Racing needs a long-term plan which will put the sport on a path to raise handle to nearly $50 billion annually with more than $5 billion held by the industry by 2040.
Sound optimistic?
Falling well short of that goal would still be a monumental accomplishment given we are on track for another year at just $11 billion in handle, and down nearly 50% in the last two decades, adjusted for inflation.
So where are the plans from the industry to start thinking long-term about not just surviving, but thriving, and building a robust, wagering-forward industry?
Horse racing has a tremendous opportunity to lean into a massive culture of betting liberalization, but it has otherwise failed to capitalize on it. Time is still there, and the opportunity is not yet lost.
There is no doubt horsemen should be thankful for the enrichment they’ve received through purses over the last two decades coming by way of slot machines, video lottery terminals, historical horse racing or other revenue sharing from casino-related operations. In many cases, tracks and horsemen lobbied relentlessly for them. It makes sense that they continue to fight for them, but not at the expense of racing’s most obvious source of sustainable revenue – actual wagering on racing.
These significant purse supplements have allowed the industry to minimize the importance of presenting a modern wagering product. Most tracks have not focused on making racing wagering more competitive and most horsemen’s groups have not advocated for meaningful improvements to stoke wagering, either.
In some cases, 90% of prize money has come from subsidized sources beyond racing, wagering on the sport has not seemed as important – a reality which is reflected in annual handle figures over the last 20 years. Many owners and trainers within horsemen’s groups do not possess a detailed understanding of racing wagering. They don’t know what to advocate for to improve their own futures.
This is problematic, because as it relates to prize money for racing, the future is not bright.
Subsidies to racing from gambling beyond racing, in whatever form they take in states that have long enjoyed them, are changing. Some states are in worse shape than others. The pain of the industry’s likely contraction will be widespread.
Horsemen cannot just want a bigger slice of a shrinking pie, it must advocate for growing the pie so that the slices grow for all parties.
Existing groups – including TOBA, state THAs, HBPAs and others – must begin to develop a meaningful strategic plan. Transformational steps to ensure the best possible future for racing must be embraced. At the forefront, a radical rehabilitation of wagering on racing is needed. No ideas should be off the table.
The sport is in no position to turn away from unexplored revenue streams or customer bases. Fixed odds betting on American racing is evolving, albeit slowly, and while there is no denying that the cut from fixed odds betting to tracks and purses is smaller than that provided by pari-mutuel wagering, ignoring the fastest growing legal wagering opportunity in modern American history cannot be an option. Racing’s path through fixed odds must be navigated delicately and adjusted over time, but racing needs to be co-located with all other wagering opportunities.
Racing can make its pari-mutuel offerings better and get its wagering product in front of far more customers. The question, of course for all of this, is in the specifics. How?
The sport needs short, intermediate and long-term strategic planning, identifying and plotting courses to achieve goals over the next 10, 20 and 30 years.
Racing had no such plan in 1990 when annual wagering was an inflation-adjusted $18 billion and a decade later, topped $21 billion, also when adjusted for inflation. But what has happened in the intervening two decades is a mass legalization of wagering opportunities combined with significant technological innovations and a substantial increase in personal entertainment options. Racing has to compete if we are to preserve our sport, let alone grow it.
Where are the attempts to voraciously advocate for a most robust wagering offering for our sport which will likely rely far more on it in the next 20 years than it has in the past 20 years?
Just because we lack a centralized structure to oversee an industry master plan does not mean that those groups which exist now are hamstrung from starting one. Owners, breeders and all horsemen should be as interested in growing wagering as anything else they do. Many don’t have the first clue where to start, and while unfortunate, it’s understandable. There should be no further delays in correcting our course.
The Thoroughbred Idea Foundation was launched to advocate for progressive change in racing because we believe it is possible to turn the sport around.
With a concerted effort, racing could double handle in the next ten years, and double it again in another decade, but only if changes are adopted which would offer more realistic pricing of pari-mutuel wagers, complement tote wagering with fixed odds betting, modernize technology, improve access to data and substantially increase transparency across the sport.
Racing must be more open in reporting on the business of betting – where it is coming from, what it contributes to purses and how it has changed over time. This movement should be driven by owners. Racetracks have proven insufficient leaders of the sport and industry organizations have been distracted by other topics. Nothing should be more top of mind than how we fund our business and keep racing viable.
Racing needs a new generation of horsemen’s leadership to propel it forward. Those who might not think it is the role of horsemen to relentlessly pursue improving the wagering business should think again – their role is federally protected by the Interstate Horseracing Act and should be the envy of any professional sporting endeavor in the country. Racing needs increased wagering to survive, let alone thrive.
The business of betting has been ignored for far too long. A new future for the sport promotes a modern wagering business at the heart of racing.
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