Analysis: Is Structure Really the Problem?

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By Tim Capps

Pick up a racing industry trade publication, access an online newsletter or blog, or attend an industry conference, and you are certain to read or hear a conversation about “what’s wrong with racing.” The discussion always ends up being about the industry’s lack of structure, of the need for some sort of vertical pyramid that provides a central decision-making authority at its peak.

The cries for a czar, or czarina, or imperial council, are unquestionably exacerbated by the sad state of economic affairs in the industry despite glimmers of returning stability in both the wagering and commercial breeding markets. The shocks of 2008 and 2009 are still too fresh in the minds of industry stakeholders for anyone to be confident the worst is over for the broader economy, and that it is time to throw aside one’s risk shield (as I am writing, the stock market is in free fall).

Putting aside the economic wasteland we’ve been in, the debate about structure has been with us for decades, with various starts and stops made in that direction, none more ambitious than the launch of the National Thoroughbred Racing Association more than a decade ago.

Let’s take a breath and talk about what structure can or can’t accomplish. The real problem horse racing has, or appears to have because we don’t have meaningful data to support much of anything, is growing its customer base. The real drivers of the sport are the fans, the bettors of today and tomorrow, and anecdotal views are that we are losing market share to other sports and other forms of betting.

Realistically, the states are not going to deregulate racing because that means deregulating gambling—a non-starter—and the federal government isn’t about to regulate racing because that would take away the states’ policy-making authority over gambling in their jurisdictions. The proposed interstate compact is a good step toward commonality of rulemaking and consensus on some of the sticky issues.

British racing is of high quality, has a wonderful heritage, remains an important part of English culture, and has a centralized structure that works well on almost every level except the one that matters most: the industry economy. In a nation of 60 million people who bet at least $3 billion more a year than is bet in North America, less than 2% finds its way into purses because the structure doesn’t control the wagering apparatus.

Structure can be a good thing, but it isn’t the only thing.
 
Tim Capps is executive-in-residence at the University of Louisville College of Business Equine Program

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