Archives for November 2020


It is a vast understatement to say that 2020 has been challenging for the global horse racing business; and it will take more time for a recovery to take place. How much time is uncertain because there is too little comparable history upon which to base estimates.

The world is still in the midst of the Covid-19 pandemic and, though approved vaccines will be coming onto the market soon, there is still a risky journey ahead before things can normalize.  It will likely take at least all of next year to markedly curb the spread of COVID-19.  And there is no certainty that vaccines will work as planned, especially if the virus mutates or a large percentage of the world’s population refuses to be inoculated or does not have access to a vaccine.

An early sign of the pandemic hitting the American horse racing industry full force emerged with postponement of the Kentucky Derby from the first Saturday in May until the first Saturday in September…with no fans at Churchill Downs.  It was the second time that the race had been rescheduled. The first came in 1945, near the conclusion of World War II.  Whether a 2021 Kentucky Derby can be run on the first Saturday in May with 150,000-plus fans in attendance is highly doubtful.

The horse racing industry, like all enterprises, was caught off guard by the pandemic and therefore was understandably unprepared to handle a black swan event like Covid-19. No medical equivalents of the informative betting tips and guide were available to help, as living people had never encountered such a devastating pandemic.

In spite of on-track fan restrictions forced by Covid-19, expanded horse racing on television brought at-home fans relief from cabin fever.  Daily racing telecasts from Saratoga, Del Mar, Keeneland and other tracks across North America provided fans with the next best thing to watching on track.

In a best-case outcome, with Covid-19 vaccinations beginning in December 2020, by mid-2021 sporting events will be able to accommodate large crowds of spectators.  While the NCAA has already determined that its annual mega-bucks “March Madness” men’s basketball tournament will not allow fans in 2021–and will be confined to sites in and around Indianapolis, Indiana–the rescheduled 2020 Toyko Olympics organizers optimistically plan to have fans in attendance from July 23-August 8, 2021.

Almost every aspect of daily living has been altered by COVID, including sports.  Sports competitions offer fans a diversion from day-to-day problems and often bring together people who otherwise have little in common. Thus a return to pre-Covid days would be a global healing of sorts.

Horse racing is in a better position than most sports in terms of coping with the deleterious financial effects of a pandemic, as it has a revenue stream from online wagering.  Nonetheless, days when fans can enjoy being at a racetrack up close and personal are ahead, hopefully sooner rather than later.

Copyright 2020 Horse Racing Business


At the November 2020 auction at Fasig-Tipton in Lexington, Kentucky, three exceptional female racehorses were actively sought by buyers.  When the hammer fell, Monomoy Girl, Rushing Fall, and Midnight Bisou sold for $9.5 million, $5.5 million, and $5 million, respectively.   When one thinks about such lofty prices for terrific racehorses, but unproven broodmare prospects, what comes to mind is how buyers justified paying the prices. 

Another November 2020 auction was even more eye-opening.  A two-week racing-pigeon sale culminated with a Chinese buyer using the pseudonym Super-Duper paying a record price of $1.9 million for a Belgian-bred hen named New Kim.  Super-Duper engaged in a heated bidding contest with a buyer going by the name of Hitman and the final sale price of $1.9 million eclipsed last year’s record price by $406,000, for a pigeon called Armando.  The life span of a pigeon is in the very wide range of 3 to 15 years. 

A value on assets like corporate stocks can be estimated using, for example, a discounted cash flow formula.  While the assumptions employed in the model may prove to be incorrect, there is at least an underlying rationale.  By contrast, gold is a commodity that many investors and speculators buy even though it generates no cash flows and therefore the discounted cash flow method cannot be applied.  Gold is worth basically what buyers perceive it to be as a scarce asset and gold buyers must predict that sentiment at a future time.

A discounted cash flow can be calculated on a racehorse or stallion or broodmare.  For instance, Monomoy Girl can still be raced and afterwards her foals can be sold at auction.  Yet this is an extremely speculative exercise at best in that it requires heroic assumptions about how many times she will get in foal and what the quality of said foals will be.  Modeling the discounted cash flow value of a racing pigeon is even more of an exercise in futility.  Gold, by comparison, is a much safer asset to own than racehorses or racing pigeons because gold won’t fail to reproduce, or reproduce quality offspring, or die prematurely.

A few wealthy players with a penchant for high-stakes risk taking—whether it is buying racehorses or racing pigeons—are attracted by the thrill of the chase.  Las Vegas might call them “whales.” For whales, discounted cash flow is a foreign concept.

Copyright © 2020 Horse Racing Business


The New Jersey Racing Commission is instituting a rule that riding crops or whips can be used by jockeys only for reasons of safety.  The Jockey Guild is suing to prevent the rule from being implemented.  Guild co-chairman John Velazquez stated the reasoning:

“We strongly believe the rule adopted by the New Jersey Racing Commission will have serious consequences and could result in even greater risks and dangers for both the horses and jockeys.  There are many instances when we need to be able to use the riding crop to prevent a dangerous situation from occurring that is not able to be seen or known by those who are not on the horse’s back. While purported to focus on the welfare of the horse, by not considering these instances, the new rule actually disregards the safety of the jockey and the horse.”

Empirical evidence pertaining to whip usage in horse racing recently became available in a British/Australian study titled “Is Whip Use Important to Thoroughbred Racing Integrity?  What Stewards’ Reports Reveal about Fairness to Punters, Jockeys and Horses.”  The full peer-reviewed report (which can be accessed at the end of this post) was published in late October 2020 on the scholarly open access website MDPI. 

Following is excerpted from the overview:

“As a multibillion-dollar industry involving gambling and animals, fairness is essential to thoroughbred racing. This is referred to as racing integrity. Whilst there are comprehensive rules and regulations governing equipment and conduct, whip use is the most publicly visible enforcement of integrity in racing. As a tool for ‘encouragement,’ whip use is believed to give everyone a fair chance of winning, including owners, trainers, jockeys, horses and punters. As a tool for ‘steering,’ whip use is also believed to be essential for the safety of the horse and jockey. However, the impact of whip use on steering and safety has not been studied. In this article, we compare ‘whipping-free’ races in Great Britain, where whips are held but not used with the more commonplace ‘whipping-permitted’ races. Our analysis of stewards’ reports for 126 races involving 1,178 starters over three years found no statistically significant differences between stewards having anything to report, movement on course, interference on course, incidents related to jockey behaviour or race finishing times. Our findings, that whip use is not related to racing integrity, support the normalisation of ‘whipping-free’ races, which we expect to improve horse welfare and social acceptance.”

The researchers/authors went on to explain their methodology and findings in more detail:

“The idea that whip use is critical to thoroughbred racing integrity is culturally entrenched but lacks empirical support. To test the longstanding beliefs that whip use aids steering, reduces interference, increases safety and improves finishing times, we conducted a mixed-method analysis of 126 race reports produced by official stewards of the British Horseracing Authority, representing 1,178 jockeys and their horses. We compared reports from 67 ‘Hands and Heels’ races, where whips are held but not used (whipping-free, WF), with 59 reports from case-matched races where whipping was permitted (whipping permitted, WP). Qualitative coding was used to identify and categorise units of analysis for statistical testing via logistic regression and linear mixed model regression. For both types of race, we explored stewards having anything to report at all, movement on course, interference on course, incidents related to jockey behaviour and finishing times. There were no statistically significant differences between WF and WP races for anything to report…jockey-related incidents…, and race times… That is, we found no evidence that whip use improves steering, reduces interference, increases safety or improves finishing times. These findings suggest that the WF races do not compromise racing integrity. They also highlight the need for more effective ways to improve the steering of horses.”

Findings from this study are obviously unsupportive of The Jockey Guild’s objection to whip rule curbs or bans.  It would assist state racing commissions across the United States to decide about whip-usage rules–in a fact-based manner–if the Jockey Guild were to respond to the soundness of the methodology and the validity of the results of this study.

Copyright © 2020 Horse Racing Business

(The entire report along with the British and Australian authors’ names and affiliations can be accessed by clicking here.)