Why Racing Is Losing One Of Its Best Customers

[Wandering Eyes]

Mike Maloney had it good and he knew it. The author of “Betting With an Edge,” the native Kentuckian played the races professionally and was able to make a good living doing so for nearly half a century. There was no trick to it. He bet a lot of money, as much as $14 million in one year, worked hard and had an innate ability to find the right horse at the right time at the right price.

“When it comes to betting horses, I am closing in on 50 years and I have done very well,” Maloney, 68, said. “Racing has been very good to me.”

Just not as good as it used to be. For the bettor, the game has changed for the worse over the last many years or so. Fields are smaller, takeouts remain way too high, there are fewer racing days and even the everyday player has become pretty sophisticated. Handle falls just about every year, as it did in 2024 (by 3.35%). Those are some of the reasons Maloney says he has cut back on his wagering by 90% since the days when he was betting eight figures. He estimates that when his betting was at its peak, he was contributing $800,000 to the industry, money that went toward purses and the track's bottom line.

So the player who once bet $14 million in a year is now down to about $1.25 million, and there's no telling how much longer he'll keep going, period. The sport can't afford to lose the Mike Maloneys of the world, but they are fleeing, either for other forms of wagering or perhaps giving up gambling all together.

“The old dogs like me are having to adjust what we do and a lot of the other gamblers, the everyday players, are either betting less themselves, stopping all together or going to some other form of gaming,” Maloney said. “It's been a very gradual occurrence in the last 15 years. I probably bet the most in my career probably around 2010 or so. At one time, I bet like $14 million. I gradually bet less and less. That's not because I wanted to but because takeout increased and host fees increased so the net cost of my wager increased. That's a squeeze.”

But those are not the elephants in the room–the CAW (computer assisted wagering) players are. Maloney doesn't like to complain and he admires the CAW players for their ingenuity and ability to build a much better mousetrap, but he also knows that competing against them is next to impossible and they are the primary reason he has cut back so drastically on his wagering.

“As the CAWs became a bigger percentage of the betting pools, my edge dissipated over time because they are very good and they're doing same thing I am trying to do but they're just doing it better,” he said. “Over time, if you are going to approach betting on horses as a business, you're going to have to adjust your business model every year. For me, the biggest adjustment has been to bet less. A lot of marginal bets that used to be profitable gradually became less profitable and then got close to break even. At that point, they had to be eliminated. That leads to the decrease in handle.”

He's also upset that racing has done little to modernize its tote systems.

“They need to fix the tote system,” he said. “That really bothers me at least as much as the CAWs. The tote system hasn't been completely updated since the 1970's. Look at all the changes there have been in racing since then. In the 1970's, we were handing a $20 bill to a teller at the track and now it's a different world and we're playing with the same tote system. There's definitely larceny in the tote system.”

Maloney is a believer in technology, but he says what has happened with the CAW players is that everyone else, even a big bettor like himself, is no longer playing on a level playing field. It is a familiar refrain.

“As far as the CAWs go, my stance has always been that racing should embrace technology and I firmly believe that,” he said. “The problems I have with the way the CAWs have been addressed is they are given other advantages besides the technology that they use. They are allowed to be the last mover in the way the betting operates. They get the last look at the odds. They can see things that I can't see and make decisions based on information that I can't act on. I can't make hundreds or thousands of bets in a second and they can. Racing facilitates that. I believe in embracing technology but as it operates today, it's not a level playing field.  Another problem is that some of the track ownership groups have ownership interests in the bigger CAWs that I compete against. That's inherently unfair. I don't think anyone would look at that and say that's the optimum way to operate.”

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So what can be done about it? Unfortunately, the answer is not much. The CAW players are betting so much that there are estimates that they account for about $4 billion a year in handle. The sport has painted itself into a corner and can't afford to ban the computer players and lose that much in handle. So, in the short-term, the CAW bettors are getting fat and so are Churchill, NYRA and the Stronach tracks, all of which own parts of the betting outlets that the CAW players wager through.

But the long-term picture is completely different, and it's not pretty. As the computer players continue to drive the everyday bettors out of the sport, the CAWs will be betting into smaller pools and losing a lot of their edge. They depend on the minnows and when the minnows are gone, there will be nothing left for them to feed on.

“These tracks are so myopically focused on the next quarterly report rather than what racing is going to look like in five years or ten years,” Maloney said.

Maloney says he still makes money betting on horses but obviously not nearly as much as he used to. At his age, he doesn't have the energy he used to and is comfortable playing less and not working quite so hard. But he wonders who's going to replace him. What will the next generation of horseplayers look like?

“It's still what I do,” he said. “I don't devote all my time to it like I used to. I'm still making a living, but it's not something where I would encourage my son or my stepson to come into this field. For smart young kids, there are a lot easier games that they can play than this. It's not a growing industry and the game gets tougher every year. Even if they don't know what they are up against, they know what the results are. Those everyday players aren't going to stick around. If I were czar of racing, that would be my main concern. When I play that scenario out, it doesn't end well. And I think we've gotten pretty far down that road.”

“I'm not so much concerned about me. Things are winding down for me. I have spoken to lots of national groups and at conferences and I've been trying to alert them to the things we have been talking about. Ten years ago, one of the things I would say is that during my lifetime, I have been an annuity for racing. I've spent my entire life betting horses and betting very seriously. My point is a guy like me is an annuity for racing; an everyday player is an annuity for racing . I'm 68 years old and when I decide to hang my red pen and my Racing Form up, who's coming in behind me? They haven't laid the groundwork to bring anyone new in. With young, analytically-minded people, you give them very little reason to choose racing over other forms of gambling. When I  go to the racetrack, I look around and try to find a 25-year-old or a 30-year-old everyday horseplayer that's going to be there and the racetrack is their love and their passion and they become bettors. You won't see many of them.”

It's not that Maloney is saying anything that hasn't been said before, but he is a living, breathing example of the type of player the sport is losing and can ill afford to lose. The CAW players and the tracks in bed with them are making a lot of money, but at the end of the day, they are jeopardizing racing's future. This is a gambling game that has all but lost Mike Maloney, and that's a pretty scary thing.

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