COVID-19 Impact Costing Racing Millions of Dollars

As tracks that continue to race behind closed doors are seeing reduced revenues, others have completely halted racing, and casinos that generate purse money have suspended operations, it's clear the COVID-19 outbreak is taking a significant economic toll on the sport.

Of course racing is far from alone in this trend. A record 3.25 million workers filed for unemployment in the week ending March 21. On March 25, according to multiple news outlets, the U.S. Senate committed more than $2 trillion to assist the public and businesses—a record aid package. The House of Representatives is expected to approve that legislation March 27 and President Donald Trump has said he will sign it.

According to the Washington Post, $250 billion has been committed to direct payments for individuals and families, $250 billion for unemployment insurance benefits, $500 billion for loans to distressed companies, and $350 billion for small business loans.

NTRA president and CEO Alex Waldrop notes that some of these packages, and previously completed legislation, will benefit racing, from individuals to small businesses that could include veterinarians, trainers, and some racetracks.

Waldrop noted that the added commitment to unemployment benefits in this latest aid package will expand the types of workers covered to include independent contractors and self-employed, which could provide coverage for workers in racing who previously wouldn't have been eligible for unemployment benefits. The unemployment insurance will provide an extra $600 a week for jobless workers on top of their state benefits.

Congress also is considering a fourth piece of legislation that Waldrop said will aim to assist industries specifically affected by COVID-19. He said the NTRA will have a seat at that table. Racing most assuredly has been impacted, and because pari-mutuel wagering on the sport generates future purse money, that impact figures to be felt for some time.

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For now the current focus will continue to be the health of everyone in the industry and, Waldrop noted, after things come back online, various economic issues can be addressed. During this critical time for racing's workers, horsemen's organizations and other industry groups are stepping up. The Jockey Club announced March 26 that its Safety Net Foundation, which works with chaplaincies and horsemen's groups to assist backstretch workers, will aim to ramp up its efforts.

"With many racetracks currently closed for live racing and instituting strict quarantine procedures due to the pandemic, backstretch families face significant financial strain, and the foundation is poised to utilize its resources to help those in need," said Shannon Kelly, executive director for the foundation.

Beyond those immediate needs, the economic toll will be significant. Several of the tracks that initially continued to offer racing—with no fans in attendance—have recently decided to cease racing as they stay in line with local and state government directives. After a backstretch worker at Belmont Park tested positive for the novel coronavirus, the New York Racing Association announced March 19 the suspension of racing at Aqueduct Racetrack. On March 25 NYRA said that suspension will continue at least through April 5. 

As part of the suspension announcement, NYRA CEO and president Dave O'Rourke noted how much the industry had come together to assist those in need.

"I'm encouraged by and thankful for the support, teamwork and communication with our industry partners during this difficult time," said O'Rourke. "The real-time input and expertise provided by Joe Appelbaum and the (New York Thoroughbred Horsemen's Association) team, along with the care and compassion of Paul Ruchames at (the Backstretch Employee Service Team of New York), our Chaplain Humberto Chavez, as well as Libby Imperio and her colleagues at Anna House have helped to safeguard our community and provide a sense of stability and hope."

Churchill Downs Inc., following guidance of local and state governments, brought an earlier than scheduled end to meets at Fair Grounds Race Course and Slots and Turfway Park. Fair Grounds ceased racing after its March 21 Louisiana Derby (G2) card, following the "stay-home" order of New Orleans Mayor LaToya Cantrell, for the meet that was supposed to continue through March 29. Turfway's meet, set to continue through March 28, also was called off a few days early, March 25, following Gov. Andy Beshear's "Healthy at Home" order.

CDI noted that Turfway's backstretch will remain open as a stabling area and for training, as it falls in Kentucky's "life-sustaining business" category outlined by state government as it provides "food, shelter, and other necessities of life for animals." CDI said continued focus at Turfway will remain on the safety of all employees and members of the backside community.

Keeneland already has announced it will not offer a spring meet and Churchill Downs has pushed the Kentucky Derby Presented by Woodford Reserve (G1) from May 2 to Sept. 5.

Some prominent tracks have chosen to continue racing without fans. With no on-track wagering and other track simulcast areas closed, the signals are largely dependent on advance-deposit wagering outlets. Those efforts have delivered steady returns for a few tracks and some returns for others, at a time that would otherwise would be a complete loss.

BloodHorse conducted a brief review, looking at recent race dates, on how handle was faring at some of these tracks. At Gulfstream Park, in comparing four race dates for the week ending Saturday, March 21, with four comparable dates last season, handle was off only 4% to $34,953,099. For four comparable dates ending March 21 at Oaklawn Park, the Arkansas track's handle is off 14% to $12,980,435. 

Santa Anita Park did not race for most of March 2019 after suspending racing because of a rash of breakdowns. Comparing three race dates ending Saturday, March 21 with three comparable dates in 2018 shows Santa Anita is off 41% to $16,823,899.

Also, tracks that have continued racing have missed out on on-track handle. Under racing's business model, on-track handle delivers the highest percentage of money to purse funds. Still, the tracks that have been able to continue racing have maintained at least some revenues and have provided an opportunity to attract new fans as other sports have been completely shut down and some level of normalcy in a difficult time for long-time horseplayers.

Waldrop thinks tracks have handled each of their individual decisions well.

"Those who can race and maintain those jobs, that's great," Waldrop said. "We understand that there also are tracks where the better option—based on the guidance of their state and local governments—is to close. The number one thing is that we continue to care for the horses and put first the health and safety of the people who care for the horses."

In continuing to race, Gulfstream has seen some pushback from public officials. According to the South Florida Sun Sentinel, Hallandale Beach, Fla., city officials are exploring whether the track's continued racing operations are in violation of a Broward County executive order to close nonessential businesses. Bill Badgett, executive director of Florida racing operations for owner The Stronach Group, defended the track's approach, noting that horses need to be cared for whether the track is open or not and adding racing to the mix doesn't significantly increase public health risks.

"Our priority during these challenging times is the health and well-being of our employees and the horses we all love and care for," Badgett said in a statement to the paper. "Racehorses are living, breathing animals that require constant supervision and care. It would be detrimental to their health, safety and welfare to stand in their stalls without daily exercise. There are over 3,200 horses that call Gulfstream Park home and our training and racing is being conducted by essential personnel only who are operating under stringent measures for protection that are aligned with the best guidance from health and governmental authorities."

Gulfstream has seven stakes scheduled for its March 29 card, highlighted by the Curlin Florida Derby (G1). The Florida Derby purse already has been impacted by current events. It was reduced from $1 million to $750,000, as track officials noted the impact on purses from the absence of on-track handle and suspended operations at the Gulfstream casino.

Beyond the track, the closing in recent weeks of casinos and historical racing facilities already has cost purse funds millions of dollars. Casino-type gaming generates more than a third of the purse money in the United States. A look at two affected states, New York and Kentucky, serves as an example of how the current closings are impacting purses.

Casinos in New York closed indefinitely March 16, including the Resorts World Casino at Aqueduct, which in the days that followed, according to the New York Post, saw its parking lot temporarily converted to a COVID-19 testing area.

Resorts World Casino, according to the most recent annual report from the New York State Gaming Commission, delivered $51.95 million to New York Racing Association purses. Based on those numbers, NYRA purses will miss out on about $1 million a week in purses for each week the casino is closed.

Also closed March 16 was Finger Lakes Gaming & Racetrack, which generates about $175,000 a week toward purses.

In Kentucky, the four historical horse racing facilities that generate purse money for Thoroughbred racing suspended operations in mid-March for at least two weeks, March 16-30. Those facilities directly generate purse money for Churchill Downs, Ellis Park, Keeneland, and Kentucky Downs and for all the state tracks through the Kentucky Thoroughbred Development Fund.

The two-week closing will cost Kentucky purses in the ballpark of $2.15 million based on February 2020 numbers. 

In February, HHR at Churchill Downs' Derby City Gaming generated $1,187,123 for that track's purses, while the HHR at Kentucky Downs generated $911,978 for its purses, Keeneland's joint venture at Red Mile saw $193,969 for its purses, and Ellis saw $135,905 for purses. The four operations generated $1,866,294 for the KTDF.

Besides Kentucky, New York, and Gulfstream, other gaming outlets that generate purse money for North American tracks that have closed include facilities associated with Oaklawn Park, Delaware Park, Indiana Grand Racing & Casino, Prairie Meadows, the Maryland Jockey Club tracks, all the New Mexico tracks, the Ohio tracks, the Oklahoma tracks, the Ontario tracks, the Louisiana tracks, all three Pennsylvania tracks, Colonial Downs, and both West Virginia tracks.