In a normal election year, say in 1988 or 2008 (when the ruling party controlled the White House for two terms) an often-heard question is, “are you better off than you were eight years ago?” In 2016, that question seemed to be buried into the morass that was the campaign, of course. But, it is a query that carries some weight, whether it's for a country, a family, or a business like horse racing.
Switching from Trumps and Clintons to Tapits and trifectas, I wondered: how are things eight years on in horse racing? Is the sport better off, worse off, and how has it changed?
To answer that question I turned to a database consisting of handle, number of starters, gross purses and racedates (racetrack by racetrack) across the United States. This data was scraped from Equibase results charts from October 2007 to October 2008, and then compared to the same fiscal period in 2015 and 2016. The following is a little bit of what I uncovered.
When we look at the top-line metrics that drive the sports' purses, it has not been a good run. Handle dropped from $13.8B over the period to $10.6B in 2016, a 22.9% reduction. A more important number–because the price of hay goes up too–is inflation adjusted handle was down over $5B or 37%.
For betting customers, things haven't gotten much better when it comes to field size. This driver of handle and satisfaction fell over the period from 8.11 to 7.77, about a 5% loss. Meanwhile, paid purses fell, but it has not been catastrophic, most likely due to slots and alternative gaming. Purses in 2008 were about $1.165B and in 2015 they were a shade under $1.1B for a 6% loss. Again, looking at the inflation adjusted numbers, that loss is about 20%.
The above does not paint a pretty picture, and I think everyone reading knows the sport (by various measures) has been shrinking. However, I have read time and time again in the industry press that the sport needs to contract to grow. There is–and this continues to this day–a wish that things would get smaller, to become leaner; and many in the sport ask the industry to enact policy to make it happen.
The funny thing about that is: the market seems to be doing this on its own.
In 2008, 115 racetracks held at least one race day, and eight years later that number stands at 96. 19 racetracks went the way of the hula hoop since President Obama was inaugurated.
At the same time, racedates were severely reduced. There were 12,288 fewer races in 2016, which was a 24.3% drop from 2008. Much of this drop was forced by the reduction in foal crops. In 2008, 413,859 horses had their saddle fastened for battle in the US. In 2016, that number dropped to 299,936, a 28% reduction.
Racedate and foal crop reductions are rarely good news, but it has helped one metric for the supply side–purses per starter. In 2008, each starter raced for about $2,800. In 2016, that number grew to almost $3,600, a 20% increase.
Along with purses per starter in the black, handle per betting interest has risen. In 2008, each entry drew about $33,800 in handle, and in 2016 that number grew to $35,800, a 6.2% increase. That's good news for customers, because bettors (especially larger ones) need deep pools. From an accounting point of view, more revenue is being generated per entry, which is a good thing.
Supply side reductions are rarely a reason to celebrate, but as the above shows, there is some positive news. And often, forced contractions help a sport figure out where it needs to be, in terms of racedate allocation, with respect to the changing horse supply.
In 2008, one of the top ten handle tracks in the nation was Mountaineer, with $390 million rushing through the wickets. By this year, handle at the Mountain fell to $127 million while racedates fell over 200%.
Turfway Park raced 1,115 races in 2008. This season they've raced 555, and handle, not unexpectedly, is down to $93 million, from over $267 million.
At mid-summer and winter stalwarts Arlington Park and Fair Grounds, dates are down and so is handle–from about $760 million to $340 million.
There are other examples where smaller to mid-tier tracks (that race a vast number of dates) have lost market share over the last eight years.
Where a lot of these dates (and handle) went is where things get really interesting.
Calder Racecourse achieved over $350 million in handle in 2007, and those dates are all lost, taken over by Gulfstream. There are quite a few who believe that smaller tracks' dates being swallowed up by popular signals (with big distribution networks), is a positive, and it's hard to argue with that when it comes to the Florida experience.
In 2008, Gulfstream generated $585 million in handle. In 2016, this number is over $1.3B. With Gulfstream as an anchor, handle in Florida has been booming. Gulfstream, Calder and Tampa Bay Downs took in about $1.3B in bets in 2008. In 2016, it's over $1.8B, for a whopping 42% increase. The Calder dates, which switched over to Gulfstream's “Gulfstream Park West” meet, saw per entry handle increase by 59%.
Florida is easily the healthiest state when it comes to wagering.
Not far off, the work of NYRA has been above average. On a per race basis, handle is about flat from 2008, and their jewel– Saratoga–has held more dates and generated more handle ($648 million versus $522 million). Belmont's handle has also been fairly encouraging, at near even. The loss in gross handle in the Empire state has been–and by now this should not be surprising – mostly at the smaller, claimer-dependent Aqueduct. They've felt the horse shortage most.
Other big days and big events are doing quite well since 2008, as we see with the Triple Crown races and the Breeders' Cup. In fact, Pimlico–despite racing 18% fewer races in 2016 compared to 2008–saw meet handle rise 23% on the strength of Preakness day. For big events, and big signals, there's a lot to crow about.
Across the country to the left coast, however, the very important California flagship continues to be a drag on the numbers. In 2008, Santa Anita, Del Mar, Hollywood Park and Golden Gate Fields brought in $2.27B in handle. In 2016, the same tracks (minus Hollywood Park, adding Los Al Thoroughbred) generated about $1.86B, an 18% reduction. If this jurisdiction can find a way forward, racing would be much stronger.
Researching the numbers for this article I found it obvious that the sport is not as well off as it was eight years ago. On no planet could less handle, fewer races and fewer horses ever be considered successful. But the more I read–the more numbers I tabulated and thought about–I began to be encouraged.
For years racing has called for contraction. Right under our noses, that's exactly what's happened.
The results of this shift are a work in progress. However, in 2016 handle per race is increasing, purses per horse have increased, and the most popular racetracks are front and center, promoting the game to customers through better distribution networks. The big events, which keep horse racing on the radar of both fans and politicians, seem to be growing year in and year out.
Despite just finishing an election season full of spin, I don't think it's hyperbole to say there have been some positive things happening in the machinations of Thoroughbred racing. I might even be so bold to conclude that things are looking up.
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