Archives for March 2021

A March 15, 2021, article on HorseRacingBusiness.com explored the potential negative impact that a $15 minimum wage would have on many racehorse trainers and other racing businesses.  Another glaring issue is that it is increasingly difficult for small businesses to find employees.  This has always been a problem in horse racing because of the long work hours, travel, and relatively low pay and benefits.

Now the problem has been exacerbated by the federal government’s pandemic-related rescue packages that, in effect, compete with private-sector hiring.  In fact, the National Federation of Independent Businesses (NFIB)–the largest advocacy organization for small enterprises in the United States–reports that 40 percent of small business owners could not fill job openings in February 2021, a seven percent increase from January.  This resulted even though 25 percent of small businesses boosted compensation to attract job-seekers.

The scarcity of job applicants comes in the midst of a recovering economy with around 10 to 18 million people counted as unemployed.

The Foundation for Economic Freedom (FEF) asked: “So, where are the workers?”

The answers include the lack of childcare for families whose children are being schooled remotely as many schools are either not open or are using a hybrid schedule.  FEF also said that people with pre-existing health conditions could be fearful of resuming work outside the home.

FEF went on to say:

“But all things considered, the federal government’s increase and extension of jobless benefits is likely playing an outsized role in the decision many Americans are making to stay home.

Prior to the pandemic, the average person on unemployment received $378 a week, and most states offered these benefits for a period of 26 weeks or less. But in response to the lockdowns (that the government itself implemented), Congress began passing ‘relief’ packages in 2020 that vastly expanded those numbers.

At the height of the pandemic, individuals were paid $600 a week by the federal government, giving the average collector a weekly rate of $978 for an extended period of 39 weeks.

Under the new [2021] legislation, out-of-work Americans can collect benefits through September of this year (depending on the program) and will receive between $300-$400 additional federal dollars per week.”

While unemployed Americans need help in this difficult time, the federal government’s efforts to address pandemic-related unemployment have had an adverse effect on employers.  Until herd immunity from COVID-19 is attained and the economy returns to a pre-pandemic sense of normalcy, small businesses will struggle to have enough employees to serve their customers.

An unknown percentage of horse-racing businesses will have to at least temporarily curtail the size of their operations and some may go out of business altogether.

Copyright © 2021 Horse Racing Business

A brand-new federally regulated betting exchange called Kalshi (the Arab word for “everything”) is up and running and lets people trade on disparate event outcomes.  Kalshi, founded by two twenty-something entrepreneurs with M.I. T. backgrounds, has already raised over $36 million from prominent investors.  A Kalshi user is able to buy a “yes” or “no” contract on a wide range of topics, regarding their belief that a future event will or will not occur.  (Per federal law, events must preclude war, terrorism, assassinations, or gaming.) 

A contract will pay $1 if the user makes the correct yes-or-no prediction.  The user will purchase a contract for between $0 and $1, depending on where the market is trading at a given time.   A Kalshi user will be able to exit a trade before the outcome of an event is determined.  For instance, suppose in June 2020 someone had bought an existing contract for 40 cents that would pay off if a COVID-19 vaccine would be approved by the FDA before the end of 2020.  As the prospects grew brighter for vaccine approval by late 2020, the user could sell the contract for, say, 80 cents.

A few of the current events open on Kalshi are:

Will the real GDP increase this quarter?

Will the Toyko Summer Olympics be cancelled?

Will the CPI increase this month?

Will the high in Central Park, NY be above 100 degrees this week (August 1, 2021)?

If Kalshi proves to be successful, look for competitors to come into the market.  Whether Churchill Downs, Inc., Penn, and other major players in the racing industry could get regulatory approval for a Kalshi-like operation is unknown.  Certainly, for instance, Churchill Downs could not post an event that management can control, such as:  Will the Kentucky Derby in 2022 be run with attendance at Churchill Downs limited to less than 80% of capacity?  But other events could be crafted that would permit “yes” or “no” betting:

Will the winning time for the 2021 Kentucky Derby be 2:02 minutes or less?

Will all-sources wagering on the 2021 Kentucky Derby race itself surpass $160 million?

Will the high temperature in Louisville, Kentucky on Kentucky Derby day 2021 exceed 74 degrees fahrenheit?

Copyright © 2021 Horse Racing Business

Not having the Grand National and its three-day Festival at Aintree outside Liverpool left a reported hole of £500,000,000 in the finances of British horse racing and related businesses in 2020.

That is proof, as if it were needed, that the world’s most famous steeplechase remains a huge part of the international program of this global sport.  Around two-thirds of adults in the UK are thought to place a bet on the Grand National each year, most of whom don’t normally follow horse racing.

Absence may make the heart grow fonder.  With a worldwide TV audience in the hundreds of millions, the Aintree 4-mile 514-yard marathon handicap is the highlight of a three-day jumps horse racing festival that returns in 2021 after being cancelled in 2020 owing to the COVID-19 pandemic.

The Grand National meet starts on Thursday, April 8 and there are 19 graded races across the three days.  Of those, 11 hold Group 1 status, so this is a major festival in its own right and not just following on from Cheltenham in March.

Here is what horse racing fans have to look forward to at Aintree, though sadly dual winner Tiger Roll won’t be among runners for the Grand National day 3 and bidding for a third win in the race as his owners felt he was excessively weighted in the handicap.  The first day sees four consecutive Grade 1 races kick the meeting off with a bang. 

They include the Aintree Bowl over 3 miles and the Aintree Hurdle over 2 1/2 miles.  Those horses that competed in the Champion Hurdle, plus Paul Nicholls’ McFabulous could tackle the latter on a card that also contains a Group 2 National Hunt Flat race for fillies and mares.

Headlining the middle day of the Grand National Festival is the Melling Chase sponsored by Marsh & McLennan Companies, Inc.  Entries for the 2 1/2 mile feature race could include previous winners Min and Politologue.  Both are in the veteran stage of their careers as 10-year-olds, but fought out the finish of the last two editions of the Melling. There are also three Group 1 novice events on this card. 

On Grand National day, everything builds toward the big race. Supporting Aintree’s showpiece steeplechase is the Liverpool Hurdle over 3 miles that has been partnered by Irish international budget airline Ryanair in recent years.  The sponsor’s group chief executive Michael O’Leary is brother to the boss of Gigginstown House Stud.

Those racehorse owners have enjoyed plenty of success in the Grand National itself, thanks to victories for maiden Rule The World and the icon Tiger Roll.  Every race on the final day of the Aintree festival holds graded status, including two elite novice events, an open National Hunt Flat race, and a couple of handicaps.

In the Grand National itself, a massive maximum field of 40 horses are allowed to run. They face two laps of the special track, which has unique spruce-covered fences, many of which are bigger than the obstacles encountered in regulation steeplechases like those on the inner Mildmay course. 

After missing out on holding their April festival last year, Aintree will be striving to come back stronger than ever as horse racing and supporting industries in the UK cannot afford to miss out on another Grand National.

Horse Racing Business 2021