Mutuel Interests: What Are CAWs?

Picture this. You are having a morning coffee and breakfast sitting at an outside table on Broadway in Saratoga. You have the racing form out and you are pouring over the day’s races. You spot this amazing 8-1 horse that just cannot lose, you have no idea how this horse is 8-1 morning line. You take a look at the favorite, and you realize you found your play of the day. There’s no better feeling than being able to spot a great value play. At the track there’s 6 minutes to post and your pick is bouncing between 5-1 and 6-1. There’s still value, but the horse is live. Under 2 minutes to post and you are looking at 3-1, lost some value but still can find a way to play it. They are in the gate and you lock in your bet. They’re off and they are at the 1/4, you look at the refreshed odds and see 9-5. All that value wiped out, but you still cash the ticket.

Unfortunately that edge was lost, maybe it was just an angle that everyone saw, or maybe the CAW (Computer Assisted Wagering) teams hammered it. Either way it is a real crappy feeling. Let’s break this down into the two possibilities starting with the CAW angle. The topic can get complicated pretty quickly, and it is worth walking through exactly how this scenario can play out. Over and over and over.

CAWs and retail horseplayers are both shooting for the moon, except the CAWs have a NASA rocket and retail horseplayers have a hobby rocket with your track buddy behind you trying to light it. The playing field isn’t level, and that is what needs to change.

What is a CAW?

Within the horse racing industry the term CAW (Computer Assisted Wagering) has a very particular meaning. While this sounds generic to anyone using a computer to wager on horse racing, the reality is this term represents the companies that provide high volume players a platform to wager on. High volume players are truly high volume. We are talking about handle numbers from $600 million a year up and above $1 billion a year. There is an entire process for becoming a customer of one of these CAW platforms. This is not to be confused with computer players that have models and bet through an ADW. The CAW teams do not go through an ADW and their handle can actually be tracked specifically to them through what’s called a TRA code. This is how handle can be differentiated between ADW handle of retail players and the small time computer players against that of these high volume wagering teams.

It is worth pointing out that we cannot actually determine how many small computer players there are or even how much handle they have each year. These players go through what is called “the front door” which means wagering with an ADW, and with enough volume getting a file upload capability to get bets in slightly faster than manually typing them all out. This is still nowhere near the tote access that true CAW customers get via the CAW platforms. Small computer players can have handle in the tens of thousands a year into the tens of millions a year.

Computer Assisted Wagering Platforms

Elite Turf Club is owned by The Stronach Group (80%) and NYRA (20%).¹ Velocity is owned by a subsidiary of Churchill Downs. This feels like a real conflict of interest. These companies will make the claim that high volume wagering has been happening for decades, long before they were established. This is actually true, prior to these platforms existing high volume wagering teams would have to figure out how to get all their wagers in as quickly as possible and at scale. This was largely untraceable as well, there was no way to identify these teams.

I think the argument for these platforms has its merits. There is now a way that all these wagers can be tracked and attributed to these teams. You might be thinking this is ridiculous and how could you make such an argument? The ability to identify these high volume players is actually the only value add here. It allows tracks to control the wagering from these teams. Did the industry really need to turn these platforms into companies that earn a profit? It is surprising that in an industry with more leaks than a worn out hose on the backstretch, the financials of these CAW platforms are nowhere to be found. How much profit does Elite Turf Club and Velocity generate in each year? Does this bubble up to NYRA and the Stronach Group? If they are making so much money from these CAW players what’s the incentive to make the game better for retail players?

Requirements and Access

Thanks to a letter sent by the California Horse Racing Board back in September 2024² we do get some concrete insight into some of Elite Turf Club’s operations. Elite states they have around 12-20 customers at any given time and that handle minimums start at $20 million. Elite’s customers still have to write software to communicate with the tote, this isn’t even provided by Elite. Their customers go through extensive background checks regularly and can be audited financially to ensure they have the funds to wager at the volumes required. Interestingly as well, customers also need to get permission from each of the tracks in order to wager. Just because they become an Elite customer and have tote access doesn’t mean they can just start wagering at whatever track they want to.

All of the customer accounts at Elite need to be held in an individual’s name, even though they are hiring support staff that are essentially running their operations. The letter does call out that no one individual can own more than one TRA code. This doesn’t fully answer the question, are some of these high volume players using an ADW account as well? NYRA specifically doesn’t allow CAW players to participate in the late horizontal wagers, but are they still getting some tickets in through an ADW? It would be great to get some clarification on this.

They can process their wagers faster than what retail players can. This is a big advantage when you are trying to wait till the last possible odds shift in order to calculate the true value of your plays. Yes they have the same access to the pool data and will pay data but they have it programmatically. They can have computer software read the information and parse it faster than a retail player reading numbers on a screen.

The rebates and reduced host fees provided to CAW teams do make sense. Enterprise software deals provide volume discounts all the time to companies that buy in bulk. I think it should be easier for retail players to also get rebates. ADWs do provide their customers with rebates based on their volume, but the volume requirements can be staggeringly high. Every little bit matters to horseplayers, make the process of applying rebates more automated so that horseplayers feel incentivized to play the races.

CAW players do not have the ability to cancel their wagers at any point in time for any reason. Once their wagers are in there’s no going back. These systems are also not automatic. Post times across race tracks drift so much that someone literally has to watch the track feed and start sending batches in as the horses are loading into the gate. NYRA is also restricting CAW play a minute before post time in all pools as of this year.³ The 2 minute restriction on the win pool is still in place.

This is only for the high volume players that wager through platforms such as Elite and Velocity. There are many other computer players that still bet a decent volume but just aren’t part of one of these CAW platforms. There is no way to determine how much handle is wagered by computer players going through an ADW at this point.

Point of No Return

We’ve reached a state in the horse racing industry where going back to a time before CAW players existed is impossible. The amount of handle put through the tote at race tracks across the country by CAWs won’t be easily replaced. This will have a direct impact on purses and the ability for race tracks to continue operating. As an industry I think the conversation needs to move from restricting CAWS and towards more solutions for retail horseplayers.

Take Kalshi as an example, a prediction marketplace platform with a full and complete API (Application Programming Interface)⁴ available to all users on the platform.⁵ Kalshi has markets for most major sports, but isn’t specifically limited to just sports. Every ADW should provide a full complete API for all horseplayers. Retail players should also have a programmatic feed of the tote board free of charge. Give all players access to the same tools so that they have at least have a chance to compete using computer technology. For those unfamiliar with the term, API is the software that bridges software written by a player with the software written to accept wagers. It is a communication layer between two software products and for some reason the horse racing industry has decided that this needs to be gatekept.

Horse racing has lost players year after year to sports that have more accessible data products and programmatic interfaces for wagering. This industry is literally letting people walk away all because they can’t modernize their technology in a way that levels the playing field.

Why Make Horseplayers Pay For Data?

In addition to providing all players the same access, the industry needs to find a way to fund the data platforms better. The racing data available is consistently riddled with errors and is prohibitively expensive for small retail players to access. Why do we want horseplayers spending their money on the data instead of taking those funds and putting them right through the windows? The entire point of these platforms is to wager on races. If it takes me $20,000 to $30,000 just to get off the ground how much am I really left with to wgaer? This completely prices out the small retail players that are just trying to get started.

The horse racing industry has been incredibly good at creating companies that are subsidaries of other companies all in the name of eeking out more revenue from horseplayers and even owners and trainers. There is no incentive to innovate on any of this because there is no competition. You can only get your data from one company, Equibase. The Jockey Club’s direct ownership of Equibase makes this even more of a conflict of interest.

Every single company that provides past performances to customers has to license that data from Equibase. If you happen to use DRF and Brisnet to look at the races, you are essentially paying twice for that data. These companies do add their own value on top of the past performances in the form of speed figures or layout variation, but the issue is that part of that cost is still duplicated because the underlying data needs to be licensed.

The core horse racing data provided by Equibase should be free for all players and should be distributed in a format that is readable by computers. The money spent on data should instead be available to wager through the windows.

Where Do We Go From Here?

At this stage in the industry it should be less about retail versus CAW and more about how do we expand the capabilities to the retail horseplayer? Provide a level playing field and ensure that regardless of your wagering handle you have access to all the same data and tools. Take the money that players are pumping into data products and turn that into handle.

Computer technology is not going away. AI is here to stay and will continue to evolve as time moves on. You do not need to be a software expert to write code anymore. Horseplayers have a tremendously valuable piece of technology at their fingertips, but because of the horse racing industry and its ancient practices there’s no easy way to advance skills.

The industry needs our loudest advocates to push for these changes. We need to start constructively thinking about the solutions that can enable retail horseplayers to level up their game. We need to shine a bright spotlight on all the circular relationships and subsidiaries that are all spawned from The Jockey Club and force change that will better the experience for everyone.

It is worth noting that the CEO of NYRA has publicly stated they are working on providing an odds feed freely available, but this has not been released yet.³ While this appears to be a good faith effort to improve the retail horseplayer experience, it would honestly just be easier to make all the same underlying technology used by high volume teams available to everyone. Just make everything available to all players, plain and simple.

Next Up

The next post in this series will dive deeper into computer modeling specifically. What goes into building a handicapping model and how effective are they really at winning? I touched on one major pain point with modeling, access to the tote board, but I’ll get into more specifics on why access to that information is important when building a racing model.