Blog By: Lauren K. Repa

They say the house always wins, but alternative intelligence (AI) might be the worthy contender that usurps their throne. Previously left to a game of chance, players can now use simulated human intelligence to craft the perfect bet to fit a person’s individual needs and betting habits.[i] In other words, AI is being used in the sports betting industry to turn a typical spectator into a strategic handicapper who can go up against some of the most powerful betters in the world.[ii] AI has shaken the sports betting industry, but more specifically, it has shaken how betting is undertaken in Kentucky horse racing after the passage of House Bill 551.

Betting on horse races in Kentucky started in 1875 at the Kentucky Derby.[iii] Up until September 2023, horse racing was the only legal form of sports betting in Kentucky and was carefully monitored by the Kentucky Horse Racing Commission.[iv] With the passing of House Bill 551, all forms of sports betting are now legal in the state.[v] Currently, 38 states have legalized sports betting in some format.[vi] For example, some states only allow sports betting through online portals or in-person retail locations, but not both.[vii] Experts expect the legalization of sports betting will generate about $23 million in additional tax revenue for Kentucky.[viii] The bill’s passing will allow Kentuckians to participate in sports betting online, allowing people to gamble at all hours of the day from anywhere in the world.[ix] AI technology only makes betting easier and, in some people’s minds, helps mitigate extra risks they might not have taken otherwise.[x]

However, the legalization of sports betting could turn Kentuckians away from horse racing and toward other forms of online betting.[xi] This is due in part to a cultural shift in people preferring to bet on sports or play online casino games.[xii] Horse racing also requires careful and complex calculations that the average person may not want to take the time to learn.[xiii] This is where AI technology can be a useful tool to keep horse racing alive and well despite the new competition.

Scotty “Pick Six” McKeever is one of the most famous horse racing betters.[xiv] He earned his nickname “Pick Six” for the type of bets where you “pick a track’s winner in six consecutive races.”[xv] McKeever earned this nickname through usage of his artificial intelligence app, EquinEdge.[xvi] EquinEdge automatically analyzes horse performance, data, track conditions, and more.[xvii] What used to include hours of research and thorough calculations can now be done in a matter of seconds.[xviii] According to EquinEdge’s website, the algorithm can predict where a horse might be at the first quarter mile with 72.5% accuracy.[xix] Moreover, in 2024, horses identified by EquinEdge with the highest win percentage have won 32.9% of the time, and one of their top two-win percentage horses has won 52.7% of the time.[xx] Programs such as EquinEdge level the playing field between weekend spectators and professional gamblers.

However, there is another side to horse betting and AI that has traditionally been reserved for more “elite” members of society. CAWs, or Computer-Assisted Wagers, is another form of AI used by a group called the Elite Turf Club.[xxi] The Elite Turf Club uses CAW software to make very large bets, but information about the identity of these members or how the specific CAW software works is largely unknown.[xxii] Two accounts alone, Elite Turf Club 17 and Elite Turf Club 2, account for almost 20% of all horse betting in the U.S.[xxiii] In 2021, about $1.13 billion was spent on sports betting, meaning about $226 million came from Elite Turf Club members.[xxiv]

AI apps such as EquinEdge allow mere spectators to hold a piece of the power that was initially reserved for the elite members of society.[xxv] The AI technology can analyze a player’s behavior and preferences and give recommendations that fit a player’s style.[xxvi] Many people, such as McKeever, view AI technology as a powerful tool that can finally level what has been an uneven playing field.[xxvii] Many of the high-betting gamblers have gone unchallenged for decades, with most racing tracks fearing that these betters will start to place their bets elsewhere if they begin to lose money.[xxviii]

Overall, AI software, such as EquinEdge, allows amateur gamblers to place strategic bets, which would likely not have been possible for these amateurs otherwise.[xxix] AI takes a component of sports that was once reserved for the elite and mathematically gifted, and opens it up for the rest of the world. However, the benefits legalized sports betting has on the Kentucky economy cannot be understated. After 150 years of horse racing tradition and the Elite Turf Club dominating the betting pools, it’s time to make way for a new generation of betters thanks to the advent of AI.

[i] What is (AI) Artificial Intelligence?, University of Illinois Chicago: Online Master of Engineering (May 7, 2024), https://meng.uic.edu/news-stories/ai-artificial-intelligence-what-is-the-definition-of-ai-and-how-does-ai-work/#:~:text=Artificial%20Intelligence%20(AI)%20works%20by,%2C%20perception%2C%20and%20language%20understanding [https://perma.cc/AEW5-RXG5].

[ii] Neil Sahota, The Game Changer: How AI Is Transforming The World of Sports Cambling, Forbes (Feb. 11, 2024 10:00 AM), https://www.forbes.com/sites/neilsahota/2024/02/11/the-game-changer-how-ai-is-transforming-the-world-of-sports-gambling/ [https://perma.cc/9XFN-ZMB5].

[iii] J. Keeler Johnson, How Kentucky Derby betting traditions have changed over time since 1875, Kentucky Derby (Apr. 1, 2024), https://www.kentuckyderby.com/horses/news/how-kentucky-derby-betting-traditions-have-changed-over-time-since-1875/ [https://perma.cc/EGP8-9ZAA].

[iv] KY Horse Racing Comm’n, Public Protection Cabinet: Kentucky Horse Racing Commission- Sports Wagering Frequently Asked Questions, Team KY (July 24, 2023), https://khrc.ky.gov/Documents/FAQGENERALSportsWageringFINAL.pdf [https://perma.cc/GWN5-NE4D]; John Clay, How has the first year of legal sports gambling in Kentucky gone? It’s a winning bet, Lexington Herald Leader (Oct. 22, 2024 9:02 AM), https://www.kentucky.com/sports/article293336159.html.

[v] Id.

[vi] Matthew Waters, Legislative Tracker: Sports Betting, LSR (Oct 9, 2024), https://www.legalsportsreport.com/sportsbetting-bill-tracker/#:~:text=Currently%2C%2038%20states%20%28plus%20Washington%2C%20DC%2C%20and%20Puerto,down%20PASPA%2C%20the%20federal%20ban%20on%20sports%20betting [https://perma.cc/ZT23-CGLB].

[vii] Id.

[viii] KY, supra note iv.

[ix] Brian Pempus, Kentucky (KY) Sportsbooks: Best Sports Betting Sites & Apps - September 2024, Forbes: Betting (Sept, 1 2024 10:00 AM), https://www.forbes.com/betting/legal/kentucky-sports-betting-sites/#:~:text=Under%20state%20law%2C%20people%20age,opted%20for%20consistency%20between%20markets [https://perma.cc/Q4AT-HEBP].

[x] Sahota, supra note ii.

[xi] See The Relatively Forgotten Sport of Horse Racing and How We Can Bring it Back to The Mainstream, The Plaid Horse (Mar. 31, 2023), https://www.theplaidhorse.com/2023/03/31/the-relatively-forgotten-sport-of-horse-racing-and-how-we-can-bring-it-back-to-the-mainstream/#:~:text=Factors%20Contributing%20to%20the%20Decline,a%20shift%20in%20cultural%20values [https://perma.cc/ZKR4-8UGM].

[xii] Id.

[xiii] See Oliver Roeder, I used AI to bet on horse-racing. Here’s what happened, Financial Times (Mar. 30, 2024), https://www.ft.com/content/402955aa-21fa-42d5-b1d7-f79e7f19a617 [https://perma.cc/K6SK-UH57].

[xiv]Id.

[xv] Id.

[xvi] Id.

[xvii] EquinEdge, (last visited Oct. 26 2024 ) https://equinedge.com/ [https://perma.cc/RJW5-H4FS].

[xviii] Id.

[xix] Id.

[xx] Id.

[xxi] Id.

[xxii] Roeder, supra note xiii.

[xxiii] Id.

[xxiv] Id.

[xxv] Id.