Photographer: Luke Sharrett/Bloomberg

Z Capital Eyes Future of Sports Wagers With Horse-Racing Deal

  • Jim Zenni sees company as ‘first mover’ in online gaming
  • Momentum building in U.S. for legalization of sports bets

Z Capital Partners agreed to buy horse-racing media company Daily Racing Form in a bet on the future of online sports wagers.

The private equity arm of Z Capital Group is acquiring the business from lenders after a restructuring process, according to Jim Zenni, the alternative-asset manager’s founder.

A daily publication for the horse-racing industry for more than a century, Daily Racing Form has grown to include a digital data offering and a place for horse aficionados to place online bets on races. It sells about 5 million copies of its publication annually and drew 72 million bets on its platform in 2016, up 15 percent from the year prior, Zenni said in a telephone interview.

Z Capital, which has offices in New York and Chicago, is buying Daily Racing Form’s parent company, Sports Information Group LLC, for less than $100 million, according to a person familiar with the matter, who asked not to be named because financial terms were private. Arlington Capital Partners formed Sports Information Group and acquired Daily Racing Form for a reported $200 million in 2007.

Zenni said Z Capital can improve the publication’s digital footprint and better engage consumers, while using the online betting platform to possibly expand into other sports if such wagers are legalized. Betting on horse racing is considered different from gambling on sports like football and basketball, and is legal in more places.

“We can make the digital offering better and the business will grow, and we’re in the great position where if that online market opened we could take advantage of it,” Zenni said. “This company has potential to be one of the first movers in online gaming for all sports.”

Legalization Momentum

Momentum is building in the U.S. for more widespread legalization of sports betting. Commissioners of the major leagues, some of the staunchest opponents, are starting to soften, congressmen are discussing new options, and later this year the U.S. Supreme Court will hear New Jersey’s case for allowing gambling at its casinos and race tracks.

Zenni said that in the meantime there’s a growth opportunity within horse racing. Race betting was a $10.7 billion industry in 2017, according to the Jockey Club, almost all of which happens away from the track. That’s more than double the $4.4 billion that sports books took in last year in Nevada, the only state where sports wagering is fully legalized.

Daily Racing Form’s gambling product is operated by Xpressbet LLC, one of the three major players in online horse-racing gambling.

Sports Information Group also operates two other divisions, a fantasy sports website called Head2Head Sports and a sports handicapping site called StatFox.

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