WEALTHIEST U. S. HORSE-RACING OWNERS, 2017

Forbes magazine’s annual ranking of the 500 wealthiest U. S. citizens includes five individuals in 2017 with significant horse-racing interests currently in their families.

(Forbes stated that “A record $2 billion net worth is now required to be counted among the very richest Americans.  That means 176 billionaires were too poor to make the cut, and 13 members of last year’s list dropped off even though they are as rich or richer than they were a year ago.”  Kevin Plank, net worth $1.7 billion, Sagamore Racing, is one of the thirteen because of a huge decline in the stock price of Under Armour, the company he founded.)

John Malone, net worth $8.2 billion, age 76, primary residence Elizabeth, Colorado, 56th wealthiest American.

Thomas Benson, net worth $2.8 billion, age 90, primary residence New Orleans, Louisiana, 288th wealthiest American.

B. Wayne Hughes, net worth $2.7 billion, age 84, primary residence Lexington, Kentucky, 302nd wealthiest American.

Lee Bass (Ramona Bass), net worth $2.6 billion, age 61, primary residence Forth Worth, Texas, 315th wealthiest American.

Brad Kelley, net worth $2.3 billion, age 60, primary residence Franklin, Kentucky, 350th wealthiest American.

Forbes classifies all but Lee Bass as “self-made” rather than being born wealthy.

Copyright © 2017 Horse Racing Business

ARE MILLENNIALS THE DEATH KNELL FOR CASINO VLTS?

Video lottery terminals, or slots for short, are an important source of purse revenues in horse racing.  Moreover, some states have become increasingly dependent on slots and table games to fund operations.

The Wall Street Journal (November 7, 2017) ran an article titled “Northeast States Bet on Gambling,” which led off:  “The proliferation of legalized gambling in the Northeast is showing no sign of abating with states and developers continuing to push more casinos, in some cases to help fund state budgets and ward off competition.”

For example, although Pennsylvania is already the second largest gambling market in the United States, its governor signed a bill last week to increase the ways its residents can gamble, such as online, slots at truck stops and airports, and as many as 10 satellite casinos with up to 750 VLTs and 30 tables.  New York, Ohio, New Jersey, and Maryland have also been aggressive in expanding gambling.

For some time, I have wondered whether the popularity of VLTs may have peaked and will go into a long downward spiral.  This may be dead wrong, but it is a possibility, as younger generations age, in particular the largest segment of the U. S. population—the Millennials.  While there is no precise definition of Millennials, it refers approximately to people born between 1980 and 2000.  This group came of age in an era of the Internet, mobile computing, smartphones, social media, and online streaming.  How many of them will go to slots parlors as they get older is an open question.  Will they find it to be slow and boring?

New Mexico recently reported its operating results for video lottery terminals for fiscal year 2017.  Revenues were $226 million compared to $241 million in 2016 and $265 million in 2015.  This equates to a decline of 14.7% in the past two years.  Is this the beginning of a trend that will spread?  Or is it an islolated case owing to the downturn in the oil and gas industry?

I once thought that VLTs will gradually lose popularity as baby boomers are replaced by far more computer-savvy younger generations, who won’t go to casinos to play “passe” slots, an entertainment of choice for dad, mom, granddad, and grandma.  Now I am less sure because of what has happened recently in the U. S. book publishing industry.

Nearly a decade ago, Amazon introduced its Kindle e-book reader and quickly took market share from print books.  The future looked bleak for traditional paper books and brick-and-mortar bookstores.  In 2013, for instance, print books in the United States were down year-over-year about six percent.

Then, suddenly, the trend reversed itself.  In 2015, e-book sales decreased by 15% and declined another 17% in 2016.  By contrast, print book sales rose 5% from 2013 to 2016.

Predicting the fate of most technologies is dicey at best.  Just as the demise of traditional book publishing and conventional bookstores has not occurred, so too the gaming technology of slots in brick-and-mortar casinos may survive and even prosper in the future.  Many governors, legislators, and horse-racing interests had better hope so.

Copyright © 2017 Horse Racing Business

AN UNPRECEDENTED BREEDERS’ CUP STATISTIC FROM DEL MAR 2017

The overall pari-mutuel results from the 2017 Breeders’ Cup were routine.  Handle from all-sources wagering (on-track plus off-track) on the two-day event was $166.1 million, which was an increase of 5.5% over the total handle in 2016 at Santa Anita and an increase of 6.8% over the aggregate handle in 2015 at Keeneland.

However, obscured in the all-sources figures, is a truly amazing statistic having to do with on-track wagering.  I took the two-day on-track betting on the Breeders’ Cup in each of the last three years and divided it by the corresponding two-day attendance to derive a per-capita betting statistic.  Following are the numbers:

Per-Capita Betting

2017 Del Mar $375.59 (on-track handle $25,181,317, attendance 70,420)

2016 Santa Anita $175.07 (on-track handle $20,742,847, attendance 118,484)

2015 Keeneland $218.31 (on-track handle $20,663,054, attendance 94,652)

Thus the Del Mar per-capita wagering was a multiple of 2.15 over Santa Anita per-capita wagering in 2016 and 1.72 times greater than the per-capita betting at Keeneland in 2015.

In the 34-year history of the Breeders’ Cup, nothing has approached the magnitude of per-capita handle that occurred at Del Mar in 2017 and the size of the year-over-year increase.

The weather would not be a factor because Santa Anita had the approximate conditions in 2016.  The quality of the card was also unlikely the cause in that American Triple Crown winner American Pharoah ran his last race in the Breeders’ Cup Classic in 2015.

Whatever the reason, it is safe to say that the attendees at the Del Mar Breeders’ Cup were unrivaled in Breeders’ Cup history in terms of their willingness to open their wallets to bet.

Copyright © 2017 Horse Racing Business