HANDLE…IT’S WORSE THAN YOU THINK
We can blame the economy, and people like National Thoroughbred Racing Association CEO Alex Waldrop will almost certainly do so, when the dismal year-end figures show that pari-mutuel handle in the United States is at its lowest level since 1998. But pointing to the dismal economy as the sole reason for the Thoroughbred racing industry’s woes will be a fatal mistake.
Based on monthly pari-mutuel handle figures from Equibase through November (and the expectation of a very slow December), the Paulick Report projects year-end handle in the U.S. will total just under $13.7 billion for 2008. This will be the fourth year of decline in handle over the last five years and the lowest since $13.1 billion was wagered in 1998.
Adjusted for inflation, the 1998 handle is equal to $17.4 billion in today’s dollars. The Thoroughbred pari-mutuel industry will fall more than 21% short of that figure. November’s numbers are actually worse than they appear on paper. The decline of 9.7% from November 2007 comes despite the fact there were five full weekends in the month of November this year compared with only four weekends last year. Weekend handle overall is higher than weekday handle. Handle will likely fall more than 10% this December, which only has four weekends (eight Saturday and Sunday programs) compared with five full weekends in December 2007.
The accompanying table, using statistics from the Jockey Club Online Fact Book, shows the trend in U.S. handle since 1996. If there is a sliver of good news from those figures it is the average amount of pari-mutuel handle per race, which has risen from $199,574 in 1996 to $287,014 in 2007. That number will drop this year.
| Year | US Handle | % Change | ** CPI Adjusted Handle | No. Races | Average Bet Per Race |
| *2008 | $13,694,000,000 | -7.00% | $9,921,000,000 | 51,000 | $268,527 |
| 2007 | $14,725,000,000 | -0.40% | $11,143,000,000 | 51,304 | $287,014 |
| 2006 | $14,785,000,000 | 1.50% | $11,507,000,000 | 51,668 | $286,153 |
| 2005 | $14,561,000,000 | -3.60% | $11,698,000,000 | 52,257 | $278,642 |
| 2004 | $15,099,000,000 | -0.50% | $12,541,000,000 | 53,595 | $281,724 |
| 2003 | $15,180,000,000 | 0.80% | $12,944,000,000 | 53,503 | $283,722 |
| 2002 | $15,062,000,000 | 3.20% | $13,136,000,000 | 54,304 | $277,364 |
| 2001 | $14,599,000,000 | 1.90% | $12,934,000,000 | 55,127 | $264,824 |
| 2000 | $14,321,000,000 | 4.40% | $13,048,000,000 | 55,486 | $258,101 |
| 1999 | $13,724,000,000 | 4.60% | $12,925,000,000 | 54,644 | $251,153 |
| 1998 | $13,115,000,000 | 4.60% | $12,624,000,000 | 55,894 | $234,640 |
| 1997 | $12,542,000,000 | 7.90% | $12,260,000,000 | 57,832 | $216,869 |
| 1996 | $11,627,000,000 | 11.50% | $11,627,000,000 | 58,259 | $199,574 |
*2008 year-end figures are projected
**Adjusted for inflation using 1996 dollars
The decline in handle over the last 10 years has come despite the fact we’ve made it easier for people to bet, with account or advance deposit wagering now available in many states. In addition, betting menus at nearly every track have been expanded to include more exotic wagers (rolling pick 3s, pick 4s, super high 5s, etc) and lower minimum bet sizes (i.e., the ten cent superfectas).
The worst news of all is that there are no plans on the table to reverse these trends. Industry infighting is at an all-time high, with companies like Churchill Downs Inc. and horsemen’s organizations both entrenched in their negotiating positions on the division of revenue for account wagering. We have two competing racing channels, confusion over who accepts bets on which tracks, and a fan base that is increasingly fed up and finding other places to take their action. Many racetracks appear to have given up on ever building their core business and instead are latching onto slot machines for their own personal salvation. With Magna Entertainment as the poster child, corporate ownership of tracks has been a failure for the racing industry, whose few bright spots can be found in locally- or family-owned tracks like Tampa Bay Downs in Florida or Oaklawn Park in Arkansas.
The National Thoroughbred Racing Association, launched just over 10 years ago with great fanfare and anticipation, has been dismantled almost to the point of irrelevance. We have no national marketing, no cohesive strategy to grow the business and no central organization to develop one. Structure matters, and this industry has no structure in place to bring about meaningful change. Some of the so-called best and brightest among our leaders are saying our only chance of survival is to go through a massive retraction in the number of racetracks, racing dates and horses bred each year. But a "less is more" philosophy sounds more like an admission of defeat.
The upside down economics of maintaining a racing stable (average costs exceed purse potential by an factor of 2-to-1) are driving many people out of the business, especially those who have less discretionary money than they had just a few years ago. The image of the sport - one whose grandstands echo from emptiness and whose equine athletes often are cruelly discarded at the end of their useful careers - is not appealing to a growing percentage of the American people. We need a game-changing play, new leadership that will get us out of the old way of thinking, fresh ideas and a bold vision for structural change that can reverse the direction the industry is heading. Without that, we may be on borrowed time. Does there have to be a Thoroughbred racing industry in the United States, even in a place like Kentucky that calls itself the horse capital of the world? I’ll answer that question by asking another one: Does there have to be an American automobile industry?
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Tags: Account Wagering, alex waldrop, CDI, churchill downs, Horse Racing, horse racing economics, Jockey Club, National Thoroughbred Racing Association, NTRA, pari-mutuel betting, pari-mutuel handle, pari-mutuel wagering, Paulick Report, racinos, Ray Paulick, Slot machines, Thoroughbred Horsemen's Group
December 8th, 2008 at 10:36 am
Whoa!…pretty scathing piece Mr. Ray, but certainly with more than a few credible points. Is anyone reading here that can effectively institute change and a new vision? I hope so.
There is just so much wrong with the current industry….from drugs, to betting/purse revenue infighting, use and abuse of all the atheletes involved….how can it be fixed? Seriously. What is the solution? I’m listening but not attending races any longer or betting. I follow on the internet because I don’t want to watch daily trainwrecks real time. Please, is there anyone out there with the smarts and love of the game that can fix it? Because we sure ain’t gonna get it from NTRA, HBPAs, Congress and track owners collectively.
And I disagree re: too many race dates….bring a better, higher quality product with some exclusiveness. I think limiting race dates and $2500 claimers is a start. But you know more than I and I respect your opinion.
December 8th, 2008 at 11:04 am
We also have to take in the fact that handle declines can also be attributed to the infusion of synthetic tracks in North America. As I have read in many articles and seen first hand at the racetrack, the large bettors in the pari-mutuel industry can no longer rely on the cold 7/5 - 5/2 exactas. Even when horses leave a track like Keen they move their tact to Churchill and many have to hope that horses can carry their form from synthetics back to dirt. Synthetic tracks have been great for the $1 dollar bettor like myself but an absolute nightmare for larger bettors.
December 8th, 2008 at 11:44 am
WHO WANTS TO WAGER ON INCONSISTENT SYNTHETIC TRACKS…….
BRING BACK DIRT……………………………
December 8th, 2008 at 12:03 pm
Yes Ray - a great scathing piece as Denise commented. I’m always impressed by your outlook.
As I have mentioned before, I am a major fan of horse racing but not near any track. It is the horses and their human companions that keep me interested. I can gamble anywhere.
The industry must reawaken the love of the sport itself. Cooperation with the media might be a good place to start. The human interest story of Pepper’s Pride has wonderful possibilities.
It is all about the horses and if you take away the “Wall Street” mentality I think things would improve. I simplify, of course, but it might be the cure.
December 8th, 2008 at 12:21 pm
Humility is the Acknowledgment of the TRUTH.
Thank you Ray for shining the light of truth.
The good news is “Necessity is the Mother of Invention.” In the throughbred industry’s case it gets to be the mother of Re-Invention.
The creative minds and spirits that exist in this industry get to come out of hiding and lead us down a new path that addresses all of these issues.
December 8th, 2008 at 12:24 pm
Ray,
Thanks for crunching that and bringing it to light. We often hear things from the business that gloss over some of the wagering problems we have. They are systemic and have been happening for a long while and started well before this bad economy. We need more people to discuss it so perhaps we can get out of the malaise we are in by really going after the gambling consumer.
Nice piece.
December 8th, 2008 at 12:36 pm
I have seen the Magna incompetence in northeast Ohio with the decline of live racing at Thistledown; from nine months a few years ago to a scheduled 91 days in 2008. And the horseplayers are taking their money and moving to nearby Northfield Park harness, which has aggressively begun courting handicappers in a new TV ad. I would not have said this even six months ago, but I just don’t see Thistledown remaining a viable business as it is constituted past Fall 2009.
Also, so many of the tracks which tout casinos as its main function are beholden to the simulcast bettor, since the on-track handle is mostly south of dismal.
We are in an era where Thoroughbred racing is on the verge of collapse…….and it appears as if the so-called “leaders” are already in fox holes, only slated to appear to pick up the few pieces left from the huge implosion.
December 8th, 2008 at 12:41 pm
“Horseracing Is a Poor Gamble”.
That’s the consensus from the Horseracing guy’s at the Poker Table.
10% takeout,big fields and quality racing would get us back to betting racing again.
Other than that i’ll keep betting the Breeders Cup and the Derby and that’s It.
Good luck to the people In charge.
December 8th, 2008 at 12:45 pm
As a turf and distance maniac, I don’t think dirt versus synthetic is the issue here, save for it’s disjointed implementation and the the problems with racing 2 year olds, too many sprints to add more races to a daily card and no truly enforcefable national standards.
And the solution is??????
December 8th, 2008 at 12:51 pm
Ray - Why don’t you create a competition among your readers to award the best plan to RE-INVENT all three aspects of the industry - racing, breeding and selling? It will take all three for the industry to have integrity and you are the only voice of freedom in this industry. The gaining popularity of your website and the true passion of your readers has to be the best environment in the industry right now to cultivate such ideas. There is no controlling “Big Brother” with the Paulick Report. I imagine your sponsors would love to participate in this idea and I imagine the winners would love nothing more than to earn a plaque for their office wall. Who knows, maybe ESPN would want to champion this effort? They seem to have the biggest stake in sharing the bruised reputation of the thoroughbred industry. The have a show called “Outside The Lines” that could have a ball with this.
December 8th, 2008 at 12:54 pm
Thanks again Ray for a great piece. As for new leadership, how about yourself? You seem to be the only one focusing on the broad problems and exposing the flaws in our current leadership, if you can call it leadership. You seem to be knowledgeable and passionate - a perfect candidate. You can use your forum here to educate the rest of us on your ideas.
As for your readers’ comments above, there are the usual two opposing view points; those who care about the horse and those who care about their old ways of handicapping. Who should we put first? You say our industry is doomed if public opinion continues turn away from horseracing due to breakdowns, but it is also doomed if bettors turn away from synthetic tracks, as Brandon and Jerry above complain. Horse first or bettor first?
December 8th, 2008 at 1:23 pm
To Priscilla Peabody:
“You say our industry is doomed if public opinion continues turn away from horseracing due to breakdowns, but it is also doomed if bettors turn away from synthetic tracks, as Brandon and Jerry above complain.”
Disagree. It is not that simple of a choice. People participated in horse racing before, after and during significant change (wars, drugs, monopolies, betting, breeding, track surfaces and their rules). Also want to add that anyone in the horse game that needs to win because it keeps their game going, is in the wrong business. Buy a NASCAR team if you want that…we are talking about living beings that need consideration to all that encompasses that. Race because you love it, respect it and have a passion for it…not because you need to turn a buck.
December 8th, 2008 at 1:53 pm
My question addresses the more narrow dirt-synthetic issue, but does not imply that this is the major problem with handle. However, you see in the above comments that this issue always comes up when discussing problems of the industry. The move to synthetic tracks has been one of the few things the racing industry has done to improve safety, yet it gets harshly criticized for it. Bettors are unhappy. Do we say, so what, safety is more important? Personally I say yes it is far more important, but how can we make bettors happy and still have the safest possible surfaces? I’m hoping that given time, old dogs can learn new tricks of wagering on new surfaces.
I’m fairly sure that most who invest money in horses love the animals and the game, and they understand the risk. Those who don’t, don’t stay long.
December 8th, 2008 at 1:53 pm
I’m a member of the Synthetic Haters Club. Membership seems to have grown throughout the year.
Keep up the good work, Ray. I enjoy the Paulick Report.
December 8th, 2008 at 2:07 pm
Its the synthetics. Who wants to wager on completely random events?
They will kill racing if they go any further.
December 8th, 2008 at 2:19 pm
“The decline in handle over the last 10 years has come despite the fact we’ve made it easier for people to bet, with account or advance deposit wagering now available in many states.”
Tell that to someone with three accounts, with wagering available by phone on some tracks through web on others, video a crapshoot, & uncertainty from one meet to the next.
Put horseplaying on sale…cut takeout. Just a smidge. 1-2%. Not this Ellis and Laurel stuff. Let’s see what happens.
December 8th, 2008 at 2:20 pm
A good, sound horse runs well on any surface. The problem with the synthetic debate in America is that in the dirt era, all tracks were the same. Americans have turned the sport into simple mathematics, with timed workouts, speed ratings, sheets and other gadgets. A big horseplayer never even needs to see the animal in question to place a bet. Drug them, time them and put a quarter in - you’ve turned the sport into a game for mechanical horses. In Europe, we run every which way and every track is different. There are no “meetings” for weeks or months at a single track, but racing rotates around the country (this goes for all of Europe - pick your country). So you might follow a horse that has to run an uphill straight at Fontainebleau, followed by the synthetic sand at Deauville, followed by the sweeping turn at Longchamp. And never mind that the footing changes drastically with the weather. Funny, though, our betting handle has gone up steadily over the past decade. Most of our racing in France have full fields of 16 to 20 horses for every eight-race card. The bettors love it - even though most of them don’t show up at the track, either. Most betting here is done via the Internet or off-track cafes. That said, when people do show up at the track, they are highly unlikely to witness the carnage that seems to be a regular feature in U.S. racing. Hmm…wonder why. Maybe it’s that rule against any medication in the horses’ systems.
December 8th, 2008 at 2:51 pm
“If we stress betting above all, live racing is only one jump ahead of the virtual racecourse and other computer diversions in the betting shops.â€
This is a comment from an article in today’s Times of London. They are going through a lot of the same issues as here.
Racehorse safety is not one of them. I wonder why?
December 8th, 2008 at 3:50 pm
It’s infuriating to see the mismanagement, the waste, the infighting, the lack of leadership - it reminds me of the federal government. The horse racing “system†(which is anything but systematic) developed in a different age, and has yet to adapt to the modern world, It looks like the current power structure would rather kill the sport than let it evolve.
Racing needs a Commissioner with strong powers. That’s EXACTLY what witness after witness - all respected, reform-minded horsemen - begged for at the post-Eight Belles congressional hearings.
In addition to policing the sport (no drugs, violators banned for life, etc.), centralized management could re-invent racing in positive ways and add a lot of fans who bet a little for the fun of it, but go to the track because they love the horses.
Look at the industry’s inability to capitalize on the highly dramatic Curlin story. The racing authorities - such as they are - failed to generate the national press this great horse deserved. Maybe if racing were centrally managed and had a nationally focused public relations machine, we’d have seen regular stories about Curlin’s 4-year-old campaign across the country; maybe if the sport had promoted the horse as the star he is the national press would have been captivated. And Curlin wasn’t racing’s only star this year – how many opportunities for promoting the sport have been lost? Promotion is left to the local tracks, or the owners, and the result is that no one on the outside notices.
A horse like Curlin can bring new fans to the track but only if potential fans get a chance to hear about him on TV or read about him in their local paper.
About the synthetics - as far as I know, they haven’t yet been proven safer and in any case they don’t make sense to me. Horses were meant to run on natural surfaces. Get rid of the drugs, wait a few generations and then see if Jack Van Berg and others are right that the drugs and not the surface (per se) are the problem.
December 8th, 2008 at 4:08 pm
Track takeout track takeout track takeout. The racetracks don’t try to compete with the price sensitive bettors, and they are losing (or have lost) the mindless bettors to slots and lotteries.
There are no poster boys who consistently make money long term (who don’t bet with rebate shops that is), that can be used to promote the gambling aspect of horse racing.
Racetrack execs have to ask the question “why would anyone start gambling on horses when there are virtually no winners to try to emulate?”
Sure, there are horse owners who have got lucky and wound up making lots. That is something to strive for, but on the betting side, where is the carrot?
If the game was invented yesterday, the track takeout would be 10% tops, and we would actually be seeing growth, because there would be winners that could be used to advertise the product of gambling.
December 8th, 2008 at 6:53 pm
Mr. Farrish needs to dismantle the NTRA and regroup under the Jockey Club.
The Jockey Club takes the lead and begins to set standards guided by all who are involved. After many open discussions, uniformed standards are set that all must obey.
If a Track or acronym bucks then the TJC flexes.
The first year may be rough but the public will be the true dictator if done properly.
TJC the original league office, let’s get back to it.
December 8th, 2008 at 7:15 pm
Many excellent points have already been made.
I don’t believe that the injury number is better on synthetic than on dirt perhaps because lame horses are pushed harder on synthetic, erasing any potential safety advantage. As far as I know, no complete injury numbers have been released for synthetic and dirt tracks, only fatalities within 72 hours of injury which slightly favors synthetic since horses tend to suffer more soft-tissue injuries than fractures on synthetic. It may not be better than dirt because equine exploitation has not improved. Injuries will be fewer once substantial reforms are in place to protect horses. It is easier to blame a dirt surface and demand synthetic than to blame drugs and themselves (horsemen, vets, officials, track managements and impotent racing leaders).
The total fatality number on synthetic should include horses with career ending soft-tissue injuries sent to slaughter and those who die after surgery, laminitis or other complications from injuries suffered during a race meet. The complete fatality number should be released 6 months after the end of each meet, once all horses from each meet are accounted for. The Jockey Club could be instrumental with keeping track of all horses, not only to provide complete injury and fatality numbers per owner, trainer, vet, meet, track, state, year, stallion, etc. but to assist all racetracks which have elected to ban owners and trainers who send horses to slaughter. The complete fatality number could be shocking and no one is eager to research then disclose them.
As long as examining vets cannot preview the complete medical history of all horses they are about to examine before racing on a database, as long as, as per Dr. Mary Scollay they only spend an average of 45 seconds per horse, as long as some of these vets are pressured to fill all races with what they’ve got, as long as certain examining vets maybe intimidated by shady horsemen against scratching their lame horses, as long as they can’t take images of questionable limbs and only look at them briefly after they have been drugged, iced, etc. to look racing sound, as long as the moral standard in all layers of racing in down the toilet, as long as the claiming game is huge, abusive and dirty, this crucial injury preventive measure will be mediocre, when used at all.
Medicating horses with only their welfare in mind is great. Drugs need to be banned on race day because exhausted, sick, lame horses shouldn’t race. Rest and retirement should be mandated by officials to protect horses and caring trainers and veterinarians.
Slots bring another evil to horse racing: some racinos offer purses 2, 3 and 4 times bigger than claiming prices, tempting evil too much. Slot money should be used to promote quality and safer racing: Less racing. Less speed. Fewer claiming races or claim protection for 4 to 6 races for all horses returning from turn-out periods spent GRAZING (not spent in a stall recovering from blisters, surgical procedures, in hyperbaric chambers, etc) and bonuses for winning and placing within so many months after quality rest. Horses would be healthier, last longer and run better especially if they no longer race with drugs. Offer bonuses to homebreds to reward the raising of strong, healthy, sound babies. Shift some of the purse $$ from 2 year olds, especially two year old sprints to longer, safer races with slow starts and stronger finishes and to older horses. Etc… Horsemen will follow the money.
Claiming races consume most of racing and the claiming game is very abusive and dysfunctional. An owner can still get a claim check even if his horse breakdowns or dies in that race. This rule is criminal. Claimed horses go from barn to barn without horsemen knowing what chemicals they have in them. It is at best counter productive. Complete equine medical history for all TBs should be kept and publicly disclosed to protect horses and assist owners, trainers, vets, buyers, breeders and handicappers.
Horses can be dropped precipitously, including from $80K to a lethal $10 from one race to the next. A 13 year old broodmare with a grass pedigree can be raced again after being retired 72 months and having at least a 4 year old racing and be killed for $2k on dirt in the rain. A multiple GII stakes winner on grass can be killed on dirt for $4K several years later. Everyone knows why horses are being dropped and continue to drop. No one stops the abuse. Even horses who have been very “good” to some people are abandoned. And racing still wonders how to make itself more popular? What about starting with basic common sense?
Ray for racing tsar!
December 8th, 2008 at 8:18 pm
Excellent story, especially the emphasis on “handles adjusted for inflation,” which has been routinely ignored by the racing media and managements.
Thanks, Ray!
Charlie, good point. Just remember the connection between the words “humility,” and “humiliation.”
December 8th, 2008 at 8:28 pm
You have NY with some 26% takeout, Calder has some 27% and Philly has some 30%. WE have to be crazy to play into that.
December 9th, 2008 at 1:50 am
How wonderful that some racing bloggers are now calling those who advocate a return to a seasonal sport, a vast reduction in track vs. track competition, and a supply of racing more in line with actual market demand “defeatist.” While they remain in their state of denial, ignoring the pink elephant in the room, the sport will continue to die in a prison of its own devise.
The so-called “old way of thinking” that we need to get out of is that the continuation of the never-ending season of inferior product with short fields and high takeout can attract a broader audience if only we had a national marketing plan and a new leadership comprised of bold visionaries.
Wagering in the U.S. this year will be off nearly 39% from 1970, a year when there were more than 4% fewer races run and an inflation-adjusted average of more than $457,000 was bet per race.
It goes without saying that, in addition to the industry’s decades-long suicidal “Bigger is Better” program, our government’s inability to maintain the value of the dollar over that period has made the task of staying afloat ever more challenging.
December 9th, 2008 at 12:36 pm
The industry needs to cut its number of races in half, and eventually all drugs on race day. Racing needs to eliminate the majority of its cheap claiming races. The cheaper the races are, the higher the injury rate is. Racing needs a national commissioner who will only tolerate quality and ethical conduct. Less is more.
December 10th, 2008 at 1:36 am
make all signals open to all ADW’s……allow more people access to watch and wager on all venues…let the businesses of the ADW sort out weaklings..and the successful go on