| Thoroughbred Racing Economic Indicators For August 2008 | |||
| August 2008 vs. August 2007 | |||
| Indicator | August 2008 | August 2007 | % Change |
| Wagering on U.S. Races* | $1,389,600,847 | $1,428,242,220 | -2.71% |
| U.S. Purses | $128,030,999 | $115,712,477 | 10.65% |
| U.S. Race Days | 709 | 639 | 10.95% |
| Year-To-Date August 2008 vs. August 2007 | |||
| Indicator | YTD August 2008 | YTD August 2007 | % Change |
| Wagering on U.S. Races* | $9,863,917,032 | $10,273,868,002 | -3.99% |
| U.S. Purses | $788,090,090 | $767,888,308 | 2.63% |
| U.S. Race Days | 4,242 | 4,213 | 0.69% |
| * Includes worldwide commingled wagering on U.S. races and separate pool wagering in Canada on U.S. races. | |||
While the numbers might not be alarming they nonetheless cause concern. Wagering on horse racing in the United States from all sources hit it’s high water mark earlier in the millennium and has been flat ever since. But things seem to be getting worse.
While Breeders’ Cup event day(s) attracts huge world-wide handle, HRI’s best guess is that its totals will match those of last year, an event handle-compromised by extremely inclement weather.
What Breeders’ Cup Ltd. might expect this year is an increase in volume due to the added races but that assessment coupled with similarly anticipated decreases in handle due to the synthetic surface in non-turf events. At best, it's probably a wash.
The thing that jumps out is that the industry as a whole is trying to maximize revenues by increasing the amount of product it makes available. To date that hasn’t worked. Other reasons? The insane wagering-platform wars for one, the counter-productive increase in the number of racing dates and races for another. The opportunities go up, the purses go up, yet the handle goes down.
It’s as if myopic bean counters never heard of parimutuel takeout and don't grasp its relationship to churn. The deadly combination of takeout and increased opportunities is wearing out horseplayers both mentally and economically--those that are still with us as bettors continue to skew older and older.
All this puts me in mind of Lawrence Garfield. Remember him, from the movies? Consider the words of the fictitious corporate raider, whose business sense seems at least as accurate as the racing industry’s real problems. To wit:
“This company is dead. I didn't kill it. Don't blame me. It was dead when I got here. It's too late for prayers. For even if the prayers were answered, and a miracle occurred, and the yen did this and the dollar did that and the infrastructure did the other thing, we would still be dead.
“You know why? Fiber optics. New technologies. Obsolescence. We're dead, all right. We're just not broke. And do you know the surest way to go broke? Keep getting an increasing share of a shrinking market. Down the tubes, slow but sure.”
And that’s exactly what’s happening to the industry. It devalued its product by overexposing and diluting it. It failed to embrace new technologies. It failed--and continues to fail--to understand the immutable law of takeout. They pay lip service to it, returning a few nickels and dimes here and there, but won’t change the paradigm.
You might ask, as does Mr. Springsteen, is there anybody alive out there? There are, but like a model constructed by America’s power elite, it’s about the preservation of fiefdoms. Dozens of strategic partnerships are created every year but seldom do these agreements yield big picture results.
Perhaps racing’s biggest mistake, as was suggested by Vic Zast in a recent HRI column, was expanding to an all-racing-all-the-time format, eliminating the seasonality that made the opening of each meet special.
When I was back at St. John’s four decades ago, the date March 20 was always circled. It marked the opening day of the New York racing season at Aqueduct by the sea. Aqueduct! Seasonality made a day at the races special, as did clubhouse dress codes, for that matter.
But the industry followed the country’s lead and dumbed the whole thing down, trying to increase its share of the entertainment dollar, chasing a market of competitive interests that in no way resembled the special feeling of a day of sport, a day at the races.
Yes, racing had a gambling monopoly back then. But what it never failed to promote was that wagering on horse races was an intellectual pursuit that offered, and continues to offer, the best bang for your gambling buck.
Education is the key. A new handicapping model needs to be created that emphasizes that each race is a market unto itself, that there are prices, or odds, at which horses should be played or laid.
As Zast wrote the other day, “gamblers today can get a bet down whenever he wants and betting’s as ho-hum as the highway. Coincidentally, it’s almost as interesting.”
Then there’s Lawrence Garfield’s take: “I love money. I love money more than the things it can buy. There's only one thing I love more than money. You know what that is? It’s Other People's Money."
12 Sep 2008 at 08:29 am | #
Synthetic tracks are the biggest reason for the decline, IMO.
12 Sep 2008 at 07:56 pm | #
John:
Another brilliant, insightful column. However, I’m afraid that it will be remembered as racing’s denouement, rather than a call to arms.
I must say that I’ve had an uneasy feeling this year. I felt abused by NYRA at the Belmont; paying $60 for a seat and admission didn’t make me feel better. Then, I did not enjoy Saratoga as much as I always have. Maybe NYRA has finally gilded the lily beyond recognition. I certainly believe that “Gouging” its customers cannot possibly be maintained as a useful business model. Moreover, four months of racing on the inner track is a complete waste of time and deserves to be ignored.
Finally, as to the Breeders Cup, I do not have any interest in this year’s edition. I think that they made a short-sighted decision to run for two consecutive years at Santa Anita. Moreover, as a viewer of TVG- the only network available on DirecTV-I am frankly, tired of the constant boostering for California racing.
The “solution” may be as apparent as the nose on our collective faces. Less is more and absence makes the heart grow fonder. I think that I’ll just set my alarm for July 29, 2009 and see you next year at the Spa.
13 Sep 2008 at 02:50 am | #
I have absolutely no interest in the Breeders’ Cup this year, nor have I had any interest in prior years, other than wagering $2 per race with my wife on a ‘bomb’ so that we had a minor interest in each race. How any serious gambler can wager more than a couple of bucks per race when most of the BC entrants are unfamiliar and have never set foot on the racetrack leaves me flummoxed.
I did not visit Saratoga this year, and actually made a mere handful of wagers when Ramon Dominguez was up. And, I have yet to wager on a horse running on a synthetic track.
I hold the opposite opinion from Paul Stone about the four months of racing on the inner track. Winter gambling is a hardcore bettor’s paradise, where most of the horses have a ‘track record’ at Aqueduct. Actually the inner track wagering is quite similar to Delaware and Philadelphia racing, where the horses also have a track record.
Shouldn’t a gambler who wagers on the ponies be wagering where they do best?
Mr. Pricci, racing has not been dumbed down nor is it diluted. More is more, not less. You know darn well that when racing enjoyed a monopoly on gambling the racing season could start in the spring and it could be referred to as a sport. Competition for the gambling dollar, excessive takeout, no central leadership, and failure to promote racing as a gambling entity are why racing is on life support, kept alive by slot revenue and casino dole; there are no other reasons! (no new material here Indulto).
Thoroughbred racing’s attraction (to repeat again and again) is the betting window and cashing tickets; when racetrack fiefdoms and turf writers eliminate the word sport, substitute the words gambling entity, and promote racing as such to the unknowing, they will come (no new material here either Indulto, just repeating, again and again, why racing is going out of business).
13 Sep 2008 at 04:18 pm | #
Right,
I never thought of that, or heard it quite like you said,
Horse racing is a Sport you gamble on,
NOT just mindless gambling.
It needs to be marketed like that.