Nyquist Must Win the Preakness to Make Horse Racing Cool Again
When American Pharoah won the Belmont Stakes last year to end horse racing’s 37-year Triple Crown drought, he was the godsend the sport so desperately needed. Meet-and-greets sold out at his stud farm in Kentucky. Attendance records were shattered at every racetrack he visited following his victory. The Associated Press named him the sports story of the year.
“American Pharoah’s story was a phenomenon,” says Keith Chamblin, chief operating officer of the National Thoroughbred Racing Association.
But Pharoah didn’t just win races. He won something for racing as a whole. For more than a decade, wagers on races had been in decline. Profits were down. A new generation of fans was in perilously short supply.
But 2015 was gloriously different, and the picture in 2016 is also bright. As of April, bettors had placed $3.4 billion on US races, a 4 percent increase from the same time last year. And the 2016 Derby day races made a collective $192.6 million, just one percent off from the record set last year—even though TVG, one of the web’s major online betting sites, crashed that day.
At this Saturday’s Preakness Stakes, Kentucky Derby winner Nyquist has a chance to get one win closer matching American Pharoah’s feat. He also, just maybe, is the horse that can cement racing’s comeback. Never before has the industry been more primed to take on new fans—and new money—from around the country. Spurred by American Pharoah, Internet-savvy racing entrepreneurs are drawing a new breed of bettor.
Racing Has A Gambling Problem
Recent stumbling aside, horse racing was once one of America’s top sports. Purses became more valuable in the years following World War II, and attendance numbers held strong through the ’70s. But then casinos began popping up all over the US, scooping up consumers’ mad money and cutting into racetrack profits. By 2011, the crisis was so dire that The Jockey Club released a report from McKinsey predicting that, without major intervention, wagering on the sport would decline 25 percent by 2021. Racing had failed “to keep up with rising competition from other forms of gambling, sports, and entertainment.”
Racing was also wrestling with a serious branding problem. If you think of racetrack regulars as old dudes chomping on cigars, you’re not that far off. That study showed that the average fan was 51 years old. Racing has never been a sport for the young, but fans appeared to be literally dying faster than they were being replaced.
The report found that would-be fans felt betting was too complicated. They worried about the welfare of overmedicated and overworked horses. Forty three percent said the bathrooms at the track were icky.
But racing has something other forms of betting don’t: If you want to gamble online in the US, horse racing is likely your only legal option. In the olden days, players had to make their way to a track to place bets in person. Then, in the 1970s and ’80s, bettors began calling in wagers by phone. And, in 2000, the Interstate Horse Racing Act was amended to include “electronic media,” lumping in cellular, satellite, and other wireless contact as legit ways to wager. That paved the way for online horserace betting, which has remained legal in most states.
Enter the (Almost) Digital Horse Race
Racetracks themselves have digital betting sites, and new online sports networks serve hardcore handicappers. But those are so …. old fashioned. And you still have to know your maiden from your stakes race. Instead, many new bettors are turning to gambling sites specifically targeted at casual players, such as Derby Jackpot. Known as the Zynga of horse racing, it combines simple rules, clear graphics, live feeds of races, and player chatrooms. Information is stripped down—players only see the horse’s name, odds, and a couple of details about their record—nothing about the trainer or jockey. And nomenclature for bets is tweaked—they use terms like “monkey” instead of “win” and “fiddy” for a bet similar to a “trifecta.” Another site called Derby Wars has attracted players with fantasy racing tournaments.
And American Pharoah has helped these sites flourish in the past year. “Every time he ran, our casual players reengaged with the site because races were televised and broader sports media paid attention,” Walter Hessert, co-founder of gambling site Derby Jackpot, says. Pharoah’s last three races “had ten to twenty times the wagering of a similar race without the champion horse.” And those sites—the legal ones, anyway—feed into the funds for purses and racetracks.
Not only did Pharoah and these casual gambling sites engage new bettors—90 percent of Derby Jackpot users are not regular horseplayers—but those gamblers are younger. About two-thirds of Derby Jackpot’s users are men, and their average age is 40, a decade younger than the average fan from The Jockey Club’s 2011 study and three years younger than the average NFL fan.
These are folks that racing needs—the casual players who aren’t hooked yet, who don’t have the patience to learn the intricacies of betting at the track, but who have the funds that the industry needs to stay afloat. Before you rush to develop some kind of AI-powered bettable racing game, however, know this: Online gambling is only allowed if it’s attached to a race with living, breathing horses. Avatars can’t replace the animals.
The Stakes of the Stakes
Some critics argue that this sort of gamified online race-betting has created a demand for more horses to run at smaller tracks, increasing the drugging of horses to mask injuries. They fear horses will be pushed beyond their limits. These are already big issues in racing, and sites that treat racing like a videogame may only exacerbate the problem. The Pharoah Effect, in other works, could have some bad consequences for horses.
But it’s sure been good for racing as an industry. The sport isn’t out of the hole, but it’s on the right, ahem, track. Wagering last year saw a 1.2 percent increase over 2014 after years of declines. And the sport can expect another boost in three years when Pharoah’s foals begin to race. “This alone creates a great deal of anticipation and excitement,” Chamblin says.
The Kentucky Derby might seem like the belle of the ball, with those glamorous hats and Derby pie feasts, mint juleps and outrageous rose garlands. But the stakes are higher than you might think at today’s Preakness. If he wins, Nyquist moves one step closer to the history books. If he loses (Exaggerator, we’re looking at you), the grandstands will be littered with torn tickets, the poor Belmont Stakes in June will have fewer viewers, and racing may just lose the fans it gained in the last year. Care to place a wager?