RICHEST HORSE RACES IN THE WORLD

Horse racing has always been associated with big money.  Whether it’s the wagers placed by racegoers, the purses won by the horses and jockeys, or the sums spent at bloodstock auctions, horse racing is a sizeable business.

What are the most popular races in the world and which are the richest?

This year, the Epsom Derby had a purse of £1.625 million ($2.2 million in U. S. dollars), making it the richest race in British history.  While it’s logical to think that the most popular race in the ancestral home of horse racing would have the largest purse anywhere, it doesn’t.  The Derby is so anticipated that BetStars has already posted odds of 5/1 for next year’s favorite Saxon Warrior, and the race is over six months away.

The Kentucky Derby is nearly a century younger than the Epsom Derby but is certainly one of the most followed races on the planet.  Known as “the fastest two minutes in sports” and “the most exciting two minutes in sport,” the Derby has a purse of $2 million, which puts it slightly less than the Epsom Derby in terms of prize money.  And the money wagered on this race is huge; all-sources wagers totaled $139.2 million in 2017.

The Breeders’ Cup Classic was, for a time, the richest horse race in North America.  First held in 1984, the Breeders’ Cup event (with 13 races in 2017) moves around to a handful of racetracks in the United States, and the 1996 edition took place across the border in Toronto, Canada.  The purse for the Breeders’ Cup Classic is currently $6 million, and it’s one of the most coveted races on the racing calendar, with the winner often being crowned U. S. Horse of the Year.  Even with such a large purse, the race does not have the tradition and cachet of the Kentucky Derby.

The Prix de L’Arc de Triomphe in Paris, France offers a purse equivalent to $5.5 million.  Contested on the Longchamp Racecourse, the Arc is one of Europe’s oldest and most distinguished races.  Previously at $2 million, the purse was in the same ballpark as the Epsom and Kentucky Derbies until the Qatar Racing and Equestrian Club elevated the purse via sponsorship and made the Arc the richest race in the world run on grass.

The Dubai World Cup, held in March at the Meydan Racecourse in Dubai, has a purse almost double that of the Prix de L’Arc de Triomphe and, until 2017, was the richest race in all of horse racing.  The guaranteed purse is $10 million.  Even though it’s not the most historic of races (the first running was in 1996), like most things in Dubai, it’s all about the money: “A dirt race for a king’s ransom” is how one commentator described it.

The accolade of “world’s richest race” goes to the Pegasus World Cup Invitational, which in its inaugural year of 2017 offered a purse of $12 million.  It’s another dirt race but held on American soil at Gulfstream Park in south Florida.  This nine-furlong race was such a success that the organizers have already announced that the 2018 installment will have a guaranteed purse of $16 million.

The advent of super-rich races has greatly expanded the opportunity for a horse to have a short-lived career on the racetrack and still retire with astronomical earnings.  Arrogate did not start in his maiden race until April of his 3-year-old year and only ran in 11 races in total until he was retired as a 4-year-old.  Yet he amassed record-setting earnings of $17.42 million.  Of this amount, an incredible $16.8 million was earned by winning the three most lucrative races: the Pegasus World Cup Invitational, the Dubai World Cup, and the Breeders’ Cup Classic.

Copyright © 2017 Horse Racing Business

WEALTHIEST U. S. HORSE-RACING OWNERS, 2017

Forbes magazine’s annual ranking of the 500 wealthiest U. S. citizens includes five individuals in 2017 with significant horse-racing interests currently in their families.

(Forbes stated that “A record $2 billion net worth is now required to be counted among the very richest Americans.  That means 176 billionaires were too poor to make the cut, and 13 members of last year’s list dropped off even though they are as rich or richer than they were a year ago.”  Kevin Plank, net worth $1.7 billion, Sagamore Racing, is one of the thirteen because of a huge decline in the stock price of Under Armour, the company he founded.)

John Malone, net worth $8.2 billion, age 76, primary residence Elizabeth, Colorado, 56th wealthiest American.

Thomas Benson, net worth $2.8 billion, age 90, primary residence New Orleans, Louisiana, 288th wealthiest American.

B. Wayne Hughes, net worth $2.7 billion, age 84, primary residence Lexington, Kentucky, 302nd wealthiest American.

Lee Bass (Ramona Bass), net worth $2.6 billion, age 61, primary residence Forth Worth, Texas, 315th wealthiest American.

Brad Kelley, net worth $2.3 billion, age 60, primary residence Franklin, Kentucky, 350th wealthiest American.

Forbes classifies all but Lee Bass as “self-made” rather than being born wealthy.

Copyright © 2017 Horse Racing Business

ARE MILLENNIALS THE DEATH KNELL FOR CASINO VLTS?

Video lottery terminals, or slots for short, are an important source of purse revenues in horse racing.  Moreover, some states have become increasingly dependent on slots and table games to fund operations.

The Wall Street Journal (November 7, 2017) ran an article titled “Northeast States Bet on Gambling,” which led off:  “The proliferation of legalized gambling in the Northeast is showing no sign of abating with states and developers continuing to push more casinos, in some cases to help fund state budgets and ward off competition.”

For example, although Pennsylvania is already the second largest gambling market in the United States, its governor signed a bill last week to increase the ways its residents can gamble, such as online, slots at truck stops and airports, and as many as 10 satellite casinos with up to 750 VLTs and 30 tables.  New York, Ohio, New Jersey, and Maryland have also been aggressive in expanding gambling.

For some time, I have wondered whether the popularity of VLTs may have peaked and will go into a long downward spiral.  This may be dead wrong, but it is a possibility, as younger generations age, in particular the largest segment of the U. S. population—the Millennials.  While there is no precise definition of Millennials, it refers approximately to people born between 1980 and 2000.  This group came of age in an era of the Internet, mobile computing, smartphones, social media, and online streaming.  How many of them will go to slots parlors as they get older is an open question.  Will they find it to be slow and boring?

New Mexico recently reported its operating results for video lottery terminals for fiscal year 2017.  Revenues were $226 million compared to $241 million in 2016 and $265 million in 2015.  This equates to a decline of 14.7% in the past two years.  Is this the beginning of a trend that will spread?  Or is it an islolated case owing to the downturn in the oil and gas industry?

I once thought that VLTs will gradually lose popularity as baby boomers are replaced by far more computer-savvy younger generations, who won’t go to casinos to play “passe” slots, an entertainment of choice for dad, mom, granddad, and grandma.  Now I am less sure because of what has happened recently in the U. S. book publishing industry.

Nearly a decade ago, Amazon introduced its Kindle e-book reader and quickly took market share from print books.  The future looked bleak for traditional paper books and brick-and-mortar bookstores.  In 2013, for instance, print books in the United States were down year-over-year about six percent.

Then, suddenly, the trend reversed itself.  In 2015, e-book sales decreased by 15% and declined another 17% in 2016.  By contrast, print book sales rose 5% from 2013 to 2016.

Predicting the fate of most technologies is dicey at best.  Just as the demise of traditional book publishing and conventional bookstores has not occurred, so too the gaming technology of slots in brick-and-mortar casinos may survive and even prosper in the future.  Many governors, legislators, and horse-racing interests had better hope so.

Copyright © 2017 Horse Racing Business