Archives for July 2020

Covid-19 pandemic shelter-in-place devastated conventional gambling, as brick-and-mortar casino locations closed and the most popular sports to bet on were suspended.  However, so-called igaming–which includes online casino, poker, horse racing, and esports–flourished.

Whether esports—video gaming competitions—are really sports is a matter of opinion.  What is not debatable is the huge growth in esports betting during the pandemic.

According to the UK Gambling Commission, with few real sports to bet on in the UK during the pandemic, handle plummeted.  By contrast, from March 2019 through March 2020, wagering on esports grew by 2992%.  In March 2020, the UK pound equivalent of $1,918,514 was bet on esports compared to a negligible $63,493 in March 2019.  By May 2020, handle soared to $5,835,764; while this is not a lot of dollars for the gambling industry, it is an impressive boost.  (Online poker handle was also up, by 50%.)  It remains to be seen, however, whether the popularity of esports holds up once real sports return and can be bet on.

In the United States, between March 2019 and April 2020, betting on real contests (the NCAA Men’s Basketball Tournament, NBA, NHL, etc.) declined by 62%, as most real sports were suspended or cancelled by late March 2020.  Meanwhile, investors were bullish on companies like DraftKings that offer cash-prize contests on fantasy sports and sports wagering for residents of Indiana, New Hampshire, New Jersey, Pennsylvania, and West Virginia.  After merging with Diamond Eagle and SBTech, DraftKings went public on NASDAQ in April 2020 at $19.35 per share.  The stock has since nearly doubled.  IPOs for similar companies are in the works.

As the number of states legalizing online sports books increases, companies like DraftKings are well positioned to quickly capitalize on the opportunity.  Similarly, prominent companies with casinos, racetracks, and online betting on horse racing have already added sports betting and are positioned to grow as more states legalize online sports wagering. Penn National Gaming is one such company, and has seen its stock increase by some 600% since it hit a low of $4.52 on March 18, 2020, when the stock market bottomed out.

When Caesars Entertainment Corp recently merged with Eldorado Resorts Inc., the CEO of the combined company said that it is considering spinning off its sports-betting and online gambling operation to shareholders to get more value out of a high-growth business.

The unanswered question for horse racing is to what extent online sports betting and exports betting will cannibalize or boost online horse-race handle.

Copyright © 2020 Horse Racing Business

In response to the Covid-19 pandemic, the New York Racing Association instituted precautionary procedures in order to improve the chances that the Saratoga 2020 race meet can proceed to its Labor-Day conclusion, including banning on-track spectators other than essential personnel. Privacy fences have been installed to keep people from congregating outside the track to watch races.

NYRA also mandated that jockeys riding at Saratoga won’t be able to return should they leave to ride in races at other racetracks.  Out-of-town jockeys are permitted to ride at Saratoga, provided they have not ridden in a race at another track after July 15, 2020.

The jockey colony at Saratoga 2020 consists of 22 active riders plus three apprentice riders.  It would not take many jockeys testing positive for Covid-19 to create a situation in which there are not enough riders to accommodate all of the entries in 50 races per week.  Del Mar suspended racing last weekend after the coronavirus spread through its jockey colony, with 15 jockeys and seven employees testing positive.

A shortage of jockeys at Saratoga is likely to emerge when many riders leave for mounts in the stakes races on the Kentucky Oaks and Kentucky Derby cards on September 4 and 5. Under Saratoga rules, they won’t be allowed to return to ride in races over the Labor Day race cards.

According to a story in the Daily Racing Form, Hall of Fame trainer D. Wayne Lukas will not have a string of horses at Saratoga for the first time in over four decades because his employees did not want to risk traveling to and staying in Upstate New York.  Other trainers are at Saratoga in a scaled-down mode.  Rusty Arnold reserved four stalls rather than his usual 17.  Similarly, Brad Cox obtained ten instead of 40 and Linda Rice reserved 12 rather than 50. 

In 2019, the Saratoga meet had paid admissions of more than one-million people and for the first-time ever betting revenue exceeded $700 million, despite losing one race day owing to a heat wave.  Opening day 2020 (Thursday, July 16) saw betting handle rocket by 21% over last year. For the opening weekend (Thursday thru Sunday), handle was up 9.4% over 2019.

Fox Sports is providing the next-best thing to being at Saratoga in person via its daily full-card telecasts on its cable channels.

© 2020 Horse Racing Business

In response to the Covid-19 pandemic of 2020, the U. S. Congress passed the Paycheck Protection Program (PPP) and President Donald Trump signed it into law.  Relief loans to businesses and nonprofit organizations via banks could be used for payroll costs, interest on mortgages, rent, and utilities.  The loans are forgivable if jobs are retained.

As of June 30, 2020, 5,461 lenders had provided $521.5 billion in loans to 4,885,388 million businesses and non-profits, accounting for 51,125,937 jobs retained.

Companies, partnerships, and non-profits in the American racing industry have been active participants in PPP.  The program was used by a cross section of businesses, including, for example, racetracks, farms, horse transporters, veterinarians, and trainers, among others. 

To illustrate, following is a small but representative sampling of racing-related businesses and a few non-profits that have received PPP loans of at least $150,000.

American Ruidoso Downs LLC, $1-2 million loan approved, 115 jobs retained
Bob Baffert Racing, $350 thousand-$1 million, 79 jobs
Blood-Horse LLC, $350 thousand-$1 million, 40 jobs
Bluegrass Thoroughbred Services, $150-350 thousand, 13 jobs
California Thoroughbred Horsemen’s Foundation Inc. $150-350 thousand, 19 jobs
Chad C. Brown, $1-2 million, 183 jobs
Claiborne Farm, $1-2 million, 87 jobs
Colebrook Racing Stable LLC, $150-350 thousand, 18 jobs
Del Mar Thoroughbred Club, $2-5 million, 322 jobs
Denali Stud, $350 thousand-$1 million, 60 jobs
Ellis Entertainment Company, $350 thousand-$1 million, 64 jobs
Emerald Downs Racing, $1-2 million, 207 jobs
Eurton Thoroughbred Racing, $150-350 thousand, 30 jobs
Fasig-Tipton Company, $1-2 million, 58 jobs.
Hill ‘N’ Dale Kentucky Inc., $350 thousand-$1 million, 63 jobs
Kentucky Derby Museum, $350 thousand-$1 million, 101 jobs
Kentucky Downs LLC, $1-2 million, 254 jobs
KRM Wagering LLC, $350 thousand-$1 million, 200 jobs
Machmer Hall Thoroughbreds LLC, $150-350 thousand, 20 jobs
Millennium Thoroughbreds LLC, $150-350 thousand, 24 jobs
Mott Thoroughbred Stables, $350 thousand-$1 million
National Museum of Racing, $150-350 thousand, 20 jobs
North Metro Harness Initiative, $350 thousand-$1 million, 21 jobs
Ocala Breeders Sales Company $1-2 million, 194 jobs
R. Brisset Thoroughbred Stable LLC, $150-350 thousand, 25 jobs
Ralph Nicks Thoroughbreds, $150-350 thousand, 26 jobs
Richard Mandella Inc., $150-350 thousand, no report on jobs retained
Rood, Riddle & Partners PSC, $2-5 million, 374 jobs
Rood & Riddle Veterinary Pharmacy LLC, $150-350 thousand, 20 jobs
Sallee Horse Vans, Inc. $1-2 million, 81 jobs
Stone Farm LLC, $150-350 thousand, 21 jobs
Tampa Bay Downs, $2-5 million, 461 jobs
The Lexington Trots Breeders Association, $350 thousand-$1 million, 99 jobs
The New York Racing Association, $5-10 million, 453 jobs
Thoroughbred Daily News LLC, $350 thousand-$1 million, 22 jobs
Thoroughbred Racing Protective Bureau Inc., $150-350 thousand, 11 jobs
Thoroughbred Retirement Foundation Inc., $150-350 thousand, 13 jobs
Todd A. Pletcher Racing Stables, $1-2 million, 139 jobs
The Jockey Club Information Systems, Inc., $350 thousand-$1 million, 28 jobs
Three Chimneys Farm, $350 thousand-$1 million, 60 jobs
Tommy Town Thoroughbreds LLC, $150-$350 thousand, no report on jobs retained
West Point Thoroughbreds, $150-350 thousand, 10 jobs
Winchell Thoroughbreds LLC, $150-350 thousand, no report on jobs retained

Of 4,885,388 PPP loans, 72.8% of them were over $150,000, 56.6% exceeded $350,000, 34.8% were over $1 million, and 6.5% exceeded $5 million. The New York Racing Association was the recipient of the largest loan going to an equine-type business.

(Click here for a searchable database of PPP loan recipients of at least $150,000.)

Copyright © 2020 Horse Racing Business