Absent a positive catalyst that reverses the secular downward trend in pari-mutuel handle, the North American horse racing industry is on the path to painful downsizing.  The assumption here is that racino states will gradually withdraw casino gaming subsidies allocated to purses and the timetable for the downsizing depends on how rapidly this occurs.

This future is not set in stone and the grim outcome might be interdicted if the racetracks would experiment with strategic initiatives.  However, to date, racetrack executives have shown no such ability or a willingness to try.  (More on this in Part III.)

Following are overviews of two scenarios pertaining to what a greatly rationalized horse racing industry could look like.

Scenario 1.  Horse racing has largely become a weekend event in the United States and Canada, with races held on Fridays, Saturdays, and Sundays and on the holidays in the summer.  A number of small racetracks hang on but there are about a dozen racetracks left that account for the bulk of the pari-mutuel wagering.

Many of the former racinos have abandoned horse racing altogether, with the encouragement of state governments.  Even racing at Gulfstream Park was closed down, as Frank Stronach’s heirs were not interested in horse racing.

Saratoga, Del Mar, and Keeneland still hold short meets and Churchill Downs persists with the Kentucky Derby tradition.  The Preakness and Belmont are held at Laurel Park and Belmont (the old Belmont infrastructure was demolished and replaced with a 10,000-seat facility.)  Aqueduct is defunct, Santa Anita’s fate is uncertain, and cold-weather racing is mostly a thing of the past.

The bloodstock industry is a shadow of its former self, with most of the farms in Lexington and Ocala sold off for commercial and residential development.  The horse auctions at Keeneland and Saratoga are in business, but on nothing like the scale of 10 years ago.

Though aggregate pari-mutuel handle is much lower than it was at the beginning of the 21st century, handle and purses have been growing some, using a per-race metric, because there are far fewer races to bet on.

The advance deposit wagering companies have been pared to only a few, which survive by offering a combination of North American and foreign-based races.

Scenario 2.  North American horse racing has become very similar to steeplechase racing.  Thoroughbred breeding and racing is now primarily a hobby for affluent owners, who compete mainly for sport rather than for money.  One and two-day pari-mutuel meets are held on farms and facilities specially built to accommodate them, such as Percy Warner Park in Nashville, Tennessee and the Montpelier estate near Orange, Virginia.

Copyright ©2015 Horse Racing Business

Next:  Part III.