Horse racing has long been a popular sport in the United States. Yet with a decline in betting revenue and the closure of major venues, is it time to look at how US horse racing can regain its audience and compete on a global stage?
US sports betting is at an all-time high. In May, bettors wagered $12.44 billion, up 8.9% year on year. Yet one sector, the horse racing market, is in decline. As major venues begin to close, does the US need to rethink its approach to horse racing so it can once again become a world leader in the sport?
The Current State of US Horse Racing
The horse is an animal that has long held a special place in the rich tapestry of US history. When you think of the Old West, images of horseback prospectors traversing the country’s wild frontier spring to mind. The citizens of the country have always enjoyed racing these magnificent creatures, and the Kentucky Derby is one of the world’s most well-known sporting events in the world.
Yet betting on horse racing in the United States is down, and it has fallen for the third year in a row. Specifically, this targets Pari-mutuel wagers, which raised around $11.26 billion in revenue last year, a decline of 3.4% from 2023.
Ray Paulick of the Paulick Report noted that “A dismal December for US wagering on thoroughbred horse racing put an exclamation point to the worst year for the industry since 2020 when businesses throughout the country were affected by the COVID-19 pandemic.”
Pari-Mutuel vs Fixed Odds Wagers
Pari-mutuel betting is the primary way in which bets are placed on horse racing in the United States. It involves a pool of money that is created by all those making a wager. The operator then takes a profit from this pool. The remaining money is then distributed to whoever wins the bet, dividing it if needed. Thus, the payout is determined by how much is wagered on each outcome, and the odds are not set when the bet is made.
The idea was first introduced to French race tracks in 1867 by Joseph Oller. It then grew in popularity when, in 1913, a totaliser board was invented by George Julius, which displayed current bets and odds on a board. In the United Kingdom, this betting is still known as ‘The Tote’ today. In the United States, it allowed some jurisdictions to carry on betting even when traditional fixed odds were outlawed.
One reason this type of betting may be in decline is that it is no longer favored by many bookmakers or their customers. It has dropped by around 55% since 2000. In the past few years, legalized online sportsbooks have become the norm across America. A total of 32 states now offer it, with only 11 states that prohibit all forms of sports betting.
This has led to a rise in some of the best online sportsbooks on the planet. Overseen by well-known brand names such as BetMGM, they have built a customer base for themselves and the industry through excellent service and attractive marketing. This has often involved schemes like a $1,500 first bet. Another example is that the BetMGM promotions for new players or other similar offers have increased the number of people betting digitally.
Crucially, though, the top platforms use fixed odds betting. This is because they provide players with a definitive outcome, so people know what they will get when their bet comes in. There are options to use pari-mutuel betting, but it is no longer the norm. The two are regulated differently, so some platforms may not even include horse racing betting at all.
Is This A Wider Decline in Horse Racing Popularity?
The big worry is that this is also indicative of a decline in interest when it comes to US horse racing. Comparing the years 2024 to 2023, there was an overall reduction in the number of races held. Race days themselves were reduced by 2.4% with individual races dropping by 2.8%. This resulted in a total of 30,852.
This is a huge blow at a time when some of the country’s most popular raceways are closing their doors. Freehold Raceway, at the grand age of 170 and the oldest in the country, has ceased operation. A press release stated that under existing conditions, the racetrack can not operate, and the owner can not see a way forward. It has long been battling to get a casino onsite, which it believed would turn its fortunes around.
However, many believe a resurgence in the popularity of the sport is just around the corner. New York and Pennsylvania are two states that are using revenue from casinos to directly benefit the horse racing industry. Resorts World New York City, the operator of video lottery terminals, hands over 12% of its turnover to the New York Racing Authority. This amounts to around $120 million per year.
There has also been the introduction of HHR machines at many tracks and casinos to help the industry raise money directly. These are fixed terminals known as Historical Horse Racing Machines. A form of pari-mutuel wagering platform, they look very much like slot machines. However, despite their installation at various casinos, such as Gate City Casino in New Hampshire, they have failed to convert many casino and slot aficionados into horse racing bettors.
According to the American Horse Council, in 2023, the sport added around half a million jobs and $36 billion to the US economy. That alone should signal the need for it to be grown. Yet while it can gain revenue from television rights, sponsorships, and money made at the track, gambling is its primary driver.
With the right investment, the popularity of horse racing can be sustained and grown in the United States. New animal welfare laws have managed to silence many horse racing critics, and the figures alone in what the industry brings speak for themself. Horse racing deserves respect and is a great form of entertainment that the US can not afford to overlook.
