Traditionally, the lotteries have been used to operating pool-based games. In horse betting, such pari-mutuel games are also offered by particular horse betting operators, but the largest unlicensed gambling operators only offer fixed-odds betting. As a result, WLA members face competition mainly in fixed-odds horse betting.
Pool-based games (pari-mutuel)
Pool-based horse betting includes horse betting where players play against each other for one or more prize pools defined as a percentage of the total stake sum.
Factors of interest in pool-based horse betting:
- The larger the pool size, the more interesting the product.
- The product helps lotteries differentiate themselves from their competitors and gives companies a competitive edge.
- The implementation of technical solutions is relatively easy.
- Good commercial terms. Compared to fixed-odds betting, pool-based products have low payout rates.
Pool-based horse betting has a much lower risk than fixed-odds betting, and criminals, for example, have a much lower interest in money laundering. The operators also have no financial risk in pool-based horse betting because the players bet against each other, and the operator gets a relatively high and guaranteed return. These products are well suited for lottery operations because pool-based thinking is similar to that of lottery games, and the brand of the games is soft compared to fixed-odds betting.
WLA members can operate common pool-based horse betting games, against which it is almost impossible for private operators to compete. One of the WLA members, the Hong Kong Jockey Club, offers large existing pool-based games for gallop racing. PMU’s selection includes games for a single trot or gallop race (e.g., Quinte), from which players can win large amounts with a small bet. Pool-based horse betting can also feature multiple races. Veikkaus’ T75 is a game where gamblers bet on the winners of seven different races and can win large sums of money with a small stake (row price EUR 0.05).
The pool-based horse betting operators offer a jackpot feature, at least in the most challenging games. Jackpots can also be built for marketing purposes, as in lotto games. Particularly interesting jackpots can be offered in common pool-based games. When operators provide large jackpots, marketing must not give a false impression of the probability of winning.
In horse betting, it is worth cooperating with horse racing organizations. Interesting sports content helps betting operators to acquire more horse betting customers. One effective way is to offer high jackpots in connection with big horse racing events. Almost every month there is a big competition or event. It’s an excellent way to recruit new customers and maintain current players’ interest. Betting should be made easy to understand, especially for new customers.
The most advanced betting operators have developed services for pool-based horse betting that serve both active and casual punters. New customers have the option to use the quick pick feature or buy a share of the syndicated system. For active punters, especially on digital channels, more information about horse racing (e.g., videos of previous races), betting-related statistics, and tools to make betting easier are available.
PMU offers 15 types of horse bets, and Veikkaus offers 12. These different kinds of games permit customers to find the best way to play according to their expertise, thanks to the many combinations in the offering. It is important to know and understand the primary motivation of horse race betting customers. This information, allows operators to better serve customers, and enhance customer satisfaction and loyalty. Once this has been achieved, the customers will understand responsible gaming requirements and trust that they are being taken care of.
Active customers especially, make last-minute bets in pool-based games so that the final odds are as sure as possible. Because of this large number, the operator must automate its responsibility measures.
Another unusual feature of horse betting that differs from lottery games is the large share of active punters in total sales. Many customers bet with small stakes, and a tiny group uses much higher stakes. Responsible gaming for different customer groups requires various measures from gaming companies.
Fixed-odds betting
Fixed-odds horse betting includes betting where players bet on the outcome of horse racing against the operator.
Large betting operators can take advantage of economies of scale and offer a very high payout rate (> 95%) in fixed-odds betting. From the point of view of responsible gaming, lotteries cannot provide as high a percentage as private operators ; although a higher payout rate can attract more players, it also carries a higher risk of causing gambling problems.
Lotteries that offer horse betting sell their products online and through their retail network. Working with retailers requires additional fees, including the use of terminals, a sales commission, and the costs of the sales team. In such circumstances, lotteries may not be as competitive as the biggest global online betting operators.
In many markets, the regulator sets maximum limits on the return percentage that lotteries must adhere to.
Horse betting products should offer attractive profits and be attractive enough in the customers’ eyes. On the other hand, lotteries must balance this with ensuring responsible gaming, and aim to prevent and reduce gambling problems. However, it is important to understand that fixed-odds betting is not automatically synonymous with irresponsible gambling. Several WLA members offer fixed odds betting also for horse racing, within acceptable frameworks of responsible gambling. In fixed-odds or pool-based betting, responsible gambling can be a competitive advantage for lotteries or other gambling operators.
WLA published the Sports betting – Marketing best practices document in March 2022, which contains more information about the fixed-odds betting guidelines.
