Here’s a Daily Racing Form headline from 2024 (yes, the future):
North American Racing Handle Doubles Over the Last Decade
Do you find this headline completely unbelievable? It shouldn’t be. Let me ask this: how much would betting handle have to grow year-over-year for 10 years for that headline to be true? It’s not large – it’s only a 7.2% growth rate, compounded annually. In terms of growth above normal economic growth, it’s only a 3-4% adder to normal national growth trends.
Doubling handle would mean that contributions to track earnings and purses would also double during that period. (Neither earnings nor purses would double, since those are supported now by other sources like admission, concessions, and slots) I think most observers, seeing that handle was at an historic high, would no longer say that “horse racing is dead” but that racing was as good as it had been in 30-40 years.
Now, here’s two alternative beginnings to the article that accompany the headline. Which do you find more plausible?
1. Industry officials celebrated the 10th consecutive year of handle growth, noting that wagering on thoroughbred racing has doubled since the US marked the unofficial end of the Great Recession in 2014. Attendance and off-track wagering both doubled, track revenues increased 80%, and purse accounts increased by 60%. The purse account increase reflects that purse subsidies from other sources (racino/slots revenue, sales, supplemental fees) remained flat during this time. Tracks and horsemen used the windfall to increase races by 35% while the average purse went up 18%. Breeding finally reversed a two-decade long decline as the 2023 foal crop of 40,000 returned to levels not seen since 1991.
Most track officials credited their marketing and promotional efforts to get fans back to the track as the main source of success, but acknowledged that Jess’s Dream – the first foal of popular 2009 Horse of the Year Rachel Alexandra – winning the Triple Crown in 2015 kick-started their efforts. When “Taco” came back to race in 2016 and dueled in a cross-country campaign with the late-developing Cozmic One (Zenyatta’s first foal), the Breeders Cup Classic at Belmont Park featuring their final duel (won in a late nose by Cozmic One) set betting and ratings records for a non-Triple Crown race and energized the sport…
2. Industry officials acknowledged that the 2014 “Decade Double” initiative pioneered by The Jockey Club, NTRA, and a consortium of racetracks and other racing industry groups has met their goal of doubling betting handle on North American races in 10 years. The Decade Double initiative began with the premise that the $23 billion target for wagering on throughbreds would represent an all-time, inflation-adjusted, high indicator of interest in the sport. The leaders of the “Decade Double” campaign credit its focus on customers and getting buy-in from tracks and horsemen on how to share gains.
” We knew that the sport couldn’t grow without customer support,” said Jeff Gural, Jockey Club board member and head of the Decade Double Initiative. “Significant gains had to be realized by the customer – the bettor – and ultimately that meant lowering the price of betting on racing.”
“Working with our horsemen and tracks, we concluded – and believe me, it was a tense fight at times – that bettors needed to see the lion’s share of gains, with tracks and horsemen splitting the rest. We settled on a 40/30/30 split, and that’s when efforts to reduce takeout by 40% began.”
This year, the average on-track takeout for a Win bet was 10%, which horseplayer’s Decade Double representative Andy Asaro noted was “much nearer betting the LA Jaguars and the points in the Super Bowl.” Exotics averaged 12-14%; in 2014, however, the typical takeout on exacta or trifecta pools was 20-25%.
The Decade Double and industry groups like NYRA and the CHRB aggressively promoted the takeout decreases, at first in hopes to keep track revenues and purse accounts level. Most groups acknowledge that the success was unexpected: track revenues have increased by 48% and total purses by 36%, despite the lower takeout. Racing days and total races have remained flat in response to a lower profile DD initiative meant to prop up field size in response to low foal crops. Even those have since recovered to a “healthy level” of 35,000, what many breeders consider sustainable at this level of betting…
It truly is amazing how growth can positively impact everyone while stagnation leads to tribalism and in-fighting and decision-making based on the fear of loss as opposed to the hope of gain. That’s unfortunately where horse racing is today.
Article 2, even if the numbers aren’t exact, shows that broad-based gains are possible if they accompany a plan and a target for growth. If we collectively bet $20B on racing, no one could rightly claim that racing was dead. It is, however, hard to envision that future if customers do not share in those gains. And again, the numbers are not daunting:
- To double in volume, handle needs to increase by 7.2% a year.
- To decrease takeout by 40% over 10 years, takeout needs to decrease by 5% a year.
The key, of course, is to offset the short-term revenue decrease from pricing with 2 other Ps of marketing.
- Promote the heck out of the sport emphasizing lower prices (and other promotions)
- Product quality needs to stay high / improve (larger fields, showcase racing days, etc.)
The time element is the hardest part, because it’s not an overnight fix. Nothing worth doing ever is.