Betting totals continue to decline in thoroughbred racing


Dialed In (7), with Julien Leparoux aboard, captured the Florida Derby this month and will be among the favorites at the Kentucky Derby on May 7. Horse racing betting totals have plummeted in recent years with no end in sight. (Anonymous/AP)
Andrew Beyer
Columnist April 22, 2011

Anyone who cares about thoroughbred racing — from leaders of the industry to fans in the grandstand — has to be worried about the health of the sport. Since 2007, when $14.7 billion was wagered on U.S. races, betting totals have dropped year after year, falling to $11.4 billion in 2010. In the first quarter of this year — even as other segments of the overall economy were beginning to recover — the sharp decline continued.

Faced with these grim facts, the Jockey Club commissioned the prestigious consulting firm McKinsey & Co. to “examine the current course of the sport” and make recommendations for change. McKinsey has been interviewing people from all segments of the sport, and the researchers’ preliminary findings are distressing. “In their modeling,” said Jim Gagliano, president of the Jockey Club, “the industry will continue to contract at the same pace.” This means that betting totals will keep dropping unless the horse business changes course. But how?

Andrew Beyer has been The Washington Post’s horse racing columnist since 1978 and is considered one of the leading experts on the subject. View Archive

McKinsey has been hearing a wide range of ideas from its interviewees: The sport needs stronger central leadership. The sport needs to promote itself better. The sport needs to attract new and younger fans. The sport needs more TV coverage. Many people who love the game still dream of reviving the era when fans packed the grandstands of American tracks to cheer for their thoroughbred heroes.

It’s time for the industry to get realistic about its product. Aside from a few special places and events (Saratoga, Del Mar, Keeneland, the Triple Crown, the Breeders’ Cup and some tracks’ marquee stakes races) horse racing can no longer attract large live crowds. It is unlikely to be a mainstream sport again. But the game still has one significant strength.

In a country that loves to gamble, the racing industry allows customers to play a great gambling game with unmatched convenience. Fans can watch races on two television networks, on their computers and even on their telephones (through the marvelous app of twinspires.com.) They can legally bet from phones or computers. The most serious, committed horseplayers — including syndicates with sophisticated, computerized operations — bet enough to keep the industry semi-healthy despite its dwindling on-track business and fading popularity with the general public.

But now these core customers are betting less. Why? My evidence may be anecdotal, but I talk to a lot of gamblers, and I hear the same refrain from all of them. The complaints are not the familiar ones about high takeout or illegal drugs. Serious gamblers say can’t find enough tracks offering enough races that are worth betting.

Gamblers demand fields large and competitive enough to present the possibility of big payoffs. A 12-horse field, regardless of the quality of the horses, is usually a good betting vehicle. Five- and six-horse fields usually are not.

The U.S. thoroughbred population has been declining since 2008, when general economic conditions dissuaded many owners and breeders from bringing more horses into the world. Because of the horse shortage, tracks from coast to coast struggle to put on decent cards. On April 3, Aqueduct ran a nine-race program with no field larger than six horses. Golden Gate Fields last month carded 20 consecutive races with fields of seven or fewer entrants. As bettors steer away from weak products, a vicious cycle ensues. A track’s betting pools shrink, and the smaller pools in turn make the races even less attractive to big players. So they bet even less. One of the highest of this country’s high-rollers told me his wagering is down by 90 percent from his heyday.

But in the rare situations when a track does offer a consistently attractive betting product, nobody would guess that the U.S. racing economy is ailing. Gulfstream Park and Tampa Bay Downs, both benefitting from the annual influx of northern stables into Florida, have had sensational meetings this winter. Wagering at Gulfstream is up $40 million from the comparable period last winter. Tampa handled nearly $11 million in bets on a single day — the best in its history. Last summer Monmouth Park revamped its racing calendar, distilled its traditional season into a 50-day “elite meeting” with high purses, offered a menu of big, competitive fields and smashed all of its own betting records.

The Monmouth example ought to show the McKinsey/Jockey Club study a formula for solving many of the industry’s ills: Run fewer races with large purses to attract large fields that the public wants to bet. Tracks should shorten their season and pare their schedules to four or three days per week if necessary. The weakest tracks should discontinue live racing.

Finding this answer is easy. Implementing it may be impossible.

Whenever tracks try to cut back their schedules, they face stiff opposition from horsemen’s organizations, who typically fight for as many racing dates as possible and have no objections to the small fields that the public dislikes. Moreover, tracks with slot-machine revenue to subsidize a weak racing product have no economic spur to reduce their racing dates.

Somehow the sport has to find a way to improve its betting product, because a time bomb is ticking. The U.S. is struggling this year with a horse shortage because only about 32,000 foals were born in 2008 — the current crop of 3-year-olds. In 2011, the Jockey Club estimates the size of the foal crop at 24,900, so there will be no escape from the horse-population crisis in the next several years. It seems almost inevitable that fields will get smaller and horseplayers will wager even less. In its search for solutions to racing’s ills, McKinsey & Co. has a daunting task ahead.

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