Racetracks and movie theaters have at least two commonalities: They are both multi-billion-dollar entertainment businesses and customer attendance at their physical facilities is increasingly threatened by information and communications technologies. Racetracks have seen customers migrate to off-track locations and to remote wagering over the telephone or Internet. Customers of movie theaters have a variety of alternatives, such as renting and buying from a physical store or kiosk, purchasing from a cable television company, and placing and receiving orders over the Internet or by mail. Home entertainment centers have become so sophisticated that they approach or sometimes exceed movie theaters in audio and video quality.

Following is how horse-racing handle in the United States compares to movie-theater box-office revenues over the past decade, an era when the Internet has become ever-more sophisticated and popular as a means to deliver intangibles like wagers and movies.

                  Racing Handle        Theater Gross                    

                                         (billions of $)
2009           12.3                                 10.6  
2008          13.6                                    9.6
2007          14.7                                   9.6
2006           14.8                                  9.2
2005           14.6                                  8.8
2004           15.1                                  9.3
2003           15.2                                  9.2
2002           15.1                                  8.4
2001           14.6                                  7.6
2000          14.3                                  7.4

             Percentage Change from Previous Year       

                  Racing Handle           Theater Gross                                                    

2009           -9.9                                    +10.0
2008          -7.3                                     –   0.3
2007          -0.4                                    +  4.9
2006          +1.5                                    +  4.2
2005           -3.6                                      – 5.8
2004           -0.5                                     + 1.5
2003           +0.8                                   + 0.9
2002           +3.2                                   + 8.8
2001           +1.9                                    + 9.8
2000          +4.4                                   +  2.9

Whereas racing handle continues to be considerably larger than movie theater gross, the theater business has been more resilient. In the past three years, handle has decreased and box-office gross has gone up in two of these same three years. In 2009, handle declined by nearly 10 percent while theater gross increased by 10 percent, so the gap between the two is closing.

In the face of tremendous competiton from the likes of Netflix, movie-rental stores, cable television video-on-demand, HBO, home entertainment centers, and pirated movies on the Internet, the retail movie-theater business has been able not only to hang on, but also to manage to grow. Although racetracks are not located nearby to virtually every American, as with movie theaters, those that evidently provide an entertainment experience customers enjoy, such as Del Mar, Keeneland, and Saratoga, can and do attract people from considerable distances. 

The racing industry will have to reverse the stagnation in handle, or undergo a huge downsizing. The crutch of supporting purses from alternative gaming revenues will not last because the businesspeople who run racinos and casinos and the elected officials in racing states will sooner or later stop the practice. The movie-theater example shows that an old-line entertainment business is not necessarily condemned to permanent decline in an age of proliferating communications technologies. Moreover, racetracks have an overwhelming advantage over movie theaters with regard to such technologies. While movie delivery via the Internet and cable television are direct substitutes for going to a retail theater, these are user-friendly technologies for horse racing. A wagering  transaction can be conveniently consummated with people near and far to an actual racetrack.

Copyright © 2010 Horse Racing Business


  1. Let not forget that handle means betting at the track, on computer and by phone, and at simulcast centers. Also, the chart is deceptive in that box offices have a 100% takeout…that is money actually spent by customers. Include DVDs Netflix, etc. and the market is closer to $50 billion.

    As for horse racing, the numbers are worse than it looks. Back in 2000 tracks and horsemen made a lot more of the total takeout (lets say around 20% of what is wagered) than it does today (probably less than 2 billion was lost by bettors last year). Also, with more and more people smartening up and getting rebates, they are able to churn more, inflating the racing handle even more each and every year.

    Horse racing is simply dying. It is overpriced against competitive gambling games.

    The game needs a radical change. Reduced takeout is imperative. Existing players need to last longer so that they will expose more people to horse racing, and there needs to be visible winners out there, who can be seen as being able to play horses for a living. The latter scenario in poker created thousands upon thousands of wannabes….and this is racing’s only way to grow.

  2. bill shanklin says


    Most of your points are correct, especially regarding too high of a takeout for racing compared to alternative wagers. However, the DVDs, Netflix (and cable TV on-demand movies) you refer to are disruptive technologies for retail movie theaters, whereas information and communications technologies are sustaining technologies for racetracks. In fact, most racetracks would not still be in business without them. That is the one important strategic advantage that racetracks have over movie theaters. Moreover, it is truly remarkable that horse racing handle is even in the same ballpark as movie theater revenues when one considers the relatively tiny number of pari-mutuel purveyors vis-a-vis the huge number of movie theaters that blanket the country. To say that horse racing is “dying” is too definitive and not supported by the empirical evidence. Racing is downsizing in the face of competition and the economy, no doubt about that, but to say it is dying would have been like concluding, in the early 1990s, that mainframe computers were in the extinction mode because of personal computers. The market for mainframes got smaller, but did not die out. Thanks for your valuable insights.

  3. Interesting analysis, Bill. I was thinking about the movie business when Avatar recently became the No. 1 movie of all time. I look at big movies like Avatar as being similar to racing’s big events: last 10 years have been successful for Triple Crown races and BC (to lesser extent perhaps).

    Also, is it possible the movie business has greatly expanded its bricks and mortar distribution centers? I can only speak for Lexington, but there are many new, far more comfortable theaters today than there were five or 10 years ago.

    Finally, movie goers may complain about ticket prices (just as horseplayers complain about takeout), but I don’t think the first-run theaters have cut their costs. And the cost of food and drinks at the movies is borderline obscene, making racetrack food/drink look almost like good value.

  4. bill shanklin says


    You are correct. The number of screens in the USA increased from 23,689 in 1990 to 37,396 in 2000 and 40,000 now. The average price of a ticket in the US is $7.18 and, as you point out, the concessions are very expensive. Admissions are down between two and three percent, but revenues are up owing to increases in ticket prices.

  5. While we all can agree that handle has not grown, over the last 10 years, I’m not sure comparing it to movie revenue is an apples to apples comparison. Movie ticket prices have gone up, especially now that you have 3D and IMAX. Avatar may be number 1 all time but its only number 26 all time when you take inflation into account (, where the $2 bet is been forever.

    I’m not saying things don’t need to change, I’m just not sure this is the right place to look.

  6. Michael Cusortelli says

    The movie industry has always been resilient and able to adjust to changes in technology — starting with the advent of television back in the early 1950s.

  7. FYI, the price of a ticket in the last 10 years has outpaced inflation by around 40% to 32%. The average a person spends at the concession is around $3.
    Again, when comparing horse racing to the movie business, the movie business actually does search out the optimum price (the maximum the public will spend on it overall) where the horse racing industry has never taken that route when it comes to optimum takeout.

    And yes, movie theater attendance is a smaller percentage of what a movie actually brings in.

    “DVD sales have become the mainstay of Hollywood and the financing arm for many independent movies. Barclays Capital analyst Anthony DiClemente calculates that last year the box office returns from major studios were about $10 billion in the US. By contrast, the home video market was worth $24 billion. “

  8. Comparing the two is ridiculous! Movies are broad based entertainment targeted to the whole family from animated movies for the very small children; to serious Rated movies for the adults; to love stories, feel good stories, to comedies and everything in between. How does that compare to racing and gambling?

    Also great point to put forward after your initial comment that movies theaters have almost double over the past 10 years. You also forgot to mention the fact of the fascination that we as a society have with Movie stars not to mention the amount of press the stars and the movies receive. How does that compare to racetracks and gambling? Come on you can’t compare the two. By the way you forgot to mention that attending the movies is a very cheap form of FAMILY entertainment in tough economic times and as goes the economy the opposite is true from attendance. Has never been the case with horse racing.

    Also give me a break: “the average person spends an average of $ 3 at the concession stand”; what did they buy? A ¾ filled bottle of water. You can’t buy a small bottle of water at the movies anymore for less than $ 3.50.

    You guys are grasping for straws to find an answer for our woes. I don’t have an answer but the bottom line is the sport if not broad based, it is not and has never been family oriented. Yes my father drug me to the track but he never drug me, my 2 brothers, my sister and my mom to the track all at once. It just does not happen. Maybe the use of the word dying is not correct but racing is fading in interest and will continue to do so as we as a society have more and more entertainment venues put so close to our homes and fingertips.

    We are not the only game in town. Hell we are not even recognized by the media as a game in town!

  9. One differnce is you don’t have to spend hour(s) handicapping to go see a movie.

  10. bill shanklin says


    You misinterpreted the main point of the article and comments. The takeaway is that an old-line mode of entertainment, which is brick-and-mortar, has managed to grow in spite of technological competition from Netflix, HBO, cable TV pay-per-view, DVD players, home theaters, pirating of movies, etc. It can be done with the right content and ambience. Thanks for your comment and contributing to the dialogue.

  11. JC Frank, you don’t measure inflation in horse racing by the base bet, but the total amount lost by the public from year over year and the population size. And that number is not keeping up with inflation, nor is it keeping up with an increased population size.
    In 1950 total handle was $2.3 billion. Takeout was around 15%, the public lost $345 million. Factoring in inflation ($1 is worth approx. $8.50 today), that means $2.93 billion was lost in today’s dollars back then by bettors.

    Last year, $12.3 billion was bet. At a 20% average takeout, that means the public lost $2.46 billion.

    Now, if you take into account that the population doubled in the US since 1950, one could argue that in order to keep up with inflation and population growth, horseplayers should have lost closer to $6 billion last year if horse racing was keeping pace.

    Yes, other games of chance have cut into horse racing’s what if pie, however I’m pretty sure that sports betting with it low vig, has more than kept pace with inflation and population size increases.

  12. Memchuck, many people don’t go to the concession stand, and many spend a lot. But the average is $3 a person that watches movies…..this isn’t brain surgery. Next time you go to a movie check out how many people don’t have popcorn or a pop.

  13. Memchuck,

    A lot of movie attendees don’t buy anything at all from the concession stand or sneak in candy because concessions are so expensive. If only 20-25% of people who go to the movies actually buy from the concession stand, then it is not surprising that the average is $3.

  14. Dan Needham says


    Interesting piece. The traditional movie theater industry has had to evolve in order to survive, and has done so, for now. For racing, that’s the simple lesson here. But challenges lie ahead as younger generations grow ever more comfortable watching movies on small devices. Your point that the new technology factors working against movie theaters are in fact positive with regard to racing finding new and sustaining channels for its product is well-taken.

  15. Very interesting comparison of 2 businesses beset by competition, piracy (island based rebaters, TVG) etc.
    How do theaters continue to exist in the face of monumental new avenues of competition?
    Some films, like Avatar, due to their special nature, are guaranteed an audience because the large screen experience cannot be replicated on a laptop or even a large HDTV in the home.
    Movies like Gladiator and other special effects films will also continue to draw because of the same reasons.
    Smaller, more intimate/no special effects films will find it increasingly difficult to draw a mainstream audience into the face of piracy and semi-immediate dvd release dates.
    Perhaps the racetracks should bring a 3 hour racing window to the table, along with value added events (bands, night racing) already in existence. No sense keeping it an all day sucker.
    Payrolls can be reduced and hard core simulcast patrons will stay for the off track wagering.
    Just a thought.

  16. this is very inspiring