The decline of horse racing in North America
Official statistics on the United States Jockey Club website relating to the breeding industry and the pari-mutuel sales turnover in North America should cause serious concern in Jamaica.
United States (US), Canada and Puerto Rico constitute North America and the decline in support for the Sport of Kings in these jurisdictions over the last decade has been remarkable. In fact the trend started in the early nineties and has now reached crisis proportions in 2017.
At the annual August deadline for 2006, the US registered foal crop stood at 40,333. Astonishingly, the registration recorded a near-50% decline to 20,850 at the 2016 deadline. Over the same period Canadian breeders fared worse. The 3193 registrations in 2006 declined to 1350 at the August 2016 deadline. Unfortunately for Puerto Rico foal registration of 617 in 2006 fell to 300 in 2016.
There were 82,708 races in 1989 but promoters in the USA were only able to offer 51,688 races in 2006 which fell to 37,614 in 2016. In Canada their 2006 calendar programmed 5234 races in 2006 but ended the decade with a similarly near disastrous 3242 in 2016.
Puerto Rico performed steadily with 1768 races in 2006 and 1758 in 2016 promoting four race meetings weekly. This level of activity with such a small horse population inevitably led to the bankruptcy of Nuevo El Commandante Racetrack.
Casino operators HLB Morales Padillo & Co has now taken over the operations and renamed the facility Hippodromo Camarero but is still locked in a lawsuit over intellectual property with the previous directors of El Commandante.
Incidentally, after the 2017 hurricanes forced a stoppage, Puerto Rican thoroughbred racing is facing a crisis, with no restart date predictable given the devastated state of the general infrastructure in this US commonwealth.
With 72,729 horses starting in 56,902 races across US, Canada and Puerto Rico in 2006, there were 462,937 starts, with average field size of 8.16 runners per race and the majority of capable horses running at an average of in excess of six races for the year.
The 2016 scenario in the US yielded 52,049 starters, 42,564 races, 322,878 starts, and an average field size of 7.59. The average of just over six races per capable horse remained roughly the same as in 2006.
Here is the most concerning aspect of North American racing. In 2006 US combined pari-mutuel handle/sales turnover including commingling returned US$14.75 billion. At the end of 2016 it had fallen precipitously to US $10.74 billion with the trend more than looking likely to continue in 2017 and well beyond.
Canada fared better with the 2006 CAN$528 million return increased to CAN$563 million while Puerto Rico's fell to US $11.39 million in 2016 from US $15.55 million in 2006.
Given the rate of inflation and with operating expenses moving vertically, natural rationalisation and attrition has taken place with a number of racetracks ceasing operations due to insurmountable loss making returns.
In addition to rationalisation, big players such as Churchill Downs Inc. and the Stronach Group have diversified moving to a business model of combining race track operations with casino gaming (racinos) as the full impact of the industry crisis hits home.
There are of course certain other factors influencing the decline of racing in North America. Misguided American federal regulators do not permit bookmaking nor have they recognised the importance of a well-developed system of Off-Track-Betting facilities.
Excuses such as blaming the performance of the wider economy over the period should not be taken seriously as horse racing is flourishing in economically less well-off jurisdictions elsewhere in the world. Claims of competition from other forms of gaming should also be discounted.
The fact is that a viable bookmaking industry as operated in the United Kingdom can utilise the intellectual property of promoting companies to deliver to the bottom-line an amount which is always a greater percentage of sales than any gross profit from the pari-mutuel sales turnover.
Then there is also the serious question of whether or not the North American racing product can ever have mass appeal. It is failing decade after decade to deliver an adequate customer base to enhance viability because of its complexities and the incomprehensible nature of the race entry conditions.
If the US breeding industry and the pari-mutuel/sales turnover continue to trend downwards then further rationalisation will become necessary. This is likely to have a profoundly negative impact on racing in Central and Latin America as well as the Caribbean. The price of horses bred in the US and also the offering of simulcast betting from there will also become cost prohibitive.
Over the next decade we could very well see New York, California, Florida and Canada being the only viable options for the successful promotion of live horse racing in North America.
Currently there is a global shortage of bloodstock! Fortunately Jamaica has the infrastructure collectively to respond to the opportunity to become a significant supplier in this hemisphere and beyond. Amazingly, there were 249 local breeders earning bonus of over $50,000 in 2003. With the right incentive higher levels of investment can be realised going forward.