Slimmed Down Racing May Be Finding Its Footing

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While wagering on U.S. races in 2016 was flat—up less than 1% compared with 2015— bettors continue to support a reduced Thoroughbred racing product.

That is to say average handle per U.S. race in 2016 improved 2.3% to $280,408, which is the first time since 2007 that wagering per race has surpassed $280,000. The $280,408 in average wagering per race is up 18.2% from the decade-low $237,135 wagered per race in 2011.

Overall handle on U.S. races improved 0.58% to $10,735,154,543. These numbers as well as the above figures are not adjusted for inflation.

Despite the small increase in handle in 2016, purses saw a small decline, down less than 1%. Like handle, the 0.91% decline in purses was impacted by the continued reduction in total races. The 38,284 races conducted in the U.S. in 2016 is the lowest single-season total since 37,661 races were offered in 1960.

Reduced racing, in part, has followed reduced foal crops. The estimated 2016 U.S. foal crop of 20,600 will mark a fifth straight year the crop will not reach 25,000. The most recent previous time for five straight U.S. foal crops under 25,000 was from 1967-1971.

National Thoroughbred Racing Association president Alex Waldrop sees a smaller U.S. Thoroughbred industry finding its footing.

"The 2016 wagering and purse report suggests that Thoroughbred racing in the U.S. has stabilized from the world-wide economic recession of a few years back," Waldrop said. "A declining foal crop has challenged the industry to adapt by reducing races and race days and also encouraged innovation.

"It is noteworthy that handle increased in 2016 despite 85 fewer race days. Undoubtedly, these results also reflect the fact that our champions like California Chrome, Beholder, Tepin, and Songbird, as well as a talented cast of 3-year-old stars headed by Breeders' Cup Classic (G1) winner Arrogate, continued to race through the Breeders' Cup in November."

Racing enters 2017 with some enthusiasm as rule changes on taxes that would put more money in bettors' hands appear likely to become reality.

"One additional piece of positive news for the industry is the Dec. 29 release by the Treasury Department and the IRS of proposed regulations that will fundamentally alter the way winning pari-mutuel wagers are withheld and reported," Waldrop said. "By modernizing tax withholding and reporting to reflect the true cost of a wager, especially exotic wagers, more money will now remain in the hands of our customers who will re-bet most of those dollars for the benefit of all. It's an important fix that the NTRA has spent years advocating for and will have a positive impact on overall parimutuel handle from the moment it's implemented."

Note: A version of this blog previously ran in BloodHorse magazine and in BloodHorse Daily. I figured I'd make it available in the blog as well. 

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