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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

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The “Racing” Sports

Thoroughbreds

Standardbreds, aka “Harness”

Quarter Horses (and other breeds)

Greyhounds

Jai-Alai

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A Little History

Ancient history

The original Thoroughbreds

A commercial sport evolves

Prohibition in “Progressive” Era

(Re-)Authorization / Depression

The Golden Age

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Metairie Jockey Club, 1867

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Kentucky Derby PPs, 1907

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Pari-Mutuel Betting

Not the only way to bet!

Betting Pools

The “Takeout”

Distribution of the Proceeds

Changes with the Revolution

Evolving Challenges

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Types of Bets

Win / Place / Show

Exacta = Perfecta = Exactor

Trifecta = Triactor

Superfecta

(Daily) Double … Pick-3 … Pick-N

etc. etc. etc.

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A Complicated Game

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A Complicated Game

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A Complicated Game

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A Complicated Game

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A Less Complicated Game

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Less Complicated Yet …

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Less Complicated Yet …

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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 ...

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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

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Total Economic Impact

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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

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Rising Tide of Competition

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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

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Takeout Rates etc.

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“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%

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“Price” of a bet (house edge):

Blackjack/Craps: ~ 1%

Slots/VLTs: ~ 7%

Instant Ticket (MA): 24%

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“Price” of a bet (house edge):

Blackjack/Craps: ~ 1%

Slots/VLTs: ~ 7%

Instant Ticket (MA): 24%

Exacta at Suffolk Downs: 26%

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Places to Bet in N. America:(in 2006)

Horses: 1,027

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Places to Bet in N. America:

Casinos etc: 1,378

Horses: 1,027

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Places to Bet in N. America:

Slots / VLTs: 19,695

Casinos etc: 1,378

Horses: 1,027

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Places to Bet in N. America:

Lottery Tickets: 214,284

Slots / VLTs: 19,695

Casinos etc: 1,378

Horses: 1,027

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[gambling-site homepage]

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Lottery Tickets: 214,284 +

Slots / VLTs: 19,695 +

Casinos etc: 1,378 +

Horses: millions

Places to Bet in N. America:(today)

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[gambling-site homepage]

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[gambling-site homepage]

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[gambling-site homepage]

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Responses ...

If you can’t beat ‘em, join ‘em ...

Crude video games ...

Video poker ...

Video slots ...

“Real” slots ...

Table games ... full casino experience

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Slot “Subsidies” to Purses

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“Historical Racing”

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“Historical Racing”

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Historical Racing

Major States ...

Statistics ...

Assessment ...

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Historical Racing

Major States:

Invented in Arkansas

All over Wyoming

Doing best in Kentucky

Just starting in Virginia

Statistics ...

Assessment ...

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Wyoming: 8 locations

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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 ..

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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 ...

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Louisville: Caesar’s Casino

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Louisville: Derby City

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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

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[gambling-site homepage]

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Thanks

Doug Walker: invitation

College of Charleston: honorarium

Aleta Walther: video suggestions

Patricia McQueen: photo

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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/

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Thank You

Will E. CummingsCummings Associatescummingsw@aol.com

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