Racing Is Struggling, but Isn't Ready to Be Put Out to Pasture

By John Scheinman
Special to The Washington Post
Monday, April 28, 2008

Life is pretty good for the president of Churchill Downs Inc., less than a week away from the 134th running of the Kentucky Derby, but when Robert Evans goes to work in the morning he sees a sport in turmoil.

In almost every aspect of horse racing, there are signs of stagnation, conflict and, often, decline.

Putting it as succinctly as possible, Evans, 55, who has been in charge at Churchill the past two years, summed up racing's problems like this: "Eventually, people get tired of losing money."

As purse money offered in the sport reached record levels last year, with $1.18 billion given away in the 51,304 races run in the country, according to statistics compiled by The Jockey Club, the amount wagered on racing dipped slightly for the third time in the past four years following 10 straight years of uninterrupted growth that peaked at $15.18 billion in 2003.

Churchill Downs and its associate tracks -- Arlington Park, Calder Race Course and the Fair Grounds -- turned a $17 million profit last year, but other key industry players did not.

Magna Entertainment, which owns and operates Laurel Park and Pimlico, as well as Gulfstream Park, Santa Anita Park and a host of smaller tracks, lost $113.8 million. The New York Racing Association, which operates Belmont Park, Aqueduct and Saratoga, continues to work to emerge from bankruptcy and lost $34.3 million. Advance-deposit wagering company Youbet.com lost $27.4 million. Mountaineer Casino Racetrack & Resort in West Virginia lost $11.4 million.

Several tracks seeking to augment income by adding slot machines or casino games to better withstand the pressures of a rapidly evolving gambling marketplace found themselves stymied at the legislative level: A bill that would have allowed casino gambling at Kentucky racetracks -- including Churchill Downs -- was withdrawn in March. In 2006, a statewide referendum to legalize slot machines at Ohio racetracks, similar to the one going before Maryland voters in November, was defeated. Magna last week lost a bid to install Instant Racing machines, a modified version of video lottery, at its Portland Meadows track in Oregon.

Magna lists the Portland track, as well as Thistledown in Cleveland, for sale.

In the meantime, the Thoroughbred Horsemen's Group, a new organization representing horsemen in multiple racing jurisdictions, is locked in a contract dispute with advance-deposit wagering companies, including a jointly operated subsidiary of Churchill Downs and Magna, over licensing fees for simulcast race signals.

Churchill last week filed suit against the THG, but has not been able to provide race signals from its home track and Calder to advance-deposit wagering outlets since their meets began this past weekend. TwinSpires.com, Churchill's online betting site, yesterday did not even offer customers the ability to wager on races at Churchill Downs.

As if all that wasn't enough, the Jockey Club reports that thoroughbred racehorses in this country appear more brittle than ever. The average number of starts per horse fell to an all-time low of 6.31 in 2007.

Asked if the sport is dying, Evans said: "Dying suggests there is a point in time where there is nothing left, at least in the physical world. I don't think it's dying, but on a path to significant consolidation in the industry. I think we probably have a future with fewer races and maybe even fewer tracks. Clearly, we're on a path to fewer races.

"There is roughly $14.7 billion wagered over 50,000 races in the U.S., and the math just doesn't work," he said. "There isn't enough handle per race to make the economics work for owners, trainers and track operators."

Alan Marzelli, president of The Jockey Club, the breed registry for thoroughbred horses, points to other problems, listing the lack of strong, uniform medication policies across states; wagering integrity; and pricing problems like those causing the Churchill Downs-THG rift as priorities racing needs to focus on.

"The real underlying problem we face as a sport in addressing any issue is we don't have a national structure," Marzelli said. "We have a structure that consists of 38 different jurisdictions. If you want to do something as simple as banning steroids on race day -- which The Jockey Club believes should happen -- you need to do it 38 times over. In another sport, with a commission with a backbone, it could get done what takes us years."

In 1998, industry stakeholders launched the National Thoroughbred Racing Association in an attempt to create a leadership authority for racing, but many large racetracks balked at ceding any meaningful power. Today, the NTRA is largely a marketing and lobbying arm for the sport.

Steven Crist, publisher of the Daily Racing Form, said that while racing continually sabotages itself, he believes the overall health of the sport may not be as bad as it looks.

"The people that run racing manage to screw up just about everything, and they're doing the best they can now with account wagering and artificial surfaces and everything else," Crist said. "But with just a few blips, we've seemed to settle at this national handle mark of $15 billion. It's a great game to play. Horseplayers are a resilient bunch, and they like their game."


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