The Demand for Parimutuel Horse Race Wagering and Attendance

Abstract

There has been a long history of patron participation in parimutuel horse race wagering and attendance, which are major recreational products in consumer budgets. In this paper, the demand for parimutuel horse race wagering and attendance has been specified and estimated for both Thoroughbred and Standardbred racetracks in a multistate market area. The data are annual over the period 1960--1987. It is found that demand is price elastic in every case. Racing quality, personal income, the number of racing days, competition from a state lottery, and from professional sports (baseball, basketball, football) are all significant determinants of these demands. Both attendance and wagering are found to increase with an increase in racing quality. However, it seems that the new patrons, attracted by quality racing, tend to wager less than those who attend regularly. The presence of a state lottery is found to have resulted in a substantial loss in attendance as well as in wagering at each of the racetracks. This, in turn, has resulted in a loss in both attendance and wagering-related revenue to racetracks, horsemen at those racetracks, and state governments. Professional sports are estimated to have a negative impact on attendance and wagering demands. For example, an additional 10 days of competition from professional sports in 1987 would have resulted in a 4% decrease in both attendance and wagering. Both attendance and wagering can be increased by lowering the takeout rate from present levels or by offering more quality races.parimutuel wagering, lottery, horse racing, demand for wagering

Market Cannibalization Within and Between Gambling Industries: A Systematic Review

“…The available evidence seems to support this suggestion, as most studies have found that lotteries cannibalize pari-mutuel and racing wagers both by a patronage effect and by a spending effect (Gulley & Scott, 1989;Miers, 1996;Mobilla, 1992;Simmons & Sharp, 1987;Thalheimer & Ali, 1995a, 1995bVasche, 1990). Studies have reported losses in pari-mutuel GGR of around 10-20% following the introduction of lotteries (Gulley & Scott, 1989;Simmons & Sharp, 1987;Vasche, 1990), but despite this substitution, net state revenue is positive (Vasche, 1990).…”

The Effect of Legalized Gambling on State Government Revenue

“…They find the number of slots to have a significantly negative effect on lottery sales, but horse and dog racing have no effect. Thalheimer and Ali (1995) model attendance and handle at three horse racetracks in the Ohio-Kentucky border market from 1960 to 1987. They find that the lottery (measured by payout rate) reduces the handle at racetracks.…”

“…Some of the papers that address interindustry relationships are of Elliot and Navin (2002), Fink and Rork (2003), Grote and Matheson (2006), Gulley and Scott (1989), Kearney (2005), Mobilia (1992), Ray (2001), Siegel and Anders (2001), Thalheimer and Ali (1995), and Walker and Jackson (2008).…”

“…Thalheimer and Ali (1995) model attendance and handle at three horse racetracks in the Ohio‐Kentucky border market from 1960 to 1987. They find that the lottery (measured by payout rate) reduces the handle at racetracks.…”

Do Casinos Cause Economic Growth?

“…Some authors have studied the relationships among casinos, other gambling industries, and tax revenues. These papers include Anderson (2005), Anders, Siegel, and Yacoub (1998), Elliott and Navin (2002), Fink and Rork (2003), Kearney (2005), Mobilia (1992), Popp and Stehwien (2002), Ray (2001), Siegel and Anders (1999, 2001), and Thalheimer and Ali (1995). Others have focused on the negative consequences of casino gambling and pathological gambling behaviors like crime and bankruptcy.…”