Software, meet horse racing: Derby Jackpot brings off-track betting to the Kentucky Derby

By Erin Griffith , written on May 4, 2013

From The News Desk

Online gambling is illegal in the US, but by some arcane law held over from the days of telephone betting, horse racing is exempt.

Brothers Tom and Walter Hessert found this out through their brother, who is involved in the horse racing community. In January they launched Derby Jackpot, a social media-injected online horse race betting site. Now, just in time for Saturday's Kentucky Derby, a fully functional mobile site is available. That's right, you can bet on the Superbowl of horse racing from whatever bar party you're watching it from. In 2013, something like this shouldn't be such a novelty, but such are our gambling laws. Online gambling is being made legal on a state-by-state basis (which is to say, slowly); it is now currently only available in the state people travel to gamble to already: Nevada.

Until that spreads more widely, there is betting on 50,000 races a year via Derby Jackpot's HTML5 site. Apple doesn't allow real money gambling in its App Store in the US. Android does; that will be the company's next project.

Derby Jackpot is one of the first companies to infiltrate the old timey world of horse racing with modern, consumer-friendly software since Churchill Downs launched That site provides a slightly wonky-looking site best suited for advanced betters; it did $860 million last year. The racing world has never done a great job of courting new, young racing enthusiasts but acknowledges the need to do that as its loyal fan base ages.

If Twinspires is poker or blackjack, Derby Jackpot is slots. If Twinspires is enterprise-level, Derby Jackpot's is consumer-facing. The Hesserts say their product compliments the existing industry, because their users are casual gamblers. Once a user expresses deeper interest in the intricacies of advanced horse betting, Derby Jackpot would be happy to refer them over to a more advanced site, CEO and co-founder Tom Hessert says. Currently Derby Jackpot has a partnership with a site called XpressBet to do just that.

horse_betIt wasn't simple for Derby Jackpot to inject new software into an old industry. The Hesserts spent a year and a half knocking on the doors of 150 different race tracks to get approval for integration with their systems. Since this kind of betting requires all money to enter the same pool, many racetrack operators are unfriendly to outside money coming in; that means they need to split their commission. "They don't generally let outsiders in," CPO and co-founder Walter Hessert says.

So perhaps more important than the idea of bringing fun, user-friendly software to the racing industry, the Hesserts needed to bring their relationships. Through their brother's connections, they won over the ladies and gentlemen of the racing world, securing partnerships that split a typical 17 percent cut of the winnings of each race.

Derby Jackpot now has 10,000 users with the average user making five deposits of new money into their betting pot within the first month. Most attractive to the racing industry is the fact that half of Derby Jackpot's users have never been to a horse race before. They're drawn in by the silly cartoons (and, I will admit, amusing horse sound effects), the simple user interface. They stay for the money. A typical horse will race once a month; Derby Jackpot uses irresistible nudges like emails telling a user the horse that won them money last time is about to race again. The social sharing and internal messaging to make the site feel more alive than gambling by oneself. Which makes Derby Jackpot a real rarity -- it's a social media site that actually makes money.