2016 Economic Indicators: A Positive Outlook

 

Average daily wagering on Thoroughbred races in the United States rose 2.4% in 2016 while the number of races continues tracking downward. The trend downward in races is expected to continue as three years of foal crops that have bottomed out at around 20,500 since 2014 start maturing to racing age.

The increase in average daily handle during 2016 was not as high as the 5.8% seen between 2014 and 2015, but the decline in live races slowed to a more modest 1.7% decline compared to a 5.65% drop reported between 2014 and 2015.

As the decline in races slowed, so too did the drop in puses paid. In 2016 U.S. purses totaled more than $1.08 billion, down 0.9% from $1.09 billion in 2015. Purses dropped 1.6% between 2014 and 2015. Average purses paid per race day in 2016 rose 0.9% to $232,114. The number of total race days dropped by 85 last year to 4,669, a decline of nearly 1.8%.

In all, the more modest year-over-year changes in the racing and wagering economic indicators were viewed positively by industry leaders.

“The 2016 wagering and purse report suggests that Thoroughbred racing in the U.S. has stabilized from the worldwide economic recession of a few years back,” said Alex Waldrop, president and CEO of the National Thoroughbred Racing Association.

“A declining foal crop has challenged the industry to adapt by reducing races and race days and also encouraged innovation,” Waldrop continued. “It is noteworthy that handle increased in 2016 despite 85 fewer race days. Undoubtedly, these results also reflect the fact that our champions such as California Chrome  BeholderTepin, and Songbird, as well as a talented cast of 3-year-old stars headed by Breeders’ Cup Classic winner Arrogate, continued to race through the Breeders’ Cup in November.”

As for the year ahead, Waldrop said proposed regulation changes by the U.S. Treasury Department and the Internal Revenue Service affecting the withholding and reporting on pari-mutuel wagers could significantly impact handle in 2017.

“By modernizing tax withholding and reporting to reflect the true cost of a wager, especially exotic wagers, more money will now remain in the hands of our customers who will re-bet most of those dollars for the benefit of all,” Waldrop said. “It’s an important fix that the NTRA has spent years advocating for and will have a positive impact on overall pari-mutuel handle from the moment it’s implemented.”