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Emily D. Swoboda

Racing Feels the Brunt of Slumping U.S. Economy

1 August 2008

At a time when companies in the online gambling industry are waiting to see if United States legislative efforts will grant them re-entry to the country, the domestic horse racing industry is trying to keep up with devastating changes in the economy.

Approximately $15 billion has been steadily wagered on horse racing in the United States each year since 1998, according to the Thoroughbred Racing Economic Indicators .

More recently, however -- since the end of the Triple Crown Series -- total handle, including pari-mutuel wagering, has taken a bit of a dip.

To be more precise, horse race wagering in the United States has fallen 11 percent, or $209.8 million, since June 7, the day of the Belmont Stakes at Belmont Park in New York, compared to the same period last year, reports Bloodhorse.

Peggy Hendershot, senior vice president of legislative affairs for the National Thoroughbred Racing Association, explained to IGamingNews why destination racetracks like Saratoga or Del Mar in San Diego have seen a decline in wagering.

"People have to drive to get there or travel to get there," Ms. Hendershot said. "They're (the racetracks) a little bit distant from major centers like New York and Los Angeles and San Diego. So you do have that same sort of calculation going on in the mind of the consumer of: 'How much am I going to spend to get there and what's going to be left in my pocket once I am there?'

The N.T.R.A. has appealed to Congress for help in boosting the industry's numbers.

On Tuesday, Representative Charles W. Boustany Jr., a Republican of Louisiana, on behalf of the N.T.R.A. introduced legislation that would eliminate a 25 percent automatic withholding on pari-mutuel winnings of $5,000 or more in the United States.

"That's part of our ongoing set of steps to try and make the pari-mutuel environment more attractive to players," Ms. Hendershot said. "Right now that tax puts us at a competitive disadvantage to every other form of gaming because no one else but us is subject to that tax."

The industry also has to keep up with and respond to ever-changing consumer demands.

"One of the reasons that we introduced the legislation is that our research told us that the shift in consumer habits has been very much to gravitate toward those mega-payoff type opportunities," Ms. Hendershot said. "So, people gravitate toward Pick 6 carryovers. They gravitate toward large pools. So now about $10 billion of the $15 billion that's bet is bet on exotic wagers -- wagers that involve multiple horses or multiple races in consecutive order."

Meanwhile, Ray Casey, president of the New York City Off Track Betting Corp., has observed that while wagering amounts have gone down, transactions have actually gone up, which is something he said is not often considered.

"The number of people patronizing is increasing; the number of bets is increasing; the dollar amount is decreasing," he told IGN.

He said the industry sometimes focuses too much on the absolute amount wagered and not enough on the total revenue that is generated from the handle and number of transactions.

"When you look at all of those indicators you get a better feel for what's going on," he said.

Racing Feels the Brunt of Slumping U.S. Economy is republished from
Emily D. Swoboda
Emily D. Swoboda