Wagering Down, Purses Up in 2007

Wagering Down, Purses Up in 2007
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Annual overall wagering in the United States declined for the third time in the last four years, according to “Thoroughbred Racing Economic Indicators” data released Jan. 15 by the National Thoroughbred Racing Association and Equibase, while purses increased for the third straight year.

Handle in 2007 declined 0.37% to $14,727,170,578 in comparison to 2006, while purses jumped 5.5% to $1,177,782,612, according to a release jointly issued by the two groups. Wagering on U.S. races includes worldwide commingled pools and some separate pools in Canada.

After recording a record handle of $15,178,510,116 in 2003, U.S. wagering declined in year-over-year comparisons in 2004, 2005 and 2007, according to archived data. The drop from the 2003 peak to 2007 was nearly 3%.

Alan Marzelli, president and chief executive of The Jockey Club, which is a partner in Equibase, told The Blood-Horse that sadly, there isn’t proper cooperative technology in place to accurately analyze the handle figures.

“I don’t know what to make of the (wagering) trends of the last few years,” Marzelli said. “Yes, they are flat. But the questions our industry can’t answer are: Why are they flat? Are we suffering leakage? Are people betting off-shore with bookmakers, or in other ways that are not permitted under U.S. laws? Are they turning to other sports because our sports are not competitive?

“I’m sorry to say that our tote systems are such that we don’t have good control of knowing where those revenues are coming from. And if you don’t have good control, it makes it difficult to analyze the business, and what is driving the business.”

Marzelli said he couldn’t speculate if the “signal wars” of 2007 hampered overall handle. With the advent last year of TrackNet Media Group, the joint content venture of Churchill Downs Inc. and Magna Entertainment Corp., certain advance deposit wagering entities and other betting outlets weren’t able to carry racing signals to which they had previous access.

For example, all-sources wagering on the 2007 Kentucky Derby card declined more than $7 million, or 4.1%, from the record 2006 total of $175,129,090. Companies shut out from the 2007 Derby card included TVG and Youbet.com, which combined accounted for more than $11 million in wagers in 2006.

All-sources handle was also down about $29 million on the 2007 Breeders’ Cup World Championships from the previous year. Most ADWs had the signal, though some only secured deals in the final days prior to the event.

“Anytime you confuse your customers about where they can go to buy your product can’t help,” said Marzelli, who in August led a discussion at The Jockey Club Round Table Conference which called for urgent action in regards to the fractured ADW situation. “And we as an industry did a good job of confusing our customers last year.”

But Marzelli said he was encouraged by recent developments in California, New Jersey, and New York, where previously exclusive signal rights were made available to more outlets.

“The good thing is that we are starting to see progress,” he said.

In a statement, NTRA president and CEO Alex Waldrop said “handle, purses, and auction sales are three leading economic indicators of the sport, and the three are interrelated.

“Handle was steady in 2007, while auction sales also remained steady after an all-time record year in 2006. The robust growth in purses was clearly aided by revenue from racinos, but we are optimistic that increased purses will lead to increased handle as these higher purses translate into a more attractive racing product.”

Results were buoyed by the 2007 opening of Presque Isle Downs in Pennsylvania, the release said. The Erie-area track, which has a separate slots operation, had an average daily purse distribution of $432,074 for its inaugural 29-day meet. The track, owned and operated by MTR Gaming Group, reported an all-source handle of $13,185,584 for a daily average of $585,680.

Total U.S. racing days in 2007 declined 0.82% to 6,168.

For the fourth quarter of 2007, total wagering declined by nearly 1% to $3,314,809,207 in a year-over-year comparison, while purses rose 3.63% to $285,341,402. The total number of race days increased by 0.75% to 1,340.

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