Updated on 11/08/2012 6:41PM

Churchill's Luckity.com: Horse racing meets bingo


If you’ve ever wanted to wager on a horse race without knowing you’re betting on a horse race, Churchill Downs Inc. has a new suite of games for you.

On Nov. 2, the company officially launched a website, Luckity.com, that offers players the ability to make bets on games that are modeled after slot machines and lottery scratch-off tickets. But despite those appearances, bets made on the games are commingled into the wagering pools for horse races offered through Churchill’s account-wagering site, twinspires.com, with all payoffs based on the race results.

The website is one of several attempts by Churchill to establish itself as the dominant player in the Internet gambling marketplace. Though some states have authorized the online sale of lottery tickets, online gambling is prohibited in the U.S. by a federal act with one exception: horse racing. Luckity provides games that appeal to bettors who enjoy gambling on the lottery, bingo, and slot machines even while staying well within the law by sending those bets into the parimutuel system.

“There’s nothing like Luckity in the legal, online gaming marketplace right now,” said Churchill’s chief executive, Bob Evans, on a recent conference call.

The games run the gamut, from offering players the chance to make a bet on a single number or a combination of numbers. Each game is linked invisibly to one or more of the parimutuel pools being offered on races being run. If that sounds like Instant Racing, the slot-machine-like devices installed at several racetracks in the U.S., it’s not. Instant Racing relies on already-run races to generate random numbers to determine payouts. The Luckity games use live races to determine the payouts.

While the games strive to offer players a simple interface for making their wagers, the mechanics can get complicated. For example, Luckity offers a game called “Lucky Silks,” which costs the player $4. The player is instructed to select two numbers and a third “magic number.” If the first two numbers match the “first two winning numbers,” the player wins “the top prize.” If the player’s “magic number” matches any of the three numbers in the result, the player wins what the game’s instructions call “a consolation prize.”

Here’s the parimutuel deconstruction of that bet: Two dollars of the bettor’s $4 play is being used to box the first two numbers in a $1 exacta. The remaining $2 is being used to place a show bet on the “magic number.” So if those first two numbers hit, the player gets a payoff equal to the $1 payoff for the exacta. If the player’s “magic number” is one of the horses who finishes in the top three, the player gets the show payoff. It all happens without the player necessarily knowing that the distributions are based on parimutuel payoffs.

Luckity.com offers another 24 games, all of which will take the player’s money and deposit it in the parimutuel pools of a race that is unidentified (though you can find out by clicking on a tab called Game Details). Bubble Pop requires players to “pop three bubbles to choose your 3 lucky numbers, or use Quick Pick to select 3 numbers.” Translation: A $1 straight trifecta bet. A 50-cent play on the “Pick 6 Pot o’ Gold” actually buys the player a straight pick six bet and will require the bettor to wait 2 1/2 hours before the player knows if the wager hits.

Churchill began marketing the site to existing customers of twinspires.com and other individuals in the company’s marketing databases several weeks before the official launch. Company officials would not provide the site’s wagering.

Bill Carstanjen, Churchill’s chief operating officer, said on the conference call that the company plans to begin aggressively marketing the site in the next several months. The company incurred $1 million in expenses to roll out the site and begin development of an unrelated exchange-wagering site, the company said in a statement.

There appear to be several limitations on how popular the games could be. For one, because the games are tied to live races, players have to wait for a race or series of races to be run to find out if they’ve won, rather than continuing to pull a handle or scratch a ticket to receive instant gratification. On a Saturday afternoon, twinspires.com might be offering as many as 20 races an hour, but on a Monday morning in the winter, the offerings are extremely limited.

Also, the price of the games is the average 20 percent takeout of the parimutuel pools. Slot machines typically distribute anywhere from 92 percent to 97 percent of the money bet into them, depending on the competition within the local market, and they rely on that high rate of return to consistently reward players with small payouts to keep them in their seats. The Luckity games aren’t able to recreate that experience.

At first glance, horseplayers might think they have little reason to root for the success of games that entirely discard the intricacies of gambling on horse racing, from the analysis of past-performance data and race dynamics to the careful crafting of the proper bets. But the development of the site is actually good for astute bettors. Because Luckity customers make their selections without any consideration of the horses’ chances in the races, gambling on the site’s games will probably contribute to the creation of overlays and underlays on specific horses or exotic combinations.

That’s good news for bettors who specialize in identifying those opportunities, and especially good news for the computerized robotic wagering programs that scour pools for just such inefficiencies. Even though the games will not appeal to race bettors, race bettors have every reason to root for others to play them.

CORRECTION: An earlier version of this article included a misleading reference to cash payouts that appears on Luckity.com and was in turn used to make a mistaken estimate for Luckity handle over a seven-day period. Although Luckity.com reports "total prizes last week: $3,265,952," a Churchill official said that was a theoretical figure for payoffs based on all the games offered and was not a true figure for the amount of money players had won. Churchill declined to give the site's wagering, but the wagering was not $4.2 million.