Archives for March 2020


Over a century ago, the Spanish Flu was taking lives by the millions and casualties from World War I were adding to the heartbreak.  Yet the then-major sport of horse racing was able to carry on and offer a needed diversion in a time of so much human carnage and sadness.

The Center for Disease Control states that the influenza pandemic of 1918-1919, erroneously known as the Spanish Flu, was the worst in modern history in terms of the number of people infected and the resulting death toll.  The CDC says that the flu was initially identified in the United States among military personnel in the spring of 1918.  It spread during 1918-1919 (World War I formally ended on June 28, 1919 with the signing of the Treaty of Versailles, although Germany had agreed to stop fighting on November 11, 1918).  Autumn of 1918 was the height of the flu’s devastation.  It is estimated that, before it ran its course, the virus infected 500 million people, or about a third of the world’s population.  This resulted in some 50 million deaths worldwide, including 675,000 in the United States.

In the midst of World War and the virulent influenza pandemic, horse racing in the United States was largely business as usual.  On May 11, 1918, the great gelding Exterminator won the Kentucky Derby.  A contemporaneous report of the festivities said that “Throughout Kentucky Derby Day in 1918, school children started a ‘swat-the-fly’ campaign,” evidently in an effort to curtail contagion from the dreaded flu.  The Triple Crown went off as planned in 1918 as did the remainder of the racing scheduled. 

Racing in Great Britain needed some accommodation, but because of the war rather than the flu.  The Epsom Derby, for example, was moved to Newmarket for the fourth consecutive year.

In the second and last year of the pandemic, 1919, the racing calendar again went ahead as planned despite the influenza that was killing so many victims.  In fact, 1919 proved to be historically significant for American horse racing, for two reasons. 

First, arguably the greatest racehorse ever, Man o’ War, arrived on the racing scene as a 2-year-old and ran in ten races, with the only loss of his storied career coming at the hands of the fatefully named Upset in the Sanford Memorial at Saratoga in August. 

Second, Sir Barton swept the Kentucky Derby, Preakness, and Belmont.  In the 1930s, these classic races would be labeled the Triple Crown and Sir Barton would be recognized as the first winner of the series.

Fast forward 100-plus years to the present.  In spite of the ominous coronavirus pandemic of 2020, self-quarantined racing fans are able to watch and bet on horse races from remote and sanitized environments while most other sports are idle.

In the influenza pandemic of 1918-1919, the horse racing enterprise “kept calm and carried on” in the manner of its British roots.  The same can be said today, thanks to television, the internet, and races run without on-track customers.

Horse racing insiders and fans of long ago and today give credence to the adage “Where there is a will, there is a way.”

Copyright © 2020 Horse Racing Business


When news broke about federal indictments of 27 people (trainers, assistant trainers, veterinarians, and performance-enhancing drug suppliers) for their part in doping racehorses, I immediately recalled a remarkably candid admission about race fixing in a book published in 2019 titled Better Lucky than Good, which contains 34 self-told life stories from people who work or use to work on the backside at Churchill Downs.  In the vignette by trainer Bob DeSensi, he said:

“There’s a book called Fixed that’s about two fixed races here on Derby Day.  It’s about these horses Scottish Thorn and Postal Milagro, and I just happened to be in on both races when they ran.  That was a big deal on Derby Day, to fix the last race every year.  This went on every year for a long time until finally they stopped the last race from being a claiming race.  Everybody on the backside knew it.  It’s the way we got money to go on to the next town.  It went on everyplace.  It wasn’t just here.  You never asked questions but you could figure out what was going on.  You knew the trainers that would be involved…The only way you would be in on it is if you had a horse in the race, or one of the jocks would tell you in advance, or one of the grooms…”

Scheming to defraud bettors is reprehensible but hardly surprising.  Cheating is a perennial problem in competitive sports, especially if money can be made doing so.  While horse racing has many dedicated and honest participants, unscrupulous actors are looking to swindle…and if given the opportunity, they will. 

The 27 defendants indicted this week will have their day in court (or possibly to plea bargain), so all have a legal presumption of innocence until proven otherwise.  Nonetheless, the indictments are a public relations disaster and are materially damaging to a sport whose economic sustenance depends on bettors having confidence that they are wagering on fairly run races.  Moreover, administering performance-enhancing drugs to racehorses is animal abuse.

American horse racing has proven time and again that policing is lax, to say the least.  It is highly unlikely that the last race on Kentucky Derby day could have year-after-year been fixed, as alleged, without track management or at least one Kentucky regulator hearing of it?  In 2020, why did it take the U. S. Attorney from the Southern District of New York to zero in on 27 alleged criminals in horse racing, rather than racing officials?

No policing system can guarantee that cheating will not go on, but horse racing in the United States has a long way to go to even approach perfection.  Yet, notwithstanding that pari-mutuel wagering is in secular decline, a meaningful number of insiders continue to resist much-needed reforms.

Copyright © 2020 Horse Racing Business


Owing to fears over the coronavirus, events are being cancelled, hand sanitizers are scarce and selling for premium prices, and shock waves have roiled global stock and bond prices.  Today was called “Manic Monday,” as the major world stock markets plunged.

While the downdraft over the past couple of weeks took almost all stocks down, some were damaged far worse than average, including leisure and recreation stocks like those of cruise lines and casinos.  This is predictable in that people under threat of infection will avoid crowds and travel. 

The two publicly traded companies with the most racetracks are Churchill Downs, Inc. (CHDN) and Penn National Gaming (PENN).  Both have heavy involvement with regional casino businesses.

From the beginning of 2019 until the end of 2019, the Nasdaq composite gained 37% (adjusted for dividends and stock splits), whereas CHDN stock soared by 72% and PENN stock gained 40.4%.  With a buoyant economy heading into 2020 and consumers in a strong financial position, prospects for CHDN and PENN looked to be bright.  That is, until the “black swan” named coronavirus emerged in late February.

On February 20, 2020, the Nasdaq composite stood at 9817.18.  CHDN was at $163.44 and PENN was at $38.28.  At this writing on “Manic Monday,” March 9, 2020, the Nasdaq composite has fallen by 18% from its price on February 20.  In contrast, CHDN has plunged by 35% and PENN by 45%.

The view here is that second quarter GDP will take a significant hit from the coronavirus scare, perhaps on the order of a half percentage point decline.  However, history tells us that a downturn from an epidemic is likely to be short-lived and that the economy and stock prices will soon recover.  In retrospect, this will look like a blip and a buying opportunity for stocks of strong companies.

As people return to normal lives, casino and racetrack attendance will inevitably come back.  The danger for CHDN in the short term is that the Kentucky Derby might have to be cancelled or postponed.  Since it is about two months away, the probability of cancellation or postponement is likely in the neighborhood of 10-12%.

(Full Disclosure:  I am a CHDN shareholder.)

Copyright © 2020 Horse Racing Business