass is in-game play,” he continued. “We’re already to where all the major sportsbooks want to get with other sports. Major sportsbooks will ultimately get to where they can bet on whether it’s a pass or run every play. We already have that in drag racing. Every minute you’re going to be able to get rewarded or have another opportunity to earn your money back.”
Simmermaker has a vision for how the wagering ecosystem could look once sports wagering is hitting on all cylinders. “First off, they’re going to increase their fan interaction and the fan experience in general,” he said. “What I accepted as a fan 20 years ago isn’t acceptable today as a fan. We are demanding better as fans. You take a look at a local drag strip that gets 500 people showing up on a Saturday night. And you allow them to have gaming on their action—we have the technology to do that today. That could easily double their gate. So they have 1,000 people walk through the door because not only can they watch great action, but they can be involved with it and maybe make a few bucks. People love that. Now you take a local drag strip that counts on a 500-person gate, and they get it to 1,000, that’s a difference maker for that track. I really believe that legalized gambling is the answer from that standpoint.”
Antron Brown is a three-time NHRA Top Fuel champion and owner of AB Motorsports, and he also sees the potential for increased fan engagement that sports wagering could bring. “I think legal sports betting is just like going to a horse race,” he said. “It just brings more awareness, it brings a lot more people into the sport because they feel they are a part of it, because they have part of the stakes. It’s not just the teams winning the races or the prize money—you have people on the side who are rooting for their favorite team or the best team that they think can win on odds. It’s like bringing fantasy football to the drag strip.”
Few businesses willingly turn their backs on increased customer engagement and new revenue streams, but not all the stakeholders in motorsports will be eager to cozy up to the gaming industry. Jhonnattan Castro competes in the Formula Drift series and races primarily in the US. He’s from the Dominican Republic, where gambling is a thorny issue, and he’s not convinced a coat of legality is going to improve gambling’s reputation anytime soon.
“Gambling is something that I’m not sure I feel comfortable with. Does it help motorsports? I believe it can help, sure, it can give options to people,” Castro said. “But I’m not sure I agree with it.”
Long of Duck X Productions sees sponsor communication as crucial for any tracks or organizations that sign on with sportsbooks. “I’m sure that it could cause problems,” he said. “Let’s say I get on board, but you might have somebody else out there, let’s say Mickey Thompson, Summit, or whoever, maybe they don’t want to support gambling. That could definitely cause some problems. If you have people for and against it, you know how that goes sometimes, people will get a little hurt about it. It would definitely be one of those things where you almost want to run that by all of your title sponsors.”
Brown has a more optimistic take on sponsor acceptance of legalized sports betting. “I believe that manufacturers and sponsors that are all involved on race teams, their full mindset is the same thing—to win,” he said. “They are out there to win on Sunday and sell on Monday, and from that perspective, they’re not going to think about the wagering or the betting.
“But for all of us as competitors, we’re going out there to win,” Brown continued. “Win, lose, or draw, we work hard, we put the time in just like a professional football team or baseball team. They have wagering and betting on that, but that never changes the outcome of the game from anybody’s standpoint. For ours, it’s going to be the same thing. We’re going to race hard, but I think the betting and wagering is going to bring more excitement to the fanbase, where they can feel more involved and have some stakes in the game.”
Game or Vice?
The potential downsides to normalized betting in motorsports aren’t hard to imagine. Whenever big money is at stake, there can be temptation to throw a race. Team orders can suddenly be viewed with suspicion, or big money interests could start to exert pressure on a series or team. Shady operators could take the money from fans and run. “I think any time there’s a possibility for some unknown to happen, it could,” McCoy said.
“The sponsors we work with are very connected to younger people,” said Castro. “They want to do things right. And betting is something that I don’t think is right for young people.”
Policing the real or perceived corruption that legal gambling could generate is crucial for Long. “If I knew that it wouldn’t change the outcome, okay,” he said. “There’s always somebody trying to make some side hustle, and that’s what concerns me. I wouldn’t want it to change the integrity of the sport.”
Brown believes an educational initiative would be a good plan to introduce alongside any sports betting partnerships in racing. “The downfalls would be the same that you would have with any other type of gambling,” he said. “You see people out there gamble more than what they have, that people get in over their head. It’s just like anything else where moderation is important. You need to put some awareness out there and make people aware of the effects of getting addicted to gambling. Besides that, I think it will make it fun, it will raise the stakes, it will bring a lot more interest and eyeballs on our sport.”
Simmermaker at Winlight Bets has factored in the concerns about corrupting influences in sports betting while creating the app and will be using all the tools of technology to neutralize it. “Utilizing tech that simply wasn’t around five to 10 years ago, we can notice trends in how people bet,” he explained. “For instance, if a guy who typically bet $20 on a race and did that every other weekend, and then walked in and put down $10,000 on a race, that would be a flaggable event and we may not let that bet go down. Similarly, we can look at the handle and we can limit it to, say, we’re only going to allow 50% of the handle to be bet. And any bet above that is going to be flagged or disallowed. There are great compliance groups in the major sportsbooks that really have this stuff down.”
One aspect of legalized sports betting that might reassure the industry is that not all of the push is coming from giant casino interests. Some of the movement is coming from people with deep ties to racing culture. “What’s really important to me, the reason I started Winlight Bets, is to grow the sport and to help and enhance the sport. I worry about all of motorsports in the sense of ‘death by a thousand paper cuts,’” Simmermaker said. “Nothing we do at Winlight Bets will risk the reputation of drag racing or any other motorsport.”
Ultimately, betting on competitions seems to be an almost natural impulse for the human race, and will continue, legally or not. Whether sports wagering can vault motorsports to the next level of fan popularity will be decided in the next few years. “I’ve never really seen attitudes change; it’s always been there, especially from a standpoint of a fan where they might do their own little wagers in the stands, a dollar here or a dollar there,” Brown said. “But it’s always brought excitement, it’s always been part of sport even since I was at an early age watching it as a little kid.”
American Gaming Association
Duck X Productions