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“Racing” 101
A Presentation to “The U.S. Casino Industry” Class
College of Charleston
Will E. CummingsCummings Associates
March 10, 2020[ this draft dated March 8 ]
Outline
The “Racing” Sports in the U.S.
A Little History ... “Golden Age”
The Pari-Mutuel Betting System
Economics: The Expensive Way...
Challenges Arise
Responses, and More Challenges
2
The “Racing” Sports
Thoroughbreds
Standardbreds, aka “Harness”
Quarter Horses (and other breeds)
Greyhounds
Jai-Alai
3
A Little History
Ancient history
The original Thoroughbreds
A commercial sport evolves
Prohibition in “Progressive” Era
(Re-)Authorization / Depression
The Golden Age
4
5
6
7
8
Metairie Jockey Club, 1867
9
Kentucky Derby PPs, 1907
10
11
12
13
Pari-Mutuel Betting
Not the only way to bet!
Betting Pools
The “Takeout”
Distribution of the Proceeds
Changes with the Revolution
Evolving Challenges
14
Types of Bets
Win / Place / Show
Exacta = Perfecta = Exactor
Trifecta = Triactor
Superfecta
(Daily) Double … Pick-3 … Pick-N
etc. etc. etc.
15
A Complicated Game
16
A Complicated Game
17
A Complicated Game
18
A Complicated Game
19
A Less Complicated Game
20
Less Complicated Yet …
21
Less Complicated Yet …
22
Economics
Horses cost a lot!
Substantial economic impacts
But high-cost as a gambling game
Originally high-cost to the consu-mer – except as a gambling game!
But takeout rates have risen ...
23
Economic Impacts
Oklahoma 2012:
$491mn output, 6,450 FTE jobs
N.B. “Recreation and Showing” 5x that size
Florida 2012:
$906mn output, 12,188 FTE jobs
About the same size as MLB Spring Training
24
Total Economic Impact
25
COMPREHENSIVE ECONOMIC IMPACTS
Direct Indirect Induced Total
Employment 8,901 999 2,288 12,188
Labor Income 254.7$ 49.3$ 96.1$ 400.1$ $ Millions
Output 469.5$ 145.0$ 291.1$ 905.5$ $ Millions
THE ECONOMIC IMPACT OF THE FLORIDA HORSE RACING INDUSTRY
2012
Including horse racing, training, and breeding, race track
operations, and expanded gaming activity
SOURCES: Survey of Florida horsemen; annual state filings of Florida pari-mutuel horse race tracks,
IMPLAN.
Challenges Arise
Golden Age = “Industrial” Racing
Local ~monopolies everywhere
Changes in the marketplace:
Gambling: Lotteries ... Casinos
Television / Professional Sports
Financial + Sociological
26
Rising Tide of Competition
27
Responses ...
Reduced tax rates
Higher takeout rates
More places to bet (“OTB”)
Simulcasting ... betting on-line (ADW)
More days + longer hours of operation
MUCH higher volume of product
Higher quality + More competition
28
Takeout Rates etc.
29
“Price” of a bet (house edge):
Blackjack/Craps: ~ 1%
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“Price” of a bet (house edge):
Blackjack/Craps: ~ 1%
Slots/VLTs: ~ 7%
31
“Price” of a bet (house edge):
Blackjack/Craps: ~ 1%
Slots/VLTs: ~ 7%
Instant Ticket (MA): 24%
32
“Price” of a bet (house edge):
Blackjack/Craps: ~ 1%
Slots/VLTs: ~ 7%
Instant Ticket (MA): 24%
Exacta at Suffolk Downs: 26%
33
Places to Bet in N. America:(in 2006)
Horses: 1,027
34
Places to Bet in N. America:
Casinos etc: 1,378
Horses: 1,027
35
Places to Bet in N. America:
Slots / VLTs: 19,695
Casinos etc: 1,378
Horses: 1,027
36
Places to Bet in N. America:
Lottery Tickets: 214,284
Slots / VLTs: 19,695
Casinos etc: 1,378
Horses: 1,027
37
[gambling-site homepage]
38
Lottery Tickets: 214,284 +
Slots / VLTs: 19,695 +
Casinos etc: 1,378 +
Horses: millions
Places to Bet in N. America:(today)
39
[gambling-site homepage]
40
[gambling-site homepage]
41
[gambling-site homepage]
42
Responses ...
If you can’t beat ‘em, join ‘em ...
Crude video games ...
Video poker ...
Video slots ...
“Real” slots ...
Table games ... full casino experience
43
Slot “Subsidies” to Purses
44
“Historical Racing”
45
“Historical Racing”
46
Historical Racing
Major States ...
Statistics ...
Assessment ...
47
Historical Racing
Major States:
Invented in Arkansas
All over Wyoming
Doing best in Kentucky
Just starting in Virginia
Statistics ...
Assessment ...
48
Wyoming: 8 locations
49
Historical Racing
Kentucky: 4 locations
$106 to $312/day/machine
Virginia: 4 locations
$138 to $380/day/machine
Compare: “good” slots ~ $300/day/
So, doing pretty well! But ..
50
Historical Racing
Major States:
Arkansas: replaced by real slots
Wyoming: small state, no casinos
Kentucky: horse-mad, no casinos *
Virginia: no casinos ... yet!
Statistics ...
Assessment ...
51
Louisville: Caesar’s Casino
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Louisville: Derby City
53
Conclusions
Still the “expensive” option
Still complicated
Still challenged by the competition
But revolutionized by simulcasting and ADW / internet wagering
Gambling game: doing OK
But no longer need 100s of tracks
54
55
[gambling-site homepage]
56
Thanks
Doug Walker: invitation
College of Charleston: honorarium
Aleta Walther: video suggestions
Patricia McQueen: photo
57
Resources Online
www.ua-rtip.org (UofA RTIP)
http://business.louisville.edu/equine/
http://www.jockeyclub.com/
http://www.equibase.com/
http://www.arci.com/
58
Thank You
Will E. CummingsCummings Associatescummingsw@aol.com
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