Horse race On the harness racing week on the Freehold Raceway in New Jersey: a reverse race with the sulky fastened in entrance of the horse – 1930.
Robert Sennecke | Ullstein Bild | Getty Pictures
America’s oldest horse racetrack is closing after working its final race on the ultimate weekend of 2024.
Freehold Raceway in New Jersey, co-owned by Penn Leisure, tried for many years to land a on line casino however failed. Like many tracks across the nation, it grappled with declining attendance and income. It had been working for greater than 170 years.
“Sadly, the operations of the racetrack can’t proceed below present circumstances, and we don’t see a believable manner ahead,” mentioned Howard Bruno, the racetrack’s common supervisor, in a information launch saying the closure.
However business insiders, buyers and different fanatics consider horse racing in the USA might be poised for a resurgence — fueled by new investor curiosity, improvements within the sport and a growth in legalized on-line sports activities playing.
In 2023, the game added greater than $36 billion to the U.S. financial system, supporting almost half one million jobs, in keeping with the American Horse Council.
Horse-racing income comes from quite a lot of sources: tickets, hospitality, merchandise purchases on the monitor, licensing for TV or simulcast, sponsorships and playing.
Dependable estimates of world horse-racing revenues are exhausting to come back by, specialists say, partially due to the personal nature of possession and partially due to the big variety of metrics used. Income estimates vary from $44 billion to just about 10 instances that.
A number of sources agree the game may see compound annual progress of roughly 9% within the years forward.
Progress in playing
No catalyst for the game’s progress is extra essential in the intervening time than the income that comes from playing.
The deal with, or the sum of money wagered on horse races, funds the purses, or the prize cash, awarded to successful horses. So does the casino-style playing at amenities related to race tracks.
For instance, Resorts World New York Metropolis, which operates video lottery terminals, is contractually obligated to show over 12% of its internet win to the New York Racing Authority, or NYRA. Patrick McKenna, NYRA’s vp for communications, mentioned that at present quantities to about $120 million yearly. Of that whole, $60 million goes towards purses, $40 million goes to capital enhancements, and $20 million funds operations.
When the dimensions of the purse grows it attracts greater high quality horses, and better high quality horses entice extra curiosity within the sport.
In 2022, $12 billion was wagered on horse races, marking a brand new file, in keeping with an evaluation by the New York Thoroughbred Horsemen’s Affiliation, or NYTHA. The whole purse cash awarded that yr additionally set a brand new file, at $1.25 billion.
Followers place bets previous to the Belmont Stakes at Belmont Park in Elmont, New York, June 7, 2014.
Streeter Lecka | Getty Pictures
Progress in sportsbooks in addition to the elevated entry People now need to legalized, on-line sports activities wagering is fueling optimism for horse racing’s resurgence. New methods to guess on horse racing means a brand new era of sports activities fanatics is getting publicity to the game.
FanDuel, the nation’s main sportsbook by market share, partnered with the Kentucky Derby for a second yr in 2024. The corporate advised CNBC that the quantity of bets on Derby day hit the identical degree as Tremendous Bowl playing in the identical yr.
Crown jewel
The Kentucky Derby is the crown jewel of Churchill Downs — probably the most important pure-play, publicly traded firm centered on horse racing.
The corporate introduced a major enhance in adjusted EBITDA — earnings earlier than curiosity, taxes, depreciation and amortization — throughout Derby Week in 2024, with important sponsorships from corporations that needed to align themselves with the status occasion.
The corporate says file wagering numbers recommend the betting viewers just isn’t solely rising however turning into more and more engaged as they be taught the game, particularly on the cellular platforms favored by a youthful demographic.
“Our operational methods current a mannequin for different racing occasions to comply with. Total, the Kentucky Derby is not only a standalone occasion however a blueprint for the way forward for horse racing,” mentioned CEO Invoice Carstanjen.
Corridor of Fame horse coach Bob Baffert mentioned the Kentucky Derby is particular as a result of it is a bucket-list race: “It is an Instagram second for everyone. All people goes. They’re taking their selfies: ‘I am right here. I am right here on the largest celebration.'”
However the high-profile Triple Crown races and the Breeders Cup could also be outliers — a sort of World Collection within the horse-racing schedule that in any other case is stuffed with on a regular basis competitions that draw solely a smattering of followers.
Curiosity in additional unusual races has been waning for many years.
The sum of money wagered on pari-mutuel racing — the place bettors gamble towards different bettors and the percentages consistently change forward of the race — has declined by about 55% since 2000, when adjusted for inflation, in keeping with the Paulick Report, a web site in regards to the horse-racing business.
Additionally, over the previous twenty years the variety of homeowners, horses and trainers within the U.S. has plummeted, in keeping with the NYTHA researchers. They concluded that in 2022 horse racing had “on most days been lowered to a distinct segment market, albeit with a extremely core viewers.”
Baffert advised CNBC he believes horse racing wants extra high-profile occasions with massive purses to drum up buzz. And, like baseball, it wants superstars to attract in weekday audiences.
Baffert, who is simply the second coach ever to have two Triple Crown winners, could also be horse racing’s best-known character. However controversy lately has overshadowed his success.
Baffert was suspended for 3 years from competing at Churchill Downs after a horse he’d skilled, Medina Spirit, received the Kentucky Derby in 2021 however examined optimistic for an anti-inflammatory drug that is not allowed on race days — and was disqualified.
This summer season, Churchill Downs lifted its suspension of Baffert after he publicly took accountability for the failed drug take a look at.
Baffert returned to the storied racetrack the day earlier than Thanksgiving, with a 2-year-old horse named Barnes that had by no means raced earlier than however had fetched a powerful $3.2 million at an public sale in Saratoga, New York, from now-owner Zedan Racing Stables.
The median value to buy a race horse is about $30,000, in keeping with BloodHorse, a publication for homeowners and breeders that tracks gross sales and the state of the market.
Barnes received by a nostril in his debut.
Wall Avenue funds
Some well-known Wall Avenue names have earned a status for recognizing — or creating — alternatives in horse racing.
Danny Moses, a dealer made well-known in “The Huge Brief,” is a sport fanatic, avid gambler and investor in race horses. And although he is identified for his brief calls, he mentioned he is lengthy on horses.
“I believe the worth of horses are going to go up,” Moses mentioned, pointing to the larger payouts and purses introduced in by the growth in legalized on-line sports activities playing.
Mystik Dan #3, ridden by jockey Brian J. Hernandez Jr. (R), crosses the end line forward of Sierra Leone #2, ridden by jockey Tyler Gaffalione and Ceaselessly Younger, ridden by jockey Ryusei Sakai to win the one hundred and fiftieth working of the Kentucky Derby at Churchill Downs on Could 04, 2024 in Louisville, Kentucky.
Michael Reaves | Getty Pictures
Moses is considered one of 14 in an elite group of buyers in Starlight Racing, which at present owns 26 race horses. It is headed by former hedge funder Jack Wolf, and it produced 2018 Triple Crown winner Justify and 2020 Derby and Breeders Cup winner Genuine, each skilled by Baffert.
Over a little bit greater than twenty years, Starlight-owned horses have completed within the cash greater than 50% of the time, raking in additional than $64 million in whole purse cash.
Wolf mentioned his expertise in hedge funds helped him to determine an progressive mannequin to put money into horses, the place all companions share within the potential upside for a group of horses. He mentioned buyers have to issue within the expertise and the enjoyment of the game into their expectations for return on funding.
“We have been all over the world with our partnership. That is what they’re investing in,” Wolf mentioned. So far as concrete monetary returns go, he mentioned, “We have been profitable some years, and a few years we have not been. It is a very powerful enterprise, a really powerful technique to make a return in your cash, however it may be finished.”
Wolf is now trying on the races themselves. In 2017 he was CEO of the Pegasus World Cup at Gulfstream Park in Florida. The race set a brand new mannequin: House owners paid $1 million every for a spot within the race, which they might use, promote or lease.
The race’s $12 million purse was the richest on the earth.
Although the Pegasus has reverted to a conventional race mannequin since then, Australia has embraced the “gate race” or “slot race” construction, with a few of the highest purses globally.
And Moses is lobbying for extra U.S. races to comply with the weird mannequin, pitching racetracks resembling Monmouth, Santa Anita and others.
Ramping up regulation
There stays a thorny drawback for the U.S. horse-racing business: It is lengthy been seen because the Wild West so far as rules and oversight of horse welfare are involved, in keeping with Lisa Lazarus, CEO of the Horseracing Integrity and Security Authority, or HISA. The group was established by the Federal Commerce Fee to supervise the integrity of horse racing throughout state traces and in numerous racing amenities.
Buyers don’t need their cash connected to potential guidelines or ethics points, Lazarus advised CNBC.
“By prioritizing constant and clear practices, HISA goals to reassure followers and the general public that horse racing operates with integrity and security at its core,” Lazarus advised CNBC. “This dedication not solely fosters belief but additionally creates an atmosphere the place innovation can thrive, attracting new homeowners, contributors, and followers.”
However powerhouse operators Churchill Downs and the New York Racing Affiliation, or NYRA, are suing HISA over charges.
In an announcement to CNBC, NYRA insisted it is broadly supportive of HISA’s mission however is protesting “illegal, extreme and disproportionate monetary assessments.”
Lazarus mentioned that ultimately, HISA’s oversight and regulation will gas extra funding — much like that of sports activities playing or cryptocurrency — as a result of the foundations and legality are clearer.
In 2020, racing horse deaths within the U.S. amounted to 1.41 per 1,000 race begins, in keeping with HISA, which launched a monitor security program in July 2022. After the company standardized doping rules and enforcement, horse deaths fell to an estimated 0.9 per 1,000 race begins in 2024.
It was the primary time the U.S. has achieved something beneath 1 within the metric and places it on par with dying charges in the UK, Japan and Australia, in keeping with Lazarus.
House owners and trainers hope that can assuage issues by lawmakers and regulators and discourage the sort of backlash that may hinder progress of the game.
New age of racing
Even when the game can overcome the widespread notion of its remedy of horses, racetrack amenities are in determined want of an overhaul. Outdated amenities discourage followers from attending.
“They do not wish to go to a racing facility that is been there because the Sixties with outdated infrastructure, with outdated bogs,” mentioned Donna Brothers, NBC Sports activities racing analyst and commentator.
Churchill Downs is spending $300 million on enhancements to its paddock and grandstand. Belmont Park is present process a $500 million renovation, funded by a mortgage from New York state. And Maryland’s legislature in April authorized $400 million to overtake Pimlico, residence of the Preakness Stakes.
The sphere of jockeys and horses begin the one hundred and fifty fifth working of the Belmont Stakes at Saratoga Race Course on June 08, 2024 in Saratoga Springs, New York.
Al Bello | Getty Pictures
Brothers mentioned the business goes to need to embrace new expertise, resembling cellular apps, to go together with the bodily enhancements.
Dennis Drazin, CEO and chairman of Monmouth Park Racetrack and Sports activities Guide, mentioned the game’s true potential can solely be realized by means of a number of income streams.
“Racetracks should embrace gaming, leisure, fan expertise and innovation of their method for achievement,” Drazin mentioned.
NYRA, for one, is seeing a serious increase from expanded nationwide tv protection of its races. Fox Sports activities, a minority fairness proprietor in NYRA Bets, airs 1,000 hours of horse racing all year long. NYRA mentioned that boosted whole wagers on its on-line platform 127%, from $306 million in 2016 to $696 million in 2023.
FanDuel purchased racing broadcaster TVG and has turn into a number one operator in horse racing alongside NYRA and Churchill Downs’ TwinSpires, which licenses its playing operations to different sportsbooks together with FanDuel and DraftKings.
DraftKings turned a naming sponsor for the 2024 Travers Stakes in Saratoga.
Regardless of the Freehold Raceway closure, Penn Leisure mentioned in an announcement it is seeking to broaden gaming tied to horse racing.
“In these states the place business gaming just isn’t but authorized on the racetracks, resembling Texas, we proceed to teach lawmakers on the success we have seen,” mentioned Eric Schippers, senior vp of public affairs for Penn. “Gaming has helped to revitalize racing, driving greater purses, enhanced breeding applications and the preservation of household farms and open area.”
