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Handle on U.S. Racing Off Less Than One Percent in 2020

Despite a racing calendar ravaged by the coronavirus, all-sources handle on U.S. racing in 2020 declined by just .98%. According to Equibase, total handle on the year was $10,925,226,444 or $108,597,919 less than what it was in 2019.

Had the Triple Crown races not been rescheduled, it’s possible that handle might have risen on the year. The total handle for the three race days combined dropped by $208 million, or more than what handle was off for the entire year.

“The horse racing community is extremely resilient as borne out by the fact that despite the widespread and negative impacts of the coronavirus pandemic, pari-mutuel wagering on U.S. races held steady in 2020 at nearly $11 billion,” NTRA President and CEO Alex Waldrop said in a statement. “We thank both our customers and all of our essential participants on the backside and beyond for keeping the sport going and supporting the industry during what continues to be an unprecedented and challenging period, not only in the United States but around the world.”

The 2020 numbers were largely in line with the amount bet every year since 2011, when $10.77 billion was wagered. Since they have been relatively stagnant. However, the handle figure for 2020 represents a sharp decline from racing’s peak year in 2003 when a record $15.18 billion was bet.

The numbers were achieved during a year in which there was a 23.5% decline in the number of races that were run and a 25.38% drop in the number of racing programs that were offered. That was offset by a significant increase in the average amount wagered per race, which was $394,412, for a 29.4% increase over 2019. That could mean that there was little to no growth in the industry went it comes to wagering and that players simply bet the same amount of money that they did in 2019, but spread it around among fewer races.

When the major sports all shut down due to the coronavirus, horse racing had a window where it was the only legal form of sports wagering available and, thanks to its television presence, one of the few sporting events available for viewing. Whether or not racing picked up new customers during that period is open for debate.

“It will remain to be seen what the 2020 numbers mean,” said Marshall Gramm, an economics professor who is also an owner and horseplayer. “I don’t know if it’s reason to be positive or negative. I’m somewhat disappointed to see that we weren’t up on the year. But it’s hard to come out definitively to say this was a bad year or this was great year because there were so many factors involved. In many ways, there is some optimism to take away from this because handle wasn’t down as much as you might have thought with the lost days and lost events.”

Ironically, handle surged in the second half of the year, a time in which the major sports opened back up for business. After handle fell by 10.88% in the first half of the year, it increased by 9.49% in the second half. December proved to be a particularly good month, with $751.7 million wagered, an increase of 6.24%

Perhaps the most alarming number to come out Tuesday when Equibase released the year-end figures was the amount paid out in purses. Purses in 2020 totaled $869.7 million, a 25.53% drop from 2019 and the lowest amount paid out since 1997. The average purse for a race in 2020 was $31,399, a 2.7% decrease from the previous year.

The average field size for the year was 7.94, a 5.51% increase from 2019.

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TIF: How Will Racing Pay for HISA? Grow the Business!

by Thoroughbred Idea Foundation

The creation of the Horseracing Integrity and Safety Authority (HISA) is the most significant development in American racing at the federal level since the passage of the Interstate Horseracing Act in 1978.

Questions now being rightly considered include how much HISA will cost and where will its funding originate from. Below, we offer some perspective on the costs. But as the greater industry determines where the funding will come from over time, racing should proactively adopt policies which seek to grow the wagering business.

The industry already has a plethora of obligations–aftercare, backstretch programs, integrity matters, jockey health and equine research, not to mention purses, the main driver for investment from owners. HISA adds to these. The best way for horse racing to afford all of its obligations is to grow the business.

Racing’s wagering business needs to evolve–appropriate pricing of bets, improving access and reducing costs to accurate data, complementing pari-mutuel betting with fixed odds options, modernizing existing bet processing and infrastructure, all while increasing transparency to the public in many areas. Increasing costs to our already fragile wagering markets, or to a declining base of horse owners, without these needed improvements is a recipe for disaster.

Any step where costs to betting are increased to help pay for HISA programs will hurt the greater racing business.

Projecting Costs

There is every reason to expect that a new level of federal bureaucracy functioning on top of individual state commissions will be expensive.

As it relates to testing, these expenses are fairly clear. For example, if the per-race spending on testing alone from the more than 5,000 races across all breeds overseen by the California Horse Racing Board were extrapolated across the entirety of U.S. Thoroughbred racing, nationwide testing alone would run approximately $20 million annually at current standards.

This is a cost already borne by individual commissions.

Factoring in improvements and upgraded requirements, it should be understood that the $20 million–just for testing–merely represents a starting point.

Administratively, what it will cost to start a federal authority from scratch is more challenging to envision. The HISA creates a layer of federal bureaucracy where one never previously existed. This isn’t necessarily good or bad, it is a reality in development with little insight on costs to this point.

HISA requires the registration of all “covered persons”–an umbrella term which, according to the language of the bill, includes “all trainers, owners, breeders, jockeys, racetracks, veterinarians, persons (legal and natural) licensed by a State racing commission and the agents, assigns, and employees of such persons and other horse support personnel who are engaged in the care, training, or racing of covered horses [basically, all active Thoroughbreds].”

Most are already licensed by existing commissions, but some are not. Will that information be shared or require completely new registrations? The exact administrative requirements are (understandably) unknown to this point, but all of this will come with costs.

The United States Anti-Doping Agency (USADA), which will assist in the development of HISA, serves as a potential reference point to understand the possible administrative expenses.

According to its annual report, USADA conducted more than 14,000 tests in 2019 across various groups which include America’s Olympic and Paralympic athletes, services to the UFC or contracted services for other events, such as the Boston and New York City Marathons. Off a base of just 30,000 Thoroughbred races, down from 36,000 run in 2019, it is reasonable to expect the number of annual tests in U.S. Thoroughbred racing would be no less than five times larger than those conducted by USADA, and very likely more.

USADA’s testing costs in 2019 ran more than $13.5 million, but non-testing expenses, which includes results management, science, research and development and drug reference, education and awareness, as well as general and administrative expenses totaled an additional $9.3 million.

It would be reasonable to estimate that HISA’s costs would be similar, if not more, given a substantially increased number of tests, across a far larger base of competitors and events (races) requiring tests.

Whatever the exact costs, it will be more than in pre-HISA times.

Grow the Business

The best chance racing has of covering HISA costs is if racing finds a way to actually grow the business, turning around two decades of decline.

Grow the business. Grow the business. Grow the business.

State commissions are, for the most part, funded through fees assessed to, or withheld from, the sport’s participants. Receiving a portion of the hold from wagering takeout is one source of funding, licensing fees and starter fees are another. Some receive funding through a share of alternative gaming revenue too.

If wagering on racing continues to decline, recalling that it has dropped roughly 50% adjusted for inflation over nearly the last two decades, the ability to pay for HISA and plenty of other programs required of the industry–aftercare initiatives, jockey health, equine research, among others–would grow increasingly difficult. Takeout hikes would be a completely counterproductive measure to pay for HISA as betting churn would decline.

The path to a brighter future, where the industry’s liabilities can be covered, is wagering growth.

More wagering on racing yields a more sustainable business for all stakeholders. But yet, many of the decisions made by racing operators over the last two decades have been in opposition to growing wagering on racing. This has to change.

Whether it is the continuation of churn-killing jackpot bets, high takeout rates, an aversion from many to exploring fixed-odds options, or continuing to operate antiquated pari-mutuel bet-processing systems without modernization–these and other actions have greatly limited racing’s growth, all as the sport’s liabilities increase and its social license to operate becomes tougher to retain.

As racing and humanity emerge from a troubling calendar year, make no mistake that 2020 was a year of tremendous growth in legal sports betting. Those states doing the best with sports betting are those which have embraced online betting and competitive markets. While the overall environment for betting has never been stronger, racing’s wagering product remains stagnant.

If racing wants to succeed, and cover its growing liabilities which now include HISA, it must undertake measures to radically improve–and grow–the wagering business.

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Pennsylvania: Continued Casino Closures Would Make Racing Dependent On Break-Even Handle

Penn National's current purse account will allow the Grantville, Penn. track to race through the end of January whether or not Hollywood Casino remains closed, according to a Tuesday memo from the Pennsylvania Horsemen's Benevolent and Protective Association executive director Todd Mostoller.

Should Gov. Tom Wolf extend the casino closure past the current Jan. 4 expiration date, however, racing at Penn National will become contingent on track handle.

“Penn National has agreed to continue live racing through [January], provided the handle generates a break-even scenario for the company,” Mostoller wrote. “This is estimated to be a handle of roughly $1.4 million per night.”

Mostoller's memo indicated that both the track and the Pennsylvania HBPA are confident that level of handle is achievable, but added that if it is not, Penn National management will “likely wish to temporarily shut down racing.”

The memo concluded with an encouragement to bet the races through HollywoodRaces.com: “A bet placed on Penn National races through this ADW is treated the same as a wager placed on track, resulting in considerably higher revenue for both horsemen and the track.”

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Stories to Watch in 2021

It’s time to turn the page from what was a horrendous year. Thank goodness. The year 2021 is upon us and, for horse racing, it figures to be an important and eventful 12 months. These are the stories we will be talking about and writing about in 2021:

Will Handle Be On The Rise?

Perhaps the most positive story to come out of 2020 has been the handle figures. With the pandemic causing a sizeable reduction when it comes to the amount of races that were run, betting figured to have declined steeply this year. Instead, entering December, it was off just 1.48% for the year. The number of total races run was down by 24.52%.

This could mean that handle will show a significant bump in 2021. The theory is that racing picked up some new customers during the months where it was the only sporting event going and that is why the handle numbers for 2020 didn’t fall off a cliff. With what should be a fairly normal racing schedule in 2021 and with racing perhaps having grown its customer base, this could be a year where the sport takes a needed step forward.

Then again, the 2020 figures could be nothing more than a matter of the pie being sliced differently. Was this simply a case of the same people betting virtually the same amount of money, but having fewer overall races to wager on?

It’s anyone’s guess, but there should be a concrete answer to that question in 2021.

What Will Be The Impact Of The New Lasix Rules?

Starting Jan. 1, Lasix will not be permitted in most stakes races at several of the sport’s top tracks. The ban will include all three Triple Crown races and most of the prep races for the GI Kentucky Derby. This comes after the same tracks banned Lasix in 2-year-old races this year.

The 2-year-old ban didn’t have much of an impact as trainers adjusted and learned to do without the anti-bleeding medication. There didn’t seem to be any major incidents. Most likely, the story will be much the same when it comes to the 2021 stakes races as the sport discovers it can get by just fine without Lasix.

What’s Next When It Comes To The Doping Indictments?

Since the bombshell story broke in March that Jorge Navarro, Jason Servis and 25 others had been indicted for their alleged involvement in the doping of horses, there haven’t been many additional developments. That should change in 2021.

By year’s end, it’s likely that the case will reach a conclusion, with the possibility that both trainers enter into a plea deal. If that happens, both could be sentenced some time in 2021.

We should also know whether or not there will be additional indictments. It appears that some of the individuals who were indicted could be talking, perhaps naming more names. We’ll find out in 2021.

What Will We Learn About The Horseracing Integrity And Safety Act?

Signed into law by President Trump Sunday, the Horseracing Safety and Integrity Act must go into effect by July 1, 2022. But it will still be an important story to follow in the year ahead. This should be the year where many questions begin to get answered, among them how much will it cost and how will it be paid for? Horseplayers are dreading the thought of having to pay for this through a higher takeout and owners don’t want to have to pay some sort of fee every time they start a horse, Both, unfortunately, are possibilities.

This will also be the year when the members of the Horseracing Integrity and Safety Authority Board will be named.

Will Arlington Park Survive?

Churchill Downs, the owners of Arlington Park, has only committed to one more year of racing, which means 2021 could be it for one of the sport’s most beautiful tracks. There should be a place in the sport for a showcase track in a huge metropolitan area, but it doesn’t appear that there are many options on the horizon that would save Arlington. Let’s hope that there will be a reprieve for Arlington.

How Good Is Charlatan?

It’s not too early to jump on the Charlatan (Speightstown) bandwagon. Limited to just three races before being sidelined by an ankle injury, he looked like a horse with unlimited potential after crossing the wire first in the GI Arkansas Derby, a race he eventually lost due to a medication violation. He looks even better after his blowout win over a stellar field in the GI Runhappy Malibu S. Saturday at Santa Anita. The early favorite for 2021 Horse of the Year, Charlatan could have the kind of year that Ghostzapper had in 2004. Don’t expect a busy campaign, but he could dominate every time he shows up while posting ridiculously fast numbers.

What Will Be The Effect Of New Jersey’s Whip Ban?

Whip reform has been a slow process, but it will take a huge leap forward in 2021 when the whip will be banned in New Jersey racing. The only exception will be situations where it is needed for safety reasons. All eyes will be on Monmouth Park when it opens in the spring with an experiment that could change the debate when it comes to the future of the whip in racing. What happens in New Jersey could influence what direction California will take.

When Will Fans Be Allowed Back In The Stands?

Fans weren’t allowed to attend the Triple Crown races in 2020 or the Breeders’ Cup. The stands were empty at Saratoga and at Del Mar. That won’t change Jan. 1, but it appears likely that, with the rollout of the coronavirus vaccine, there will be a return to normalcy in 2021. That may not happen in time for the Kentucky Derby, but could it happen for, say, opening day of Saratoga? Nothing would be more welcome.

Can Godolphin Win Its First Kentucky Derby?

There aren’t many important races left in the world that Sheikh Mohammed has not won, but a victory in the Kentucky Derby has eluded one of the sport’s most powerful stables. Godolphin has sent out 10 starters in the Derby without a winner. Its best showing was a fourth-place finish by Frosted (Tapit) in 2015.

That very well could change in 2021. Essential Quality (Tapit), the GI TVG Breeders’ Cup Juvenile winner who will soon be named 2019’s Champion 2-Year-Old Male, is a horse without any apparent flaws. He has the ability, the right breeding and the right trainer in Brad Cox. He will have to deal with whatever Bob Baffert brings to Churchill Downs, but Essential Quality very well could be the one to get Godolphin into the Derby winner’s circle.

The post Stories to Watch in 2021 appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

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