Heres an article I read:
Reasons for the Decline of Horse Racing
By BENNETT LIEBMAN JUNE 6, 2010 10:34 AM June 6, 2010 10:34 am
We all know that horse racing is in decline. Thoroughbred racing declined nationally in handle by 7.3% in 2008, by 9.8% in 2009, and by 8.4% in the first four months of 2010. In New York State, total handle on horse racing fell by more than 10 percent in 2009. When you consider the changes in the consumer price index, New York racing handle is approximately 20 percent of what it was in 1974. What happened here? This article represents a subjective attempt to review what happened both in the nation and in New York State to bring about the fall from grace of the racing industry.
1. Other Forms of Gambling. Slots and casinos provide a simpler, quicker, more honest, and for most people, a more entertaining game in a better atmosphere. Lotteries are simple, easy, and convenient. Racing had a nearly total monopoly on gambling until the lottery came in. It may not be a coincidence that racing’s best year in New York was 1964, and we’ve been going downward since then. 1964 is the year that the lottery began in New Hampshire. By 1967, it started in New York. While it didn’t become a major fiscal force until the early 1980s, it provided the first form of convenience gambling, where you did not have to go to the track to make a bet.
By now, we have a situation where horse racing, which was almost the entire gambling market 40 years ago, is now a tiny part of the overall gambling market. Total thoroughbred handle in the U.S. was $12.3 billion in 2009. If you add in other pari-mutuels, you probably have a handle of $14 billion. Assuming a 20 percent takeout rate, that translates basically into revenue of about $2.8 billion.
Nationwide, commercial casinos brought in $30.74 billion, tribal casinos $29.4 billion, and racinos $6.4 billion. New York State raised $2.54 billion alone from the lottery last year, and lotteries nationally raise approximately $18 billion. There is also revenue from bingo, charitable gaming and card rooms plus considerable revenue from Internet wagering. Pari-mutuels (horse racing, dog racing and jai-alai) probably are down to about 3 percent of the gambling industry.
2. Traditional Individual Sports. Horse racing is not alone. Many traditional individual sports have seen their popularity tumble since the 1950s. These sports initially thrived in the early days of TV, but have largely faded out. Think of boxing, bowling, track and field, tennis. At one time, these were major sports. The decathlon champion was the greatest athlete in the world, whether it was Bob Mathias, Rafer Johnson or Bill Toomey. Now hardly anyone knows who the decathlon champion might be.
Boxing in reality is a lot like horse racing. It’s an individual sport regulated largely on the state level. Now, nobody cares about normal individual matches. The club fight gyms and the club fighters have disappeared, and the public is only interested in the big championship events. It’s a lot like horse racing where there is tremendous interest in the Triple Crown, but little interest thereafter.
Is tennis that much different? There is considerable interest in the four major events but not that much interest in the other tournaments. By now, there are top professionals like Serena Williams who hardly bother to play in the non-major events.
3. The Suburbanization of America. Urban ethnic America in the 1940s to 1960s went to the racetrack. As these ethnic groups moved to suburbia, they largely stopped going to the racetrack. Whatever the reason, when people left Brooklyn and Queens in the 1960s and moved to Long Island, they stopped going to the track. Pretty much the same thing happened in Los Angeles and Chicago.
4. Corruption and the Inability to Prevent It. The perception that the sport is not being conducted on a fair level has harmed racing greatly and almost destroyed the sport of harness racing. When there were no other forms of legal gambling, the sport could get by with the odor of corruption. But with faster and more honest gambling venues now close at hand, the sport cannot tolerate corruption.
5. Drugs. The sport has not been able to prevent the use of drugs and the belief that many of the sport’s leading trainers have regularly chemically enhanced the performances of their horses. We have never been able to explain or explain away the Oscar Barrera phenomenon, where one trainer in New York in the late 1970s and early 1980s seemed to be able to improve a horse’s performance magically overnight.
6. Public Perception. Numbers 4 and 5 plus the use of whips on horses and the catastrophic injuries we have seen in major races have contributed to the public perception that horse racing is a cruel sport which has little concern for the health or the safety of the horse.
7. Government Involvement. It is not that government has taken too much money out of racing and appropriated it for itself. That may have been true before 1980, but by now, most every racetrack has a very low tax rate. Now government’s problem is that it cannot let racing or racetracks fail. It has kept racetracks in existence where there was no public interest in their races. It has forced racetracks to race far too many programs than are supported by public demand. The government seems to believe that the laws of supply and demand do not apply to horse racing.
8. Inability to Present Racing Effectively on TV. Again, it’s not that racing wasn’t on TV. It was on TV frequently regularly in the late 1940s and 1950s. The problem has been that we have never been able to show the sport to its best advantage on TV. It’s much like ice hockey — exciting sport to watch live — hard to follow and misses something on the tube. We have never been able to make the sport move quickly. We have never been able to produce announcers who seem to be the voice of the sport. There is no racing equivalent of Vin Scully, Red Barber, Mel Allen, Keith Jackson, John Madden or Marv Albert. At least tennis had Bud Collins. Maybe HDTV will help, but we’ve never been able to produce a compelling televised racing program.
9. Takeout Issues. Again, maybe this didn’t matter when racing was the only game in town, but how with a 20 percent overall takeout does it compete with slots (a 5 to 10 percent takeout), and many table games (skill games such as blackjack and poker) which give you an even better chance at winning. When you hear from the major rebate shops, that without the rebate, even their most skilled players almost never beat the takeout, you wonder why you play the game.
10. Inability to Market Its Advantages. Racing does have some advantages. There’s a tremendous international interest in horse racing. It’s one of the few sports where men and women can compete equally as trainer, jockeys, and drivers. It’s the only sport with legal Internet wagering. Yet, we’ve never been able to use these advantages to advance the sport. Horse racing should have dozens of Danica Patricks. All we have are recollections of Julie Krone who retired six and a half years ago.
11. Failure to Race Horses. The average number of starts per runner in thoroughbred racing is now 6.23 per year. (It actually went up for the first time since 1992.) It was at 11.31 in 1960. How can you build stars or attract a following when horses race so infrequently?
12. Lack of a Central System for Internet or Account Wagering. It might normally be that competition is good in racing, but the lack of a central platform for account wagers makes it difficult and confusing for people to place wagers. The overall systems are simply too confusing. Can you bet Churchill on TVG? Can you bet harness racing through NYRA One? Shouldn’t there be an easier way to exploit horse racing’s monopoly on legalized Internet wagering?
13. The Knowledge Base of Racing. As much as we might enjoy the art and/or skill of handicapping, the learning curve for learning how to play the horses is simply too steep. (Again, there‘s no learning curve with a slot machine.) We have never developed a simple way for people to bet the horses with a modicum of skill. We have never developed a racing program which works to attract newcomers to the sport. We have made the act of placing a knowledgeable bet too hard.
14. The initial 1970s OTB Experience. I’m not sure that the existing OTB experience is all that bad, but the initial encounters with OTB in the 1970s severely damaged the perception of the sport. Because of the total absence of amenities and the disreputable conditions of the parlors, horse racing in New York went from the sport of kings to the lodging place of the low lives. Again, the perception of the sport of racing (See No. 6 above) took a hit, and I’m not sure it has meaningfully recovered. Ask someone about horse racing today. Do they think of Secretariat, or do they think of elderly unshaven males hanging out at an OTB?
Also, the initial OTB experience in New York truly hurt harness racing. With the OTB’s rarely open at night, numerous harness fans — who wanted to follow horses in action — became thoroughbred bettors. I doubt that harness racing in New York has ever recovered.
15. Management in Racing. Perhaps it is understandable, given all the problems, but too often, management in racing is strictly reactive. They believe that they live under a cloud much like Al Capp’s Joe Btfsplk. It has too often become a passive-aggressive world where people in racing management spend their professional lives playing the victim of the government and/or the racing gods. They have become terrific crisis managers, but not leaders.
Added New York State Issues:
1. The Breeders’ Cup. The Breeders’ Cup has destroyed any championship nature of the Belmont fall meet. The best horses were at Belmont fall. You had to be there to be a champion. Now these races have little meaning, and coupled with the presumed rest requirements of the modern thoroughbred (and the thought process of the modern thoroughbred trainer), a great horse is hard to find at Belmont in the fall.
2. No VLT’s at Aqueduct. Not only has the lack of video lottery terminals made a mockery of New York government, it has significantly hurt the New York breeding industry. Why breed in New York when you can do better in other states? Given New York racing’s dependency on New York-breds, this is an extremely serious problem.
3. Winter Racing. The winter racing requirement makes little sense. Aqueduct in January does help the purse cushion for Saratoga, but it dampens whatever interest there could conceivably be for New York racing.
4. The Detention Barn. While it might have once worked to prevent milkshakes, all the detention barn does now is discourage horses from shipping to New York. Five years of an ineffective policy ought to be enough.
5. Internet Video Streaming. It may not be a major deal, but there is no reason why the races can’t be shown live on the Internet.
6. The OTB Structure. I actually think that by now this may be only a minor issue. The OTB’s (at least those not in bankruptcy) now do provide a decent amount of revenue to the tracks inside New York State. For example in 2008, the bettors at Western OTB, which operates in 15 counties in western New York State, bet slightly more than $29 million on races conducted at the New York Racing Association. NYRA received in direct and indirect payments slightly more than $3.7 million from Western OTB. That’s a return of 12.7 percent from an OTB system which is not located anywhere near any NYRA track. (Right now NYRA is in imminent trouble because of NYCOTB not paying these fees.) We could get some savings by combing functions and by shared Internet service, but the savings might not be all that significant. We would get a more efficient system, but it might cost as much as the current system.
I used to relate everything that happened in racing to the New York OTB’s, but the fact is that racing handle is declining everywhere, regardless of the statutory framework established for the OTB operation. It is convenient but probably not accurate to blame this on the structure of the New York OTB’s.
A Nonissue:
The Age of the Patrons. It is said frequently that racing has been unable to attract the computer gage people: Generation X or Y. Why aren’t there younger faces in the crowd like there are at Saratoga or Del Mar? The short answer is that horse racing has always appealed to an older demographic. For decades, people have been complaining that there are no young fans at the tracks. The fact is there almost never were any young fans at the track. Horse racing is not likely to appeal to Gen Y. Horse racing’s problem is that baby boomers — who should now be at the right age to go to the track — are not going to the track. There are more senior citizens in the U.S. than ever before. There will be even more in the next two decades. Racing’s problem is that they’re going to casinos and playing the lottery instead of going to the track.
Racing has never been a young person’s sport. The problem is why the baby boomers are not going to the track and what can be done to get baby boomers to go there.
