Analysis
By Cole Boehler
There is a wide chasm between traditional horse racing betting and fantasy sports leagues.
But a dedicated group of individuals has been slogging through the process of bridging that crevasse by developing administrative rules to implement a law passed by Montana's 2007 Legislature that allows merging the two concepts.
Over the last year and through a half-dozen day-long and arduous meetings, the rules committee had worked out much of the functional aspects of this new fantasy league pari-mutuel wagering concept with one major exception: the specifics of wagering propositions and how they might be structured.
A number of the committee members come from horse racing backgrounds, which is to be expected since the Board of Horse Racing was the entity statutorily assigned governance of the fantasy pari-mutuel. Some still wonder why this responsibility resides with horse-racing authorities but, in its simplest iteration (it is actually quite complex), it is because that board is the body that has overseen pari-mutuel wagering for decades in the state.
But a few other members of the committee have backgrounds in Montana's licensed gaming business, where the fantasy pari-mutuel activity is to occur under HB616, the statute that legalized fantasy pari-mutuel. These individuals, naturally, bring a different perspective to the deliberations, and perhaps a better comprehension of the true nature of fantasy sports leagues, but particularly the law and rules governing the activity.
In writing the new rules covering specific wagering propositions, the notion of traditional horse race betting had to be set aside, a leap that has taken time and re-wiring of thinking processes. But, according to participants, the requisite comprehension finally took solid root at the committee's March 12 meeting.
In traditional horse wagering, bettors typically pick individual horses to win, or otherwise finish at the front of the pack: win, place and show, for example. There are also more exotic bets such as quinellas, daily doubles, pick-threes and more.
In fantasy sports leagues, however, participants may not bet on the performance of individual competitors or even individual teams. To do so would constitute sports-book wagering which is decidedly illegal in Montana and almost every other jurisdiction.
The trick here is to retain some of the traditional horse race betting formats while not betting on individual competitors or teams. Instead, participants in fantasy pari-mutuel must bet on "fantasy teams" comprised of two or more competitors picked from a field--a "roster"--listed by the game's overseer prior to the start of the game.
For example, a participant in fantasy pari-mutuel could pick a quarterback, running back and wide receiver from the roster--likely all playing for different actual teams--to comprise his fantasy team. The game's operator will have established rules as to how the players' performances that week will be scored. Your "team's" performance then is measured by the cumulative scoring of your individual players.
You decidedly do not bet on an individual's performance: only the cumulative performance of your picked "fantasy" team.
Now imagine if, at a horse racing venue, you had to pick a group of horses, then add up their individual performances to determine if you won your bet. You might argue, "but you already do that when your pick a 'win-place-show.'" Not really. In that case you are still betting on the performance of individual competitors.
A person can see where merging these concepts can be complex, but is more a matter of mindset.
So, how would you set up a "win-place-show" format in fantasy sports pari-mutuel?
A participant would have to pick a fantasy team of two or more players to finish first according to league scoring, another group of players to finish second, and a third group of players to finish third.
The required conceptual shift has been to think in terms of teams rather than individual competitors.
Tom Tucker is president of Montana Simulcast Partners, a company that offers horse and dog racing pari-mutuel wagering via video at locations across the state. That "simulcast" system is in turn wired into a national network that allows bettors in Montana to wager on--and view live feeds of--races in New York or anywhere. But more importantly, our Montana bettor's wager is part of the national pool--a "pari-mutuel pool"--of wagers made on that particular race.
Tucker serves on the fantasy pari-mutuel rules committee, as does Steve Arntzen, a partner in Century Gaming, a Montana video gaming machine vending operation.
Both men said the rules committee has now collectively and effectively adjusted its conceptual thinking to encompass the fantasy pari-mutuel premise: betting on fantasy teams, not individual competitors, yet arranging wagering propositions to, at least to some extent, mimic traditional horse racing wagering formats.
Getting there hasn't been easy, according to Tucker.
He says that one of the guiding principles of passage of HB616 was to boost horse racing which has been in a state of decline. The measure calls for the bulk of the profits to flow to the Board of Horse Racing to provide the financial wherewithal to revitalize that sport and industry.
Further, Arntzen notes, fantasy pari-mutuel was also designed to educate players regarding traditional horse-racing wagering structures, also an attempt to familiarize new players with horse racing, providing another potential boost.
Yet, Tucker says, the rules must specify wagering that will pass statutory muster, meaning it simply must be fantasy sports based and cannot even rub shoulders with sports-book wagering--betting on individual competitors or actual teams.
"Trying to blend fantasy sports fundamentals with horse racing wagering--even the terminology--had us stumbling," Tucker says. "We backed up. We had to come up with new wagering concepts that still utilize a totalizer system" that is the basis of pari-mutuel wagering, he said.
"Our thinking has started to flow a little better. We had to move away from horse racing and in the direction of fantasy sports."
Arntzen concurs, stating, "We had to go backward to go forward. I believe we can now see how to set up wagering to make it comply with fantasy law and rules and still put it in a pari-mutuel package. About the only thing we'll be using that really pertains to horse racing is the pari-mutuel pool."
Tucker adds, "We can still offer a quinella--picking a first and second place finisher--but participants will have to pick a fantasy team to finish first and another to finish second. How they finish will be determined by game rules established to determine the cumulative team score."
But Tucker says the committee recognizes the need to keep wager propositions simple at first; there will be a fairly steep learning curve that will need to be overcome before anything very complex can be understood by, and offered to, players.
Both agree that major progress was made at the March 12 meeting, paving the way to have a fourth draft by April 1 and a final draft done May 1, which they say is the committee's objective.
There is still a process that could take up to 90 days after that: giving public notice that the rules will have public hearings, conducting the hearings, in some cases amending the rules to take into account public testimony, getting the rules into their final form, then having them published in the Administrative Register.
With luck, the rules could take effect by August 1, they say.
However, much more remains to be done before the game can actually be played, they point out.
Arntzen says that while potential totalizer system providers are interested and available, and proven hardware exists, the new wagering propositions will require some fairly extensive writing of new software. And that is an expensive proposition, he says.
There hasn't been, and won't be, any software development by system providers, Arntzen and Tucker both say, until at least the final rules draft is ready. At that point a software developer could zero in on enough of the fundamental concepts to begin designing a system which then, of course, would be followed by a fairly extensive round of testing.
Finally, a network needs to be established and terminals installed at establishments that find the proposition financially attractive. Location operator and employee training would then commence.
"We need to get to the final rules draft so (system provider software developers) can hit the ground running," Arntzen says. "It's critical we get it done; we need to push harder."
How long that might take is anyone's guess, but both men express a desire to see the game in place in time for the football season. In addition, entities interested in licensing the game will need to prepare and present proposals to be approved before a license can be granted.
Some might still see the concept as fantasy; others like Arntzen and Tucker say they believe it is now closer to becoming a reality.
Source: The Montana Tavern Times, April, 2008, published monthly by Continental Communications, 125 W. Granite St., Suite 102, Butte, MT 59701.