THE 2021 KENTUCKY DERBY PR DISASTER IS A SELF-INFLICTED WOUND

Incredibly, a multi-billion dollar sport/industry is tarnished by 21 picograms of a legal medication. To borrow the words of tennis icon John McEnroe, “You cannot be serious!”
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When news of Medina Spirit’s drug positive in the 2021 Kentucky Derby broke, the national media understandably reported the story as a sensational scandal.  Horse racing’s most prominent trainer had won the race with a colt running on illicit medication.

Predictably, PETA immediately put out accusatory releases and major organizations in horse racing abandoned due process in their rush to condemn and punish Robert Baffert, Medina Spirit’s trainer.  He was banned by both Churchill Downs Inc. and the New York Racing Association (the NYRA ruling stayed by a New York judge).  And, at this writing, the Breeders’ Cup board is considering whether it will allow Baffert to participate in the upcoming Breeders’ Cup World Championships. 

The sordid episode is far from over. After legal proceedings play out, very public recriminations will resurface regardless of whether Medina Spirit is or is not disqualified. It is a “no win” outcome for horse racing’s image.

In my view, the sport and industry of horse racing has needlessly brought a litany of negative attention onto itself.  After reading a review in the New York Post of a new book by Josiah Hesse titled Runner’s High, I am even more convinced of that. The review is by Gavin Newsham and is titled “Why more athletes are depending on cannabis.”

According to Hesse, professional athletes who spoke to him on the record estimate that 85% of NBA players, 90% of NFL players, and 50% of NHL players use cannabis to manage pain or stress.  Consider the following three paragraphs from the New York Post article within the context of the imbroglio over an inconsequential 21 picograms of the anti-inflammatory drug betamethasone in Medina Spirit’s system on Kentucky Derby Day.

“In May 2013, WADA [World Anti-Doping Authority] raised the threshold for cannabis in an athlete’s system tenfold, from 15 nanograms to 150 nanograms, allowing athletes to partake during training, safe in the knowledge they can easily get down to the required level once competition starts. In 2018, they also removed CBD from their list of prohibited substances — in or out of competition. 

The NFL also recently raised the acceptable limit of THC in a player’s system from 35 nanograms to 150 and will no longer suspend players for a positive cannabis test. In June, they announced a new commission, alongside the league’s players union, with an award of up to $1 million in grants for researchers to look into the therapeutic potential of marijuana, CBD and other alternatives to opioids for treating pain. 

In 2019, Major League Baseball removed cannabis from its list of prohibited substances following pressure from their players union (although the league still bans players from being high during a game or being sponsored by a cannabis company). And, in 2020, the NBA suspended random testing of players for cannabis.”

Had the Kentucky Horse Racing Commission established acceptable and reasonable limits for humane medications on raceday—similar to WADA and the major professional sports leagues for cannabis—the highly detrimental PR damage emanating from America’s premier horse race would have been avoided.

While the entire horse racing enterprise isn’t to blame for antiquated drug rules and blundering by a few, the whole industry is paying a steep price in the market of public opinion.

Click here to access the NY Post book review of Runner’s High.

Copyright © 2021 Horse Racing Business

FANTASY HORSE RACING GAMES

NFL football is in full swing and fantasy leagues are immensely popular as well.  A niche sport like horse racing will never achieve the following of this mainstream sport, but it may be possible to expand racing’s fan base through digital versions. Especially among younger people, who are so immersed in virtual realities.

The Wall Street Journal recently ran a column on a startup called Zed Run.  The article says:

“Virtually Human Studio, the startup behind digital horse racing service Zed Run, has raised $20 million in financing, highlighting investors’ appetite for companies exploring the intersection of entertainment, gaming and the so-called nonfungible token sector.

Media and technology-focused investment firm TCG Capital Management led the Series A funding round, with Andreessen Horowitz and Red Beard Ventures also participating in the deal.

Launched in 2019, Zed Run enables users to buy, sell and breed virtual horses and race them in a videogame style setting against other horses. The horses are purchased with digital currency and act as NFTs, which are essentially digital collectibles that hold value.”

Click here to access the full Wall Street Journal article or click here to go to Zed Run.

Another digital venture is StableDuel.  Its website states:

“StableDuel will be the center of innovation for horseracing entertainment, focused on developing and growing a dedicated fanbase with a commitment to simplicity, approachability, and continuous improvement.  By the players.  For the players.”

Patrons of StableDuel bet on horses and compete for a variety of prizes, ranging from what the site calls Silver Club rewards to VIP rewards, five categories in total.

I don’t know the amount of money that was put up to start StableDuel, but the $20 million in venture capital for Zed Run demonstrates confidence that digital horse racing can gain traction.  My personal view is wait and see. No doubt Zed Run and StableDuel are commendable efforts to make horse racing more popular. I just don’t know to what extent digital games will boost pari-mutuel wagering.

 Horse Racing Business 2021


 

ROBUST BUSINESS FOR U. S. HORSE RACING SO FAR IN 2021…WITH A DELTA WILD CARD

Key contributors to the economic health of the horse racing enterprise in the United States are the summer meets at Del Mar and Saratoga Race Course, tracks located on opposite coasts.  Betting at their recently completed meets broke existing records.

In 31 days of racing in 2021, Del Mar took in total handle of $569.98 million.  By comparison, in 2020, aggregate handle for 27 days was $$467.6 million.  Average daily handle for 2021 was $18.38 million compared to $17.3 million in 2020. The card featuring the Pacific Classic set an all-time wagering high for the day of $36 million.

At the 40-day meet at Saratoga, total handle was $815.51 million.  This represented a 15.6% increase over the previous record of $705.34 million in 2019.  Average daily handle in 2021 was $20.39 million.  Saratoga had paid attendance of over one million patrons.

Meanwhile, in Virginia, Colonial Downs handled wagering over 21 days of $46.87 million or $2.23 million per day.  This was a 91% increase from the 2019 meet.

Year-to-date, betting on U. S. horse races is up 17.51% over 2020 and 10.18% over 2019.

It was fortunate that the popular gatherings at Del Mar and Saratoga were able to be completed without fan attendance being limited or shut down altogether.  In this 2021 Labor-Day week, a new wave of the Delta variant of Covid-19 infections is surging and slowing economic activity.  Johns Hopkins reports that Covid cases are up 300% compared to this time last year. Major companies are delaying a return to the office for employees until early 2022, business travel is stalling, restaurant chains are closing some in-door dining facilities, and many hospitals are overcrowded. 

Whether sporting events like college and NFL football and the Breeders’ Cup will be able to accommodate full houses through the mid-to-late fall is an open question.

Copyright © 2021 Horse Racing Business