WHAT HAS BECOME OF HORSE RACING’S CUSTOMERS?

Pari-mutuel wagering on horse racing in the United States has been in a downward spiral. Some of the attrition in handle undoubtedly stems from the 9.1 percent national unemployment rate; comprised of 9.6 percent for men and 8.5 percent for women. However, current unemployment is not the chief culprit in the tumble in wagering because the negative trajectory began in 2004 when the unemployment rate was 5.5 percent.

A major cause of the erosion in handle is the well-documented 30-plus year decline in the economic circumstances of the adult American male. This, of course, is the demographic segment from which the preponderance of betting revenues has traditionally come from and still does.

In July 2011, the percentage of all adult men holding a job—either part-time or full-time–fell to 63.5 percent; this was slightly better than the most recent low point of 63.3 percent in 2009. The previous trough occurred in 1948. Similarly, only 81.2 percent of men in their prime working years between 25 and 54 years old now hold a part-time or full-time job; in 1969, the percentage was 95.

Men’s wages have also been in a long-term decay, after adjusting for inflation. According to MIT, the median income of males in the age range of 30 to 50 dropped by 27 percent from 1969 to 2009—to $33,000 annually.

Gaming revenues have taken much less of a hit in the current economic malaise than pari-mutuel wagering because the customer base is far more diversified. Whereas the vast majority of bettors on horse racing (and sports and table games) are men, casino patrons are about 54% women. Moreover, slots are overwhelmingly the favorite gambling activity of both men and women (especially women) and account for the largest dollar component of gaming.

Racing’s fortunes have deteriorated in the face of new competition but also in sync with the economic stagnation of the adult American male. The inherent risk in depending on such a highly concentrated customer portfolio was demonstrated in the recent Jockey Club/McKinsey & Company study. It looked at a group of handicappers from a large rewards program and found that “1.6% of the handicappers accounted for 50% of the handle.”

Although dramatic changes to old ways of doing things are divisive, the status quo for horse racing is manifestly untenable. Purposeful disruption from within, risk-taking, and creativity are de rigueur for an imperiled mature industry like racing that is searching for a worthwhile future. For example, experimentation with significant across-the-board reductions in takeout percentages, exchange wagering, lottery-type bets, and other fresh approaches to reinvigorate the product line and broaden the customer base.

Copyright © 2011 Horse Racing Business

Originally published in the Blood-Horse. Used with permission.

Look for Breeders’ Cup posts on Tuesday, November 1 and Thursday, November 3 and a regular weekly post on Saturday, November 5.

KENTUCKY’S VAGUE SANCTIONS FOR ABUSIVE WHIPPING INVITE TROUBLE IN BC

In recent weeks, a host of people have rightfully decried the flailing of a few of the mounts in notable stakes races, primarily by European-based jockeys. Jamie Spencer worked over an injured Cape Blanco to win the Joe Hirsch Turf Classic at Belmont Park and Christophe Soumillon was suspended for five days and fined £50,000 for a whip violation in a race at Ascot’s British Champions Day.

Flagrant whipping should not occur in any race and especially not in the showcase Breeders’ Cup; it conveys a primitive image about horse racing and is widely considered to be inhumane. However, a close reading of the relevant Kentucky Horse Racing Commission rules raises concerns that the stewards can do little to prevent brazen whipping because the sanctions are vague and weak.

The rules (reproduced verbatim at the end of this article) forbid a jockey from whipping a horse “excessively or brutally.” Two particularly pertinent statements governing abusive whipping and sanctions for such are as follows:

“After the race, a horse may be subject to inspection by a racing official or official veterinarian looking for cuts, welts or bruises in the skin. Any adverse findings shall be reported to the stewards.

The giving of instructions by any licensee that if obeyed would lead to a violation of this section may result in disciplinary action also being taken against the licensee who gave the instructions.”

The language pertaining to what constitutes a violation is unambiguous—“cuts, welts or bruises in the skin.” On the other hand, note the lack of any language whatsoever regarding the punishment stewards can mete out to the offending jockey. The rules state only that “a violation of this section may result in disciplinary action also being taken against the licensee who gave the instructions.” The word “also” is confusing because no mention is made in the first place of the appropriate punishment for jockeys. Lastly, there is no language at all about how many times a jockey is permitted to administer the whip.

Consider this scenario. A jockey in the Breeders’ Cup Turf blatantly whips his mount down the stretch (to the chagrin of fans at the track and a worldwide television audience) and produces plenty of evidence in the form of cuts, welts, and bruises. The horse wins and a state veterinarian inspects him on the racetrack and immediately informs the stewards of the extent of the damage the jockey inflicted.

If you were a steward, would it be absolutely clear to you in the heat of the moment–from reading and interpreting the Kentucky rules–what you could do and should do immediately about this egregious  incident in which the jockey showed such contempt and gained an unfair advantage?

For example, do the stewards have the authority to disqualify the winning horse for the jockey’s manifest violation? Even if the stewards did disqualify the horse could that be deemed, on appeal, too harsh of a penalty under the amorphous rules?

At most, stewards might later be able to suspend the jockey for five days and impose a stiff fine, which is a price he may be ready to pay for a Breeders’ Cup win. By then, the pubic-relations damage (from outraged fans and bettors) would have already been done and the effects would linger, as with the Life at Ten fiasco in the 2010 Breeders’ Cup.

Regrettably, the sanctions that stewards can impose in Kentucky for excessive whipping are not spelled out. Therefore, the stewards don’t have the guidance and authority they need to make sure that a whip-prone jockey doesn’t mar the Breeders’ Cup spectacle and get away with it relatively unscathed.

The solution to the whipping problem may be to follow the inclination of Hall of Fame jockey Jerry Bailey and ban whips altogether. Bailey commented:   “Look, if nobody has whips, what’s the problem? Everyone is still on a level playing field.”

Even if one makes the argument that today’s padded whips don’t do physical damage to a horse, the fact remains that the public perceives otherwise–and perception is reality.

Copyright © 2011 Horse Racing Business

Kentucky Horse Racing Commission Rules:

810 KAR 1:016. Running of the race.

Section 15. Use of Riding Crops.

(1) Although the use of a riding crop is not required, a jockey who uses a riding crop during a race shall do so only in a manner consistent with exerting his or her best efforts to win.

(2) In any race in which a jockey will ride without a riding crop, an announcement of that fact shall be made over the public address system.

(3) An electrical or mechanical device or other expedient designed to increase or retard the speed of a horse, other than a riding crop approved by the stewards, pursuant to 810 KAR 1:012 shall not be possessed by anyone, or applied by anyone to a horse at any time, on the grounds of the association during a race meeting, whether during a race or otherwise.

(4) A riding crop shall not be used on a two (2) year-old horse in races before April 1 of each year.

(5) A riding crop shall only be used for safety, correction and encouragement.

(6) A rider who uses a riding crop shall:

(a) Show the horse the riding crop and give the horse time to respond before striking the horse;

(b) Having used the riding crop, give the horse a chance to respond before using it again; and

(c) Use the riding crop in rhythm with the horse’s stride.

(7) A riding crop shall not be used to strike a horse:

(a) On the head, flanks or on any other part of its body other than the shoulders or hind quarters except if necessary to control a horse;

(b) During the post parade or after the finish of the race except if necessary to control the horse;

(c) Excessively or brutally;

(d) Causing welts or breaks in the skin;

(e) If the horse is clearly out of the race or has obtained its maximum placing; and

(f) Persistently even though the horse is showing no response under the riding crop.

(8) A riding crop shall not be used to strike another person.

(9) After the race, a horse may be subject to inspection by a racing official or official veterinarian looking for cuts, welts or bruises in the skin. Any adverse findings shall be reported to the stewards.

(10) The giving of instructions by any licensee that if obeyed would lead to a violation of this section may result in disciplinary action also being taken against the licensee who gave the instructions.

THE ELEGANCE AND AGONY OF SPEED SPORTS

The Monday morning paper reiterated what I had repeatedly heard Sunday on television and radio and read about on the Internet. Dan Wheldon, 33 years of age, died at a hospital of injuries incurred in a fiery 15-car pileup during Sunday’s Las Vegas Indy 300. He won the Indy 500 for the second time on Memorial Day weekend 2011. Wheldon left behind a wife and two young sons.

Another newspaper story was less visible but caught my attention. The sub-headline: “Jockey injured, horse euthanized.” The report read, “Jockey Eddie Castro suffered a hairline fracture of his LI vertebra in a spill on Saturday at Belmont Park in New York. The New York Racing Association jockey advocate said there was no resulting compression on Castro’s nerves and his spinal column remains aligned. It is unlikely Castro will need surgery. Castro was injured when his mount, Royal Brush, broke down in the fourth race. Royal Brush suffered a fractured left front leg, and was euthanized.”

A list of 26 drivers who have been killed in IRL, NASCAR, CART, and Formula One races in the past 30 years was positioned next to the newspaper account of the Wheldon wreck. My cursory research into jockeys killed in races in the 21st century turned up 23, but I can’t vouch for its accuracy. Further, no telling how many racecar drivers, horse racing jockeys, harness racing drivers, and horses, have been badly injured in competition.

Auto racing and horse racing have avid followers who appreciate the sports for a variety of reasons. But the realization is always there that danger lurks owing to the fact that speed is the object. Car racing and horse racing can be made safer but not safe. It takes guts to make your living as a pilot in either endeavor.

In discussing the Wheldon death, a cable television announcer appeared to be searching for something to say when she asked a sports expert for an explanation of why drivers risk life and limb. He ventured that money is a major reason, but then added, “because that is what they do.” That is what I thought after Eight Belles perished on the Churchill Downs track after she finished second in the 2008 Kentucky Derby.

Nonetheless, all true fans of car racing or horse racing periodically ask themselves why they support a sport in which a pleasant day at the track can quickly turn disastrous. The cognitive dissonance can be overwhelming in the wake of an incident involving Dale Earnhardt, or Dan Wheldon, or Michael Rowland, or Barbaro…

Some of us keep coming back time and again on the thinking that the good far outweighs the bad.

Maybe.

Copyright © 2011 Horse Racing Business