Is horse racing nearing the finish line?

By David Mullen

By all accounts, Sham was a fine thoroughbred.

The dark bay stallion was known as a speed runner with a big heart. He lived nearly 23 years, and upon his death in 1993, his necropsy revealed that his heart was about twice the size of the average horse. But ultimately, his stature and drive were just not big enough.

Sham wasn’t known for what he was, but for what he could have been. Out of the gates in the 1973 Belmont Stakes at Pimlico Race Course in Baltimore — the third jewel in Horse Racing’s Triple Crown — Sham raced out to the lead against Secretariat, the greatest race horse of all time. Sham would ease, and Secretariat would run the mile and a half race in an American record 2 minutes and 24 seconds, winning by a stunning 31 lengths. Sham finished last in the six-horse race.     

Horse racing as a sport, much like Sham in the 1973 Belmont, seems to have faded.

Despite government scrutiny, statistics on the horse racing industry are held as close to the vest as a hot tip. It was reported that in 2020, the horse racing industry lost more than $5 billion compared to prior years, and its popularity has declined. But the sport remains immensely popular.

“The price of gambling on racing — the takeout — is anywhere between 15 and 25 percent,” said Ed DeRosa, vice president of content and product development at Horse Racing Nation, a Louisville, Ky. based website that covers U.S. thoroughbred racing extensively. 

“When you compare that to casino gaming, which is between two and 10 percent and sports betting, which is between five and 10 percent, racing just can’t compete with that.” 

The takeout is the cost of doing business. “In this era, the consumer has so many choices, when it comes to gambling as opposed to when horse racing had a monopoly state by state,” DeRosa said. “In some cases, racing was the only option. Those days are gone. In my mind, for horse racing to continue to compete on any sort of national level, it needs to get more competitive. 

“Casino and sports betting are booked. You are playing against the house. Horse racing is parimutuel, so you are playing against the other betters. What happens is that the track pools all of the money and then takes out its portion for running the sport. It is used for purses and operations. For racing to do better long term and to be a viable industry, it needs to be more competitive with other forms of gambling. 

“Part of that in my mind, is information. We are in a very data rich environment. We have seen that play out in all sports with Sabermetrics and things of that nature. People gamble on sports based on all of the free information available, [especially] to sports betters and fantasy players. Horse racing is data rich and people like solving the puzzle.”

On April 28, Lone Star Park at Grand Prairie began their thoroughbred racing season, featuring 48 live racing days running through Sunday, July 24. DeRosa pointed out: “Thirty years ago, 36 tracks raced four weeks before the Kentucky Derby [held annually on the first Saturday in May at Churchill Downs in Louisville]. Fifteen years ago, it was 26 tracks. And this year, it was just 14 tracks.” 

The highlight of the Lone Star Park schedule is Lone Star Million Day on Memorial Day, Monday, May 30. The Grade 3, $400,000 guaranteed Steve Sexton Mile, for 3-year-olds and up, is part of a card featuring six stakes races worth a total of $1.2 million. 

With the Dallas Mavericks, Dallas Stars, Texas Rangers, FC Dallas and Dallas Wings seasons underway, the Dallas Cowboys preparing for the 2022 NFL season and other lesser sports all vying for the attention and dollars of local sports fans, Lone Star Park faces a competitive environment. Their website at lonestarpark.com stated more than 700,000 guests visit the facility each year. Multiple emails and phone calls to Lone Star Park seeking comment for this story were not returned. 

One of the world’s oldest sports, horse racing dates back to the 12th Century. Initially, the sport attracted all social and economic classes. The pageantry associated with races like the Kentucky Derby is unequaled in American sports. According to an American Horse Council study, the horse industry contributes $39 billion in direct economic impact, supporting 1.4 million jobs across the U.S.

But recently, the sport has earned a tarnished reputation for the use of performance enhancing drugs and reports of animal abuse, which have surfaced throughout the years. 

It is reported that in 1890, there were more than 314 tracks operating in the U.S. Today, the number (including harness racing tracks) is 112. In addition to Lone Star Park, three other tracks operate in Texas.

Horse racing has survived World Wars and the Great Depression. Even during the first wave of the COVID-19 pandemic, the total handle [amount wagered] of races was down only one percent. But the number of races held was the lowest in our modern era. 

People love to win, and horse races produce a winner. But that was before lotteries, casinos and betting on professional and college sports became immensely popular. And horse racing needs a bigger piece of the pie. Americans wagered a record $57.22 billion on sports in 2021, bringing in an all-time high in revenue of $4.29 billion. Texas remains the largest state without legalized online horse betting.

“It is an expensive game. Horses are not cheap. They need 24-hour care and the people who care for them come with a cost,” DeRosa said. “I fully understand why the freight needs to be paid. 

“Right now, the handle is about $10 billion [annually in North America] and the takeout is 20 percent. Two billion dollars is going to all the various factions that make the sport run. The bet takers, the horsemen, regulators, drug testing … all that gets paid for out of that $2 billion. I personally feel like if you price the sport better and the takeout was 10 percent, that you could get the handle to $30 billion. Although your percentage is lower, the total amount you are taking from the amount bet is $3 billion in that case. 

“I would love to see pricing become more competitive. I think in the long run, that’s how you grow the sport. The future is definitely predicated on becoming more competitive as a gambling game,” DeRosa said. Otherwise, other sources of sports gaming will race ahead like Secretariat, and horse racing will be seen as a Sham.