Unemployment and Its Impact on Wagering

By William Shanklin 

Pari-mutuel wagering on U.S. horse racing peaked in 2003 and has been stagnant or deteriorating ever since, with precipitous drops during the economic slowdown of 2008 and 2009. In 2009 pari-mutuel wagering fell by 9.8%, compared with a 5.5% dip for casino gaming. Though the rate of decline has slowed in 2010, the decay is nevertheless persisting.

To be sure, escalating competition from other forms of gambling has cut into pari-mutuel handle, with casinos spreading to locations across the United States and illegal gambling proliferating on the Internet. But an equally troubling problem is chronic unemployment among adult men, and in particular among those who are less educated. Whereas telecasts of Thoroughbred horse racing appeal to both men and women, the gambling side of the racing enterprise is overwhelmingly supported by adult men.

Recent statistics from the U.S. Department of Labor revealed that the U.S. unemployment rate is 9.7%, or 15 million people, and 45.9% of unemployed persons have been out of work for at least 27 weeks. The seasonally adjusted unemployment rate among adults (age 20 and over) was 10.1% for men and 8.2% for women.

This dichotomy is reflective of a long-term secular pattern. Women, who tend to work in service industries, have fared better than men in maintaining their jobs as the economy has evolved away from historically male-dominated heavy industries. For example, in the latest employment data, U.S. job gains came in fields in which women are found in large numbers, such as professional and business services, health care, and leisure and entertainment.

A widening educational gap between men and women plays an important role in the stubbornly high unemployment rate for adult men. Female students make up about 57% of college undergraduates and earn close to 60% of the bachelor’s degrees that employers increasingly require.

Currently, 20% of the men between 25 and 54 are unemployed, and the percentage of adult males in the work force has been eroding for the last 50 years, while the percentage for adult women has been rising. Dr. Lawrence Summers, President Obama’s chief economic adviser, predicts that five years from now, the unemployment rate for men between 25 and 54 will be around 17%.

As economic conditions improve, pari-mutuel handle is unlikely to have a commensurate recovery because racetracks rely so heavily on adult male bettors. A key component of strategy for revitalizing pari-mutuel handle must be to cultivate the more educated men and women who have the skill sets that employers will increasingly value; these are the individuals who will have the most discretionary income.

This formidable task will entail selling the intellectual challenge of handicapping and the entertainment value of racing to people with lots of recreational choices.

William Shanklin, a longtime contributor to The Blood-Horse, is the publisher of the Web site horseracingbusiness.com

Recent Posts

More Blogs