CELL PHONES AND THE FINANCIALLY SQUEEZED CONSUMER

It is not surprising that pari-mutuel wagering in the United States has stagnated. The American consumer has been buffeted by falling real incomes and substantial increases in the prices of necessities like gasoline and medical care.

After accounting for inflation, median household income is 8.1% lower than it was in January 2000 and 7.2% below where it stood in December 2007. From June 2009 to June 2012, median household income fell 4.8 percent, to $50,964.

Declining real incomes and the escalating prices of essential goods and services have forced more and more people to make hard choices in order to balance their personal budgets. The decisions they reach are reflective of life in the 21st century.

A prime example is how the mounting costs of cell-phone usage are negatively affecting expenditures for goods and services that consumers historically have considered to be important.

In an article titled “Cellphones Are Eating the Family Budget.” The Wall Street Journal reported that consumers are spending less on entertainment, clothes, and dining out in order to be able to allocate more dollars to cell phones and related services.

The Journal stated that about 88% of adult Americans own cell phones, and the average U. S. household spent $1,226 annually on telephone services in 2011. In 2007, when Apple’s first iPhone became available, the average outlay was $1,110 a year. Families with multiple smartphones can have cell-phone bills exceeding $4,000 a year.

Vendors of pari-mutuel wagering are in a never-ending battle with other types of leisure offerings for a share of the entertainment dollar; and the entertainment dollar itself has come under intense pressure from diminished purchasing power. This means that whatever funds consumers have left for discretionary spending go to activities they consider to be the highest priority, whether that is going to a play or racetrack–or upgrading to the latest and most technologically advanced cell phone.

A competitive advantage for racetrack executives to convey to the growing number of financially squeezed adults is that an outing at a racetrack can be relatively inexpensive and perhaps even profitable. By contrast, the expenses for a couple of people attending, for example, an NFL game can easily eclipse several hundred dollars.

Copyright © 2012 The Blood-Horse. Used with permission.

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