How Racinos are Reshaping the US Gambling Trends

Author: Matthew Haynes

Over the last few years, we have seen a new animal come to the fore in the gambling industry, especially in the US market.

Traditional, land-based casinos have always been a popular option for gambling enthusiasts over the last few decades, particularly in resorts such as Las Vegas and Atlantic City, with these having attracted 100s of millions of visitors. While the online casino vertical of the industry has seen a considerable rise recently, with many states making these legal, there is still another viable alternative that is essentially offering gamblers a more hybrid choice to gambling.

Racinos have swiftly shown signs that they could build serious momentum in the US in years to come, with gamblers likely to continue to look for different options. For many years, horse racing or greyhound racing even have attracted many visitors - only the most serious enthusiasts, that being said there was somewhat of a bad image associated with it.

However, we have seen a significant transition for many of these original racetracks, with them being able to identify a way to attract people through the door and effectively make this more of a pleasant social day out.

What Is a Racino?

The best way to adequately describe a racino is that it combines the best of both worlds for gamblers who are interested in horse race betting and casino gambling.

These have become popular the world over, though particularly in the US, which has built up a considerable niche market of enthusiasts who enjoy both gambling on horse racing in addition to land-based casino entertainment.

A lot of the best and most popular racinos offer multiple services that include numerous restaurants, sports bars and, in some cases, even double as hotel resorts that have luxury spas, tennis courts and fitness centres.

The Surge of Racinos as a Premier U.S. Gambling Destination

Momentum has swiftly been building in the US gambling industry - certainly since the end of the global pandemic. It has seen numerous states in the country lobby for the passing of online gambling bills as a way of generating more revenue for the state in the form of taxation.

While these have proven to be popular, there is another niche of the industry that still craves more of an in-person experience that combines the best of both worlds. As a result, we have seen the emergence of more racinos to accommodate these tastes.

In addition, the best racinos (which double as hotel resorts) have also been able to significantly capitalise on the increasingly growing tourist industry and market accordingly to those who have an interest in not only horse racing but also casino gambling.

As such, it has proven to be a unique proposition for those travelers who have been seeking a diferent experience or a more exotic casino destination. Also, they can make for a nice and intriguing change from going somewhere like Las Vegas, which some enthusiasts might find too crowded or even cliche.

Also, the stature of these facilities has been able to attract some of the most popular horse racing events on the calendar over the years, which has led to further revenue in a number of ways.

Racetracks Prove to Be a Magnet for Major Brands

The surge in popularity of racino attendance over the years has not gone unnoticed. This clever tweak in business strategy has led to a growth in revenue over the years, and, as a result, major gambling firms such as FanDuel have recognized the potential of these for adding another revenue stream to their top line. Indeed, this came to fruition in 2020, when it became the first operator to effectively take over a horse racing venue, namely Fairmount Park in Illinois with the place at the time in particularly bad shape.

Fairmount Park was rebranded as the FanDuel Sportsbook and Horse Racing, with CEO of the FanDuel Group at the time, Matt King stating: “We are delighted to partner with Fairmount Park to continue bringing high quality horse racing and soon additional entertainment experiences via our sportsbook to the region. Fairmount is an iconic state landmark which we plan to modernize bringing innovative technology and entertainment offerings only FanDuel can deliver.”

This was echoed by the general manager of Fairmount Park at the time, Melissa Helton who shared King’s sentiments, stating: “Fairmount Park is excited to extend our partnership with FanDuel Group to now include their sports gaming platform. This partnership will allow the park to remain an important economic driver for the surrounding communities.”

As such, the Illinois Gaming Board (IGB), deemed the venue suitable to be turned into a racino and granted the park a casino license.

It was particularly interesting at the time to see FanDuel expressing their desire to crack into the racino vertical, however, this has proven to be somewhat of a masterstroke. The company knew that it already had the brand pulling power, due to its long-standing reputation in the marketplace, that began with its popular daily fantasy sports product which was launched nearly a decade earlier. Such was its position in the industry among the market. It was able to leverage this into attracting visitors while revealing that it had “big plans” for the race track and casino.

Less than a year previously and almost under the radar, lesser-known Australian company PointsBet opened its racino in the same state based in the suburbs of Chicago, subsequently partnering with the Hawthorne Racecourse. Arguably the biggest racino company in the US, though, is Churchill Downs Incorporated, which has essentially cornered the niche; however, due to its stature, it also owns traditional race courses, home to some of the world’s biggest events such as the Kentucky Derby.

Despite this, the company still competes in the racino space, providing its loyal customer base with additional options when it comes to gambling, especially in states where horse racing on its own might not be as popular.

Could We See Racinos Become Popular in Other Markets?

While there is no doubt that racinos exist in other markets around the world, such as in in Australia, there could certainly be other markets that may have the potential for a growth in this niche. A potential hurdle though is whether these markets have iGaming legislation in place, how strong this is and the maturity of the market in question, as this could prove difficult. Then of course, there would have to be the demand from customers.

The UK, in particular, is a country that arguably boasts the biggest and most thriving horse racing market in the world and has done so for the last few decades.

In addition, it also has a strong iGaming market that is responsible for just over £15 billion in revenue per year. It also has strong attendance figures at race courses, with this seen as a unique social event even for those who are not avid fans. The UK media hype this up, with the major horse racing events often attended by members of the royal family in years gone by, which has helped to boost numbers. In addition, the opportunity to dress up in striking outfits also acts as an attraction as well as potentially placing some lucky bets.

Even smaller, less notable events still attract sizeable crowds. With at least 40 minutes between each race, customers are often left with nothing to do but talk, eat or drink, though offering gaming machines could well be a great opportunity for racetracks to add to their top line. Big horse racing events also offer highly attractive odds for the favorites, which often result in customers winning. The opportunity for them to gamble away their winnings on slot machines could certainly represent one way for racetracks to claw back any losses.

Offering racinos in the UK could definitely be an interesting experiment and, as a result, perhaps lead to even bigger revenue figures for the country’s gambling industry.

The Strategic Evolution of Gambling in the United States

If the last few years are anything to go by, they suggest that racinos could become a permanent fixture, especially in the US – maybe even overtaking traditional land-based casinos in certain states.

Indeed, in states such as New Jersey, we may see a surge in racino attendance, especially following the passing of a smoking ban for land-based casinos in the state, with racinos as yet reportedly unaffected by this.

The ability for customers to enjoy smoking outside while watching the horse racing, before heading inside to enjoy the gambling machines could see the states’ racinos enjoy a significant increase in revenue.

It could also mean that those casino brands that are affected by the smoking ban in the state partner with race tracks to turn them into racinos as a way of making up for any lost revenue caused by the recent ban.

Of course, other markets are interesting, particularly where horse racing is popular and which has a mature and regulated online gambling industry. It will all depend on how much value can be identified, especially by potential investors such as established gambling companies who have the pull to make a difference.