The most important annual event reporting on issues facing U.S. Thoroughbred racing and breeding takes place on Sunday, August 16. But the Covid pandemic means this year’s Jockey Club Round Table Conference on Matters Pertaining to Racing will be a virtual, two-hour conference.
The event begins at 10 am Eastern Time and will provide insightful, up-to-date presentations on our sport. Please watch it on jockeyclub.com or on TVG.
For those not familiar with the conference or who did not attend last year, take a few moments and go to jockeyclub.com, click on Resources and then Round Table Conference. This takes you to a page with every previous conference transcript. Click on the 2019 link and you will see in detail the topics, transcripts and speakers for last year’s event.
To give you an understanding of a sampling of the topics and important issues that have been addressed in the past six decades, a colleague, Lucia Hawkes, has put together a sampling of relevant Round Table topics since the first meeting in 1953. There are historical documents in this archive that are informative and important.
1950s and 60s
The first Round Table was held on July 1, 1953, at the Jockey Club office in New York City. During the post-war years, horseracing spectatorship rose by 40 percent and purses nearly doubled. The Round Table was established as a sounding board for various racing professionals to discuss and scrutinise prevailing industry issues. Topics deliberated among the 18 attendees in 1953 ranged from foal registration procedures to race-entry timetables and the prohibition of spurs.
The widespread use of hormones and vitamins, and the need for stricter drug testing, was another prominent talking point.
Although most racetracks were testing horse saliva and urine, it became increasingly apparent by the 1950s that such tests were ineffective. The hormone testosterone was discussed at the Round Table as a potential performance-enhancer for racehorses. Yet, whether the hormone tampered with a horse’s natural performance remained unclear. The deliberations were split between those who supported permissive medication, and those who opposed it.
In 1954, the conference moved to Saratoga Springs, coinciding with the annual summer meet. The move also corresponded with the launch of the New York Racing Association, spearheaded by Jockey Club representatives John Hanes and Ogden Phipps, who developed a long-range plan to restore the status of New York racing. At the 1954 Round Table, discussions focused on how to assure the continuance of racing upstate and rejuvenate New York’s deteriorating race facilities.
In 1960, the Round Table included talks on the blood typing of horses, along with discussions on televising racing to the press.
A discussion on the problems associated with the anti-inflammatory drug Butazolidin, and whether the substance should be banned, also featured.
As one of the first drugs to achieve mass appeal, Butazolidin caused widespread concern in the racing industry. Despite looming drug use concerns, large new tracks were being built throughout the 1960s as the sport grew in attendance, wagering and influence.
In 1964, the format of the Round Table changed with a series of guest speakers offering industry-specific insights. A report on the new in-motion stalling start gate was delivered by major Thoroughbred owner Rex Ellsworth, followed by a presentation on commercialism in racing, delivered by prominent Thoroughbred promoter J. Samuel Perlman.
1970s
The 1970 Round Table focused on two key topics: the role of equine practitioners in the industry, and the lack of racing coverage in the press.
Racetrack attendance and betting was dwindling by then. As a result, the press focused on other, more popular sports, such as baseball and golf.
By 1971, the Round Table had turned towards the issue of off-track betting – a topic that would dominate industry discussions over the next five years.
In 1970, New York State created the Off-Track Betting Corporation (OTB), the first legal off-track pari-mutuel wagering operation in the country, to provide a legal alternative to illegal off-track betting. In a move that was welcomed by state legislators, tracks attempted to raise profit by extending their seasons. The first sign that this policy was unsustainable came in 1971, when the New York City Off-Track Betting Corporation facilitated wagering on the Kentucky Derby despite not receiving the rights to the race. This act of defiance was a turning point.
Impact of OTB parlours
John Krumpe, VP of Operations for NYRA, provided a very critical analysis at the 1971 Round Table of New York City’s initial efforts to launch their OTB betting parlour network. NYRA was very keen to monitor all of NYCOTB’s initial efforts as in 1968 it had just finished a $30.7 million renovation of the grandstand at Belmont Park, which seated 33,000.
NYRA’s concerns were real when Nassau OTB built a new betting parlour less than a half-mile from the main gate at Belmont. The competition from OTB’s parlours and the small payment that NYRA received from OTB (NYRA receives only 33 percent from OTB of what it received for its own on-track betting) was devastating to NYRA’s finances.
It is hard to believe NYRA would have spent this much money on the Belmont renovation if it knew the impact that NYC/Nassau and Suffolk OTB would have on its on-track business.
A report commissioned by the Jockey Club in 1975, The Future of Thoroughbred Racing in the United States, provided an analysis of different types of off-track betting systems. The report concluded that interstate off-track betting could seriously harm the American racing industry, removing audiences from the tracks and resulting in widespread closures.
Creation of ‘racinos’
In 1978, the Interstate Horse Racing Act was passed to regulate interstate wagering. It also legalised simulcasting events at other locations, enabling bettors to wager on a new race every three minutes, instead of every 25 minutes.
Despite the support new betting options provided for horse racing, it was not enough to restore its former glory. Racetracks in the U.S. began considering the use of slot machines, and the creation of racecourse-casino hybrids, ‘racinos’, to boost revenue. At the 1979 Round Table, however, consultant Bill Killingsworth delivered a speech on the potential implications of introducing casinos on the racetrack, predicting a drastic decline in attendance.
During the latter half of the decade, the annual Round Table presented a renewed focus on equine health. The 1974 event featured a panel discussion on the topic of Permissive or Controlled Medication, while the 1977 conference included a keynote on the prevention of racehorse lameness.
1980s
One area that New York State legislated brilliantly was the establishment of the New York State Breeding and Development Fund and in turn cultivating the relationship with the New York Thoroughbred Breeders and the New York race tracks.
At the 1981 Round Table, the majority of the agenda was devoted to the panel The Effect of State Breeding Programs on the Thoroughbred Industry, which was moderated by Jockey Club member James Moseley, and four New York breeding and racing experts.
As fate would have it, on the Saturday afternoon, the day before the Round Table, Fio Rito broke through the starting gate, was reloaded and went on to win the coveted Whitney Handicap at odds of 11/1, becoming the first New York-bred to win a Grade 1.
The New York Breeders and the New York Breeders Development Fund have consistently focused on programs and incentives to race and win in open company. Breeder and owner bonuses in turn increased the number of NY-breds that ran in open company races. This in turn increased NYRA’s field sizes, which increased wagering handle. The success of NY-breds in open company allowance and stakes races increased the participation in important horse sales like the Fasig-Tipton Select yearling sales at Saratoga.
The start of national simulcasting
The Interstate Horseracing Act of 1978 created national simulcasting by allowing bettors to wager on out-of-state tracks. The Roundtable of 1983 included owners, track operators and breeders in a panel on Simulcasting of Races.
Unfortunately, while there were some good discussions, the panel (and most of the racetrack executives) did not think through the economics. In New York, in particular, NYRA was under siege from the competition by new statewide OTBs for its on-track profitable business.
However, most tracks thought that a simulcast bet on NYRA races from California was all plus-business as the wager was no threat to their on-track business. This thinking pervaded the industry, so the standard rate that most host tracks initially charged the receiving tracks was a simple three percent commission.
The math meant the host tracks received three percent from the receiving track and the host track split the three percent with the horsemen. The receiving track paid two-plus percent for taxes (depending on the racing jurisdiction), assuming a blended 20 percent takeout would get 15 percent of the bet, which the track split with its horsemen based on their contract.
A broken model
The net result was that most small tracks across the country made a higher percentage on a bet on NYRA than NYRA made on that bet on its own races.
The rates have been adjusted higher for the better tracks as time moved on, but it is still true that the receiving tracks often make more on a bet than the live higher-quality tracks.
This problem got further complicated when Advanced Deposit Wagerers (ADWs) started taking bets online in the 1990s. Today quality tracks like NYRA, Gulfstream and Santa Anita often make less on a bet than the ADW that they are selling their signal to. The simulcasting and ADW model is completely broken and needs to be addressed.
The Round Table of 1985 had a brief update on the first Breeders’ Cup, held in November 1984 at Hollywood Park. The Breeders’ Cup was not extensively covered at the Round Table subsequently. NYRA has not held the Breeders’ Cup since 2005.
1991
At the 1991 Round Table Conference, management consultants McKinsey & Co presented a strategic plan to create an effective drug-detection system for the industry.
McKinsey’s recommendations included testing 50 percent of winning horses on race day, as well as streamlining the sample collection and documentation process. In addition, the company proposed a larger, more coordinated drug research programme, expanding quality assurance efforts, and extending responsibility for foul play to include owners and practicing veterinarians.
During the 1990s, the industry faced a number of problems. A mass of negative publicity surrounding inconsistent drug testing and equine welfare concerns had eroded public confidence and interest in the sport. As a result, economic conditions became increasingly challenging for breeders, owners and racetracks.
This caused and was compounded by a declining foal crop, which had fallen from just over 51,000 in 1987 to around 42,000 in 1991.
Industry participants believed that economic pressures had made drug use an easy option for owners and trainers, both to provide the animals to fill racetrack cards and to increase the chances of winning more purses. Such issues were further exacerbated by the wide variation in drug rules and testing practices across the United States. Even the application of drug penalties was inconsistent.
Casino crisis
The 1992 Round Table featured reports on a burgeoning casino crisis, which, if not addressed, was predicted to destroy the industry.
At the 1993 event, David Vance, President of Remington Park and President of the Thoroughbred Racetracks of America (TRA), described the racing industry as ‘under siege’, and in need of radical transformation. Into the mid-1990s, discussions at the Round Table turned to the rise of new digital media and computer technology. The 1995 conference featured a discussion on how racing should utilise the internet to expand its fanbase, promote online betting, and sell merchandise on a broad scale. Interactive wagering was forecast to become a core part of the industry.
The 1996 Round Table reviewed important industry strategic initiatives. The Jockey Club and the Thoroughbred Racetracks of America (TRA) after much review and failed negotiations with owners of Daily Racing Form (DRF) started Equibase, a new past-performance database company.
The Jockey Club and the TRA felt strongly that their core business should not be reliant on a third party to control their core past-performance business and potentially substantial business development opportunities.
New tech ventures
Prior to launching in 1990, the Equibase management team tried unsuccessfully to negotiate a joint venture data-collection business with two separate owners of DRF, Murdoch’s News America Corporation and K-III’s business group.
In 1998, Equibase successfully negotiated a perpetual license deal with the new owners of the DRF, the Alpine Capital Group. Equibase has undertaken a number of new technology ventures that should transform the information we use to make bets on horses. Stay tuned.
The 1998 Round Table was devoted almost exclusively to the exciting announcement of the launch of the new industry initiative, the National Thoroughbred Racing Association (NTRA), which was formed to organize disparate parties and businesses of the racing industry.
In fact, the NTRA was clearly the main focus of the Round Table from 1998 to 2004. Six years ago, in the early days of Thoroughbred Racing Commentary, I wrote this article expressing the strong view that the structure of Thoroughbred racing does not support the concept of an industry czar or whatever you would like to call it.
2000s
The two most important industry safety programs developed over the last two years are Jockey Club initiatives and were launched at the 2008 Round Table.
The Equine Injury Database (EID) tracks and publishes annual equine fatal injuries on an annual basis that occur at tracks racing on turf, dirt and synthetics at various distances. Training injuries are also recorded but not published.
In 2019, the EID had its lowest aggregate annual injury fatality rate of 1.53 per thousand starters since the EID started collecting data in 2009. However, the wide variance in injury rates across all tracks and surfaces indicates to me that there is more work to do.
The Jockey Club Safety Committee has published 38 unique safety recommendations on its site since its launch in 2008. You can see all the recommendations on the Jockey Club website.
It is important to note that Dell Hancock, JC Safety Committee member, is also Chairman of the Grayson-Jockey Club Research Foundation and three other Jockey Club members that sit on both of these boards. Since 1983, the foundation has individually provided $29.1 million to underwrite 384 projects at 45 universities in North America and overseas.
Gloomy picture
Figures presented at the 2011 Round Table conveyed a gloomy picture, revealing a 37 percent decrease in handle and 30 percent fall in attendance over the previous decade. Back in 2010, industry leaders at the Round Table had projected fewer foals, fewer race days, and more challenges for the industry as a whole.
The 2011 conference garnered attention when it became a platform for a study by McKinsey and Co, commissioned by the Jockey Club. McKinsey identified five major causes of decline in racing: intense competition from other types of gambling; negative brand perception; dilution of the best racing; poor fan experience at the racetrack; and fragmented distribution.
The report linked the public’s concern with animal welfare and the use of drugs to declining betting and attendance. As a result of negative publicity and a diminishing fanbase, it was predicted that handle would decline by 25 percent over the next year, the foal crop would shrink nine percent, and owner losses would hit 50 percent.
McKinsey also recognised that the sport’s investment in television was inadequate, noting that there were just 43 hours of national programming. “The core values of racing are still powerful, but we are losing the battle for new bettors and new fans,” the report’s executive summary read. “Serious intervention is required to stabilize the fanbase and position the industry to resume growth.”
To rejuvenate interest, McKinsey recommended that the sport experiment with lower takeout rates, introduce new methods of wagering – including fixed-odds and single pool – and develop a simplified betting process to attract new fans. At the 2011 Round Table, the Jockey Club announced the launch of a national television series based on rating, as part of the multi-million-dollar effort to address racing’s waning popularity. The use of drugs in racing, and the lack of uniformity in testing, remained a large problem.
Important initiative
In 2011, the Water Hay Oats Alliance (WHOA) introduced the Horseracing Integrity and Safety Act – a bill that aimed to create a private, independent horseracing anti-doping authority.
Certainly, one of the very most important initiatives of the Jockey Club has been leadership on the Thoroughbred Horseracing Integrity Act. This bill was presented by the two House sponsors, Representatives Andy Barr of Kentucky and Paul Tonko of New York, at the 2016 Round Table.
There were follow-ups in the 2017 Round Table and in a brilliant presentation at the 2019 event by Bill Lear, Vice Chairman of the Jockey Club and trustee at Keeneland.
Tremendous progress has been made on the bill and I am looking forward to the update at the 2020 Round Table on Sunday.
In closing, I believe that the 2011 McKinsey Report and the subsequent follow-up reporting through 2018 that McKinsey and the Jockey Club have done identifies important strategic issues that the industry faces.
I will be writing here on this specific topic one week from today.