Horseracing has been part of the gambling landscape for as long as man has known how to ride a horse or place wagers on outcomes, whichever came first. However, the modern landscape of horseracing is somewhat different, primarily due to advancement in technology and the new ways through which fans can engage with the sport.
Two such examples are historical horseracing (HHR) and eHorseracing, which are bringing the thrills of horseracing to players with one crucial difference: No horses are involved.
In the case of eHorseracing, bookies will provide virtual horseraces for players to bet on. This is not something to be conflated with esports, which involves teams playing various competitive video games like Dota 2 and CS:GO – eHorseracing uses data and real-time graphics to generate horse-less races for players to bet on.
Due to being a completely virtual betting market, new races can run continuously, even 24/7 if an operator chooses. Betting options also mimic those seen with traditional horseracing, with some bookies offering things such as combination, tricast and other options for players.
HHR, meanwhile, is a different can of worms entirely. These slot-esque machines use the data from historic horseraces to determine their outcomes and are almost exclusive to the US. Popular designers of these machines include Ainsworth and Churchill Downs (CDI) subsidiary Exacta Systems, having first come onto the market at the turn of the century.
These machines use naming substitutions, handicaps and other techniques to conceal the race being pulled from during games to avoid cheating, and pull much of their design philosophy from other popular Class II and Class III games. As Jeff Lind, President, at Exacta Systems, explains to Gambling Insider: “Exacta’s founders were early innovators in the Class II gaming and central determinant lottery industries. Similar to Class II using bingo to determine a prize, HHR leverages horseracing wagers on past events to quickly determine prizes that can be used to model most slot style games.”
– HHR has outperformed CDI’s TwinSpires vertical since the latter half of 2022, first being reported in Q4 2022. The segment has almost always increased in revenue quarter-on-quarter.
– In Q2 2020, during the Covid-19 pandemic, HHR made $7.3m in the quarter. Four years later, it reported revenue of $212.1m.
Source: Churchill Downs
Aside from HHR’s recent debut in Malta, made possible via a collaboration between the Maltese National Lottery, IGT and CDI, HHR is a betting vertical exclusive to the US. These machines have been “ramping up” in terms of performance numbers, according to Lind, though he suspects that these machines will be less popular than they are in the US. “The differential between US performance and foreign performance is expected to mimic Class III games where performance varies greatly by country and is generally lower than in the United States,” he said.
So, who is playing these alternative horseracing games? For eHorseracing, a likely demographic is those with a keen interest in the sport in first place – after all, these games are not tied down to an in-person racing schedule, national or international, making them ideal for players during quieter racing periods. The player base is also likely to be younger; virtual horseracing is still a relatively new betting vertical, and considering its reliance on technology and computer graphics, older generations of sports bettors may be less inclined to spend money on horses that ‘aren’t real.’
On the HHR side, Lind describes typical US players as “Similar to Class III gaming machine players. These players prefer the fast paced, immediate gratification of casino style gaming machines as opposed to the slower paced traditional wagering on horses,” with the machines now being a significant moneymaker for operators like CDI.
Consider the operator’s Q2 2024 results. Of the $464.7m in revenue made that quarter by live and historical racing, $212.1m was made from historical racing – more than CDI’s TwinSpires service and just shy of the $274.2m made by CDI’s combined gaming vertical. In total, CDI reported revenue growth of over $120m, totalling $890.7m, with Lind stating that “We expect HHR to grow in existing jurisdictions and add new jurisdictions domestically and internationally.”
The goal of HHR is to grow revenues to the horseracing industry...It is not a goal of HHR to replace the horseracing industry, but rather to use technology to keep the live racing industry viable - Jeff Lind
Still, with the popularity of these horse-less horseracing alternatives, the question becomes, what happens to the horses? HHR machines use historical data to present the thrill of race betting in a new format, while eHorseracing provides a more typical betting experience all while avoiding the use of real animals.
Does the proliferation of these alternatives present a challenge to traditional horseracing? And, more to the point, does it reflect a change of attitude towards horseracing, with many conversations in the wider zeitgeist criticising the use of animals in sport?
“HHR was created as a solution to the declining numbers in the live racing industry,” said Lind. Indeed, the horseracing industry has seen struggle and backlash across the globe – the dropping of daily racing tips on BBC’s Radio 4 Today programme after 47 years is a small yet stark example of this – with racing authorities routinely having to reassure the safety and wellbeing of the animals. It is no surprise, therefore, that operators like CDI have had to resort to alternative solutions – solutions that, as seen with the above quarterly statistics, have made them a pretty penny.
“The goal of HHR is to grow revenues to the horseracing industry and the jurisdictions where they operate. It is not a goal of HHR to replace the horseracing industry, but rather to use technology to keep the live racing industry viable,” Lind concluded.
So, what can we expect going forward?
With AI and real-time computer graphics improving year on year, and the proliferation of HHR both in and outside of the US, it is likely we will be seeing more of these horseracing alternatives on the market. It is true – neither will replace traditional horseracing, as both are distinctly NOT traditional racing – but as Lind pointed out, the market is currently facing a decline.
Animals need care and training and racing grounds need tending; all things traditionally funded by income made from wagering. These are things that will retain their cost no matter the amount of race attendees and bettors, and if those numbers are facing decline, alternative methods of revenue generation will become crucial.
Unless this can be turned around (something with some potential in the UK, after new Labour Government Parliamentary Under-Secretary of State for Sport, Media, Civil Society and Youth Stephanie Peacock emphasised the “huge contribution that horseracing makes to both our culture and our economy”), the development of horseracing alternatives will likely continue. HHR will likely continue its growth in and outside of the US, while virtual horseracing will continue to develop its following and proliferation across various sportsbooks.
The flesh-and-blood horses won’t be going anywhere. But it seems their virtual, slot-based counterparts won’t be either.