“HERE THEY COME SPINNING OUT OF THE TURN…”

3/1/11

Whether there’s anything especially profound about the ruminations in this particular post is a matter of speculation, but the topic is one that deserves attention for a number of reasons.

Last Sunday’s Chicago Sun-Times contained a feature article on the decline of horse racing in the Chicago area. Probably the most telling statistics cited were that total wagering in 2010, at $725.7 million, dropped 44% from 1992. Total purses in 2010, at $54.3 million, slid 54% since 2002. Harness racing purses dropped 62% from 1992.

The industry and the sport of horse racing is clearly dying and the reason the article cited, the aging of its clientele, is only the veneer of the problem. As loyal readers know, I am not a gambler, though some of my forays in the financial markets might be considered gambling by some. A good friend of mine is a gambler, and a good one. He goes to Vegas several times a year and spends the preponderance of his time there at the tables. He likes the boats and frequently visits the OTB parlors and occasionally goes to the track. He is a serious and skilled gambler, not a bust-out, degenerate gambler. He explained to me years ago that horse racing is dying because it is a very slow form of gambling. When it was the only legal way to gamble, it did fine. Once other forms of gambling became legal, people who were looking for action went to the casinos; they no longer had the patience that playing the horses requires. The only people left in the stands at the track were people who really liked the sport of horse racing. There aren’t many people who match that description, certainly a far smaller number of people than those who just like to gamble, and most folks who really appreciate the horses are indeed older.

The decline of horse racing is a national phenomenon and a national certainty. However, according to the Sun-Times article, the best horses and horsemen that remain are migrating away from Chicago to the east coast, where tracks are allowed to operate slot machines at the track. Though racing is on its deathbed, these tracks manage to horde whatever action is left by having their slot machines subsidize their horse racing business. The obvious “solution,” then, seems to be to allow Illinois tracks to operate slot machines so that the slots can subsidize the ponies.

A number of related questions arise. Why should we subsidize the horse racing industry? What is so magical about it that it deserves an at least quasi-public subsidy? The answer, of course, is politics; the horsemen have powerful friends in public life everywhere the tracks are found, but perhaps nowhere do they have more friends than in Illinois. But the economic question remains: If you are going to be in the business of subsidizing things with gambling (not a good idea, and not entirely because of the more nefarious aspects of gambling, but that is grist for another mill), why horse racing? Aren’t there more worthy things to subsidize, at least on their surface? Schools, health care, tourism, tax reduction, etc. all come to mind.

The argument made by the industry is that there are jobs involved. So what else is new? There are jobs involved in virtually every endeavor, and certainly in every program that politicians use to channel your money to their friends. Real jobs, however, involve providing a product or a service people want so much that they are willing to pay for it, not providing something that other people are being forced to subsidize.