Redistributing Rewards To Revitalize Racing

Abstract

The thoroughbred horseracing industry is mired in a situation where many of the owners of the typical unheralded racehorsethe staple of everyday horseracingare experiencing a severe financial strain as a result of an inadequate purse structure. As owners abandon the industry, an undersupply of racehorses is limiting racing opportunities and producing uncompetitive races with few entrants at many racetracks, negatively impacting industry revenue. There is a growing fear that the entire horseracing industry may be irreparably damaged if owners of these unspectacular but useful racehorses are not retained. The model developed here reveals that there exists a self-sustaining level of overall purses for a particular racemeet that can be supported by patron wagering. The proposed plan for distributing this aggregate level of purses embodies a minimum subsistence reward that ensures that owners of better horses of even the lowest quality can rain viable. The purse distribution scheme also offers the owners of higher quality horses the opportunity to earn greater returns on their racehorse investments, providing a strong incentive for owners to upgrade their racing stock. Stemming racehorse undersupply while raising racing quality is critical to enhancing patron support and industry revenue.