Thoroughbred Racetrack Economics: Emerging Issues in Competition, Regulation, and Wagering
22 December 2004
By Louis Guth and Thomas Joscelyn with Pari-Mutuel Industry Consultant Michael Shagan
The Thoroughbred racing industry today stands uniquely at the intersection of direct economic regulation, emerging competition, and the operations of financial markets. In the last fifteen years, the business of producing Thoroughbred racing has undergone profound change, largely as a result of advances in information technology. Races are now frequently simulcast to other tracks and off-track sites where players can place wagers via the telephone and the Internet. So-called "live" wagering at a host track has declined dramatically; off-track wagering now accounts for more than eighty-five percent of all wagering on Thoroughbred races in the United States.
The ability to distribute wagering nationwide and even worldwide has opened the door for economic competition in ways that may not have been fully anticipated by the regulators. These factors and others create a potential shift in the balance of winning away from recreational participants and toward sophisticated players, who employ information technology and derivative pricing techniques in deciding their wagers. As a result, racetracks are now increasingly challenged to find the right formula for increasing participation by both types of bettors.
Thoroughbred Racetrack Economics: Emerging Issues in Competition, Regulation, and Wagering, a volume co-authored by NERA Special Consultant Louis Guth and Consultant Thomas Joscelyn in partnership with pari-mutuel industry consultant Michael Shagan, addresses these and other important emerging economic concerns in the Thoroughbred racing industry, with an emphasis on economic practice and policy.
The volume is divided into two sections -- each based upon reports that NERA authored for the National Thoroughbred Racing Association: "Time to Deregulate: The Case for Thoroughbred Racing" (2000) and "Handle Up, Revenue (and Purses) Down: An Economic Analysis of Current Trends in the Thoroughbred Racing Industry" (2004).
