Kentucky Derby

Today is the Kentucky Derby, one of the biggest horse racing days of the year. The sport of horse racing has been around for centuries, but has been struggling over the past two decades for many reasons. However, the “Triple Crown” races has maintained its constant demand and attendance from consumers.

In Forbes Magazine this week, there was an article regarding betting and the Kentucky Derby. As the article points out, the one close to certain thing at the Kentucky Derby is that the favorite will not win. Over the past 32 derby races, the favorite emerges victorious only 4 times. The article goes onto state “And the betting favorites haven’t even been good bets to place or show.”

The article states the main reason for why favorites tend not to be good bets to win, place, or show is small sample size. These horses are young and have not run in very many races. Therefore, success in early races tends to make these horses the favorite when in reality, there is not much information known about these horses and how they will race against some of the top horses in the country.  So if you sit back to watch the derby, remember that history tells you that the outcome of this race is far less certain than the final betting lines.

Financial Problems in Horse Racing

The Kentucky Derby, the first jewel in the Triple Crown, was run today.  The winning horse, Super Saver, went off at 8-1  and covered the sloppy 1 and 1/4 mile course in 2:02 2/5.

While all might be well at Churchill Downs, the financial picture is not so rosy in New York.  According to a report on NPR, the $2 billion horse racing industry in New York is experiencing dire financial problems, and the Summer meet at Saratoga Springs could be canceled.  Horse racing has been in decline for decades in North America.  In many states, the introduction of slot machines and table games at race tracks has helped keep the “sport of kings” on its feet by using revenues generated by other forms of gambling to subsidize purses and the racing industry.  New York has been unable to get legislation passed to allow slots and table games to be allowed at race tracks, and the industry has suffered.  Worse, all the Off-Track-Betting shops in New York state went bankrupt due to mismanagement, further reducing the revenues available to race tracks and the horse racing industry. The lousy economic climate also contributes to the financial woes in the horse racing industry.

The New York legislature is considering a $17 million loan to help Saratoga Springs open in July.  The next jewel in the Triple Crown, the Preakness, will take place in two weeks at Pimlico Race Course in Baltimore.  Like Saratoga Springs, Pimlico has had serious financial problems in the past few years.

Kentucky Derby Downturn?

There is an article in this morning’s USA Today examining the economic downturn and the relation to this weekend’s Kentucky Derby. The article comments on some of the activity around this year’s derby. Some of the more interesting numbers:

-An estimated 100 million dollar boost in revenue.  A normal Derby weekend is around 120 million dollar revenue boost

-Hotels seeing a 15-20 percent vacancy rate when normal Derby weekends hotels are operating at capacity

The question is whether or not the overall handle will see a decrease as well. The article states that betting is down in the US this year. The Derby is about 4 percent of Churchhill’s yearly pari-mutuel revenue.  It will be interesting to see what happens.