The State of the Horse Race Betting Industry

America’s pari-mutuel horse racing industry will not deteriorate with the growth of legal sports betting. Instead, it provides gaming operators another revenue stream in addition to the ever-popular casino business.



Today’s Horse Racing in America


Interest in horse racing has seen a steady decline towards the second half of the 20th century, and this coincides with the uptick of Native American casinos in the 1990s. To this effect, state policymakers are embracing commercial gaming and placing their interests on existing horse tracks.


This is exciting news for track operators, as the bubbling casino industry has more or less left them on the sidelines. Corporate interests are naturally focused on the more lucrative business of slot machines as compared to horse racing.


For generations, horse racing has held very strong financial, cultural and emotional ties among Americans. In order to protect this historical connection, many states instituted requirements for operators to maintain a number of races every year to continue running their casinos. Some even go as far as using taxes on casino games to subsidize the horse racing stakeholders. These nationwide protective efforts, also known as decoupling, look like they’re here to stay.



Decoupling Conflicts


American culture is tied strongly with horse racing, despite the notable decline seen in recent years. As other gaming options enter the foray, however, interest in the tracks continues to wane. Many historic racing venues see no other choice but to shut down. For example, the Arlington International Racecourse located in Chicago closed after a century in action.


With that being said, major events such as the Triple Crown races continue to attract hundreds of thousands every year. This also applies to marquee tracks, like the Saratoga Race Course. Sadly, that isn’t the case in Pennsylvania, where state horse tracks perform worse than low-level baseball leagues in terms of audiences despite receiving the most significant economic incentive in the state, amounting to $3.3 billion since 2004.


Undoubtedly, this sets the scene for financial and emotional conflict. Is the major financial investment worthwhile? Some argue that the horse racing industry provides significant economic impact, not forgetting the employment of thousands.


On the other side of the fence, stakeholders feel that the financial subsidies aren’t fair to taxpayers. In Florida, this has led to lawmakers passing a decoupling legislation that allows jai-alai frontons, former greyhound racing facilities, and Standardbred horse tracks to offer poker and other card games without putting up races.



The Legalization of Sports Betting and Its Effects


Americans love the idea of putting money where their mouths are when it comes to their favorite sports teams. Today, more than 100 million Americans in 32 states can place a legal sports wager. The legalization of sports betting brings about the more intuitive and beginner-friendly fixed-odds format, which contrasts against horse racing’s pari-mutuel method.


Sports betting presents another revenue generator for operators despite it being the lower-margin offering. Plus, it is easier to manage compared to horse racing. The growth of fixed-odds betting is shifting operators to consider it above the traditional pari-mutuel wagering.


This shift in trend is happening globally. In Australia, it is one of the most popular betting options. Such markets are giving bettors hundreds of additional wagering options that are not available via pari-mutuel.



What’s Next for the Horse Race Betting Industry?


It remains to be seen whether the nation’s iconic horse racing track industry will survive in this new era. Operators cannot depend on subsidies alone. If venues like the Kentucky Derby want to stay alive, they will have to adapt sooner rather than later. Otherwise, they will meet an end similar to Chicago’s Arlington Park.