Gross domestic product or GDP is often used as a benchmark to evaluate how well an industry or a company is performing. I quantified how closely pari-mutuel handle for flat racing in the United States has mimicked U. S. GDP in the twenty-first century.
The correlation between the annual growth rates (positive and negative) of pari-mutuel handle and GDP for the years 2000 through 2021 is only 0.5791. A perfect positive correlation is 0.1, so a coefficient of 0.5791 indicates that the annual growth rates in pari-mutuel handle and GDP are moderately correlated. Discretionary income for leisure activities like betting varies with the state of the economy, as reflected in GDP.
In the twenty-two years from 2000 through 2021, GDP grew faster (or decreased less) than pari-mutuel handle in sixteen of those years. The six years in which pari-mutuel handle performed better than GDP were 2000, 2001, 2002, 2018, 2020, and 2021.
2000: the tech bubble in the economy burst. Pari-mutuel handle grew by 4.4% compared to 4.1% for GDP.
2001: the United States economy was damaged by the horrific terrorist attacks on September 11; handle increased by 1.9% versus 1.0% for the economy.
2002: handle grew by 3.2% and GDP by 1.7%.
2018: Justify won the Triple Crown. Handle increased by 3.3% in contrast to 3.0% for GDP. (In 2015, American Pharaoh became the first Triple Crown champion since 1978, but it did not translate into much growth in handle…1.2% for the year compared to 3.1% for GDP.)
2020 and 2021: the pandemic years. In 2020, handle growth was a negative 1.0% whereas GDP dropped by 3.4%. In 2021, handle soared by 11.8% versus 5.7% for GDP.
There are a number of plausible reasons why growth in pari-mutuel handle has generally not kept up with GDP, among them relatively high takeout rates, the spread of casinos across the United States, racetracks going out of business, and the diffusion of sports betting.
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