Chapter 1 - Pari-Mutuel Horse Race Wagering —Competition from Within and Outside the Industry

Abstract

Abstract From 1960 through 2002, real dollar wagering on pari-mutuel horse racing (handle) in North America peaked in 1977, declining 44% through the end of the period. A number of factors have been identified as contributing to this decline in handle. Most significant among these are increased competition from casino and state lottery gaming venues. The presence of casino gaming in a racetrack’s market area has been found to reduce pari-mutuel handle by 31–39%. Competition from casino gaming within the pari-mutuel industry takes the form of the integration of slot machines at a pari-mutuel racing facility (racino). Slot machines and video lottery terminals (VLT’s), when placed under the auspices of a state lottery, have been estimated to reduce the pari-mutuel handle at a racino from 24% to 39%, varying with the number of machines. State lotteries have resulted in estimated pari-mutuel handle reductions ranging from 10% to 36%. The presence of professional sports in a racetrack’s market area has also been found to reduce pari-mutuel wagering, although to a lesser extent than competition from casino gaming or a state lottery. Finally, within-industry competition from other pari-mutuel wagering venues has had a negative effect on pari-mutuel wagering. JEL Classifications: L83