Saratoga Springs, NY, September 11, 2008--The chart arrived via e mail this morning courtesy of NTRA and Equibase. As you scan the figures over a comparable time frame from last year to this, and the entire year-to-date number, the picture is clear and comes as a surprise to no one.

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 $115,712,47710.65%
U.S. Race Days70963910.95%
Year-To-Date August 2008 vs. August 2007
IndicatorYTD August 2008YTD August 2007% Change
Wagering on U.S. Races* $9,863,917,032 $10,273,868,002-3.99%
U.S. Purses $788,090,090 $767,888,3082.63%
U.S. Race Days4,2424,2130.69%
* 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."