Strong Year Sees Spikes in Handle, Increased Purses

In the first full year after the National Thoroughbred Racing Association successfully completed a campaign to have the U.S. Treasury and Internal Revenue Service change its rules on reporting and withholding of large pari-mutuel winnings, wagering on U.S. races saw its largest single-season growth in 18 years. 

Racing's economic indicators for 2018, released Jan. 4 by Equibase, showed wagering on U.S. races in 2018 improved 3.3% to $11,265,519,563. It marks the fourth straight year pari-mutuel wagering has improved and is the largest single-season gain since the 4.4% improvement in 2000.

Meanwhile, the news was just as good in terms of U.S. purses, which improved 3.52% to $1,117,727,943. It's the first time U.S. purses have improved year over year since 2012.

The NTRA reported that in the first year of the new withholding and reporting standards (Sept. 28, 2017-Sept. 27, 2018), bettors retained an extra $35 million in winnings that, previously, the IRS would have immediately retained. That extra money in players' hands likely helped spark increased handle.

Beyond the changes in withholding and reporting, some of the 2018 handle increase can be attributed to the continued success of the sport's biggest events, the Triple Crown sweep of Justify  sparking interest, and an improving economy.

"Boosted by a growing economy, a second Triple Crown winner, continued growth of racing's big days, and a full year operating under the new tax withholding and reporting regulations, 2018 proved to be a strong year for Thoroughbred racing," said NTRA president and CEO Alex Waldrop. "It is worth noting that total handle topped $11 billion for the first time since 2010 and, at 3.3%, growth in handle was the largest since 2000. Perhaps most intriguing were the per-race-day increases of 6.58% in handle and 6.81% in purses despite fewer races and race days."

Despite record rainfall for Kentucky Derby Day, racing's biggest day again enjoyed record handle, up 8% from last year to $225.7 million. That new standard came one day after Kentucky Oaks Day upped its wagering record to $55.8 million, shattering the $49 million mark from 2016.

The second edition of the Pegasus World Cup card saw Gulfstream Park enjoy a 4.3% bump in handle to $41,983,881. Gulfstream then saw track-record single-card handle of $49.9 million on its Florida Derby Day card on its way to a track-record year of $2.01 billion in handle.

"We continue to rebuild year-round racing in Florida with the help of breeders, owners, and horsemen. While we're pleased with the record growth the past two years in handle, we believe there is room to continue growing," said Gulfstream general manager Bill Badgett. "The Stronach Group's commitment to reinvigorate Thoroughbred racing is evident by its pursuit of improved customer service, relevant entertainment, and fine dining."

The increases in wagering and purses is even more impressive considering 2018 saw a contraction in race days, down 3.08% to 4,432. That means wagering per race day was up 6.58% to $2,541,859 and purses per race day spiked 6.81% to $252,195.

Thoroughbred Owners and Breeders Association president Dan Metzger said the growth in purses is encouraging.

"The long-term health of our sport is closely aligned with Thoroughbred ownership, and the increase in overall purses is an encouraging economic indicator," Metzger said. "The sustainability of this positive purse growth will be a critical factor for current owners, as well as those considering investment in racing."

In 2019, racing could see some improvement in race days. Arizona Downs (formerly Yavapai Downs, which hasn't offered racing since 2010) plans to conduct its first meet beginning in late May, and Colonial Downs plans to reopen in August for 15 race dates after not racing since 2013.