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Horse racing is set for a resurgence, even as America's oldest track closes

In Business
December 31, 2024
Horse racing is set for a resurgence, even as America's oldest track closes


America’s oldest horse racetrack is closing after running its last race on the final weekend of 2024. 

Freehold Raceway in New Jersey, co-owned by Penn Entertainment, tried for decades to land a casino but failed. Like many tracks around the nation, it grappled with declining attendance and revenue. It had been operating for more than 170 years.

“Unfortunately, the operations of the racetrack cannot continue under existing conditions, and we do not see a plausible way forward,” said Howard Bruno, the racetrack’s general manager, in a news release announcing the closure.

But industry insiders, investors and other enthusiasts believe horse racing in the United States could be poised for a resurgence — fueled by new investor interest, innovations in the sport and a boom in legalized online sports gambling. 

Horse race At the harness racing week on the Freehold Raceway in New Jersey: a reverse race with the sulky fixed in front of the horse – 1930.

Robert Sennecke | Ullstein Bild | Getty Images

In 2023, the sport added more than $36 billion to the U.S. economy, supporting nearly half a million jobs, according to the American Horse Council. 

Horse-racing revenue comes from a variety of sources: tickets, hospitality, merchandise purchases at the track, licensing for TV or simulcast, sponsorships and gambling.  

Reliable estimates of global horse-racing revenues are hard to come by, experts say, in part because of the private nature of ownership and in part because of the wide variety of metrics used. Revenue estimates range from $44 billion to nearly 10 times that.

Multiple sources agree the sport could see compound annual growth of roughly 9% in the years ahead.

FanDuel, the nation’s leading sportsbook by market share, partnered with the Kentucky Derby for a second year in 2024. The company told CNBC that the volume of bets on Derby day hit the same level as Super Bowl gambling in the same year.

Churchill Downs — the most significant pure-play, publicly traded company focused on horse racing. 

The company announced a significant increase in adjusted EBITDA — earnings before interest, taxes, depreciation and amortization — during Derby Week in 2024, with critical sponsorships from companies that wanted to align themselves with the prestige event.

The company says record wagering numbers suggest the betting audience is not only growing but becoming increasingly engaged as they learn the sport, especially on the mobile platforms favored by a younger demographic.

“Our operational strategies present a model for other racing events to follow. Overall, the Kentucky Derby is not just a standalone event but a blueprint for the future of horse racing,” said CEO Bill Carstanjen.

Hall of Fame horse trainer Bob Baffert said the Kentucky Derby is special because it’s a bucket-list race: “It’s an Instagram moment for everybody. Everybody goes. They’re taking their selfies: ‘I’m here. I’m here at the biggest party.'”

CNBC Sport: Famed horse trainer Bob Baffert on his return to Churchill Downs and 'Instagram-worthy' races

But the high-profile Triple Crown races and the Breeders Cup may be outliers — a kind of World Series in the horse-racing schedule that otherwise is filled with everyday competitions that draw only a smattering of fans. 

Interest in more ordinary races has been waning for decades.

The amount of money wagered on pari-mutuel racing — where bettors gamble against other bettors and the odds constantly change ahead of the race — has declined by about 55% since 2000, when adjusted for inflation, according to the Paulick Report, a website about the horse-racing industry. 

Also, over the past two decades the number of owners, horses and trainers in the U.S. has plummeted, according to the NYTHA researchers. They concluded that in 2022 horse racing had “on most days been reduced to a niche market, albeit with a highly interested core audience.” 

Baffert told CNBC he believes horse racing needs more high-profile events with big purses to drum up buzz. And, like baseball, it needs superstars to draw in weekday audiences. 

Baffert, who is only the second trainer ever to have two Triple Crown winners, may be horse racing’s best-known character. But controversy in recent years has overshadowed his success.

Baffert was suspended for three years from competing at Churchill Downs after a horse he’d trained, Medina Spirit, won the Kentucky Derby in 2021 but tested positive for an anti-inflammatory drug that’s not allowed on race days — and was disqualified.

This summer, Churchill Downs lifted its suspension of Baffert after he publicly took responsibility for the failed drug test.  

Baffert returned to the storied racetrack the day before Thanksgiving, with a 2-year-old horse named Barnes that had never raced before but had fetched an impressive $3.2 million at an auction in Saratoga, New York, from now-owner Zedan Racing Stables.

The median price to purchase a race horse is about $30,000, according to BloodHorse, a publication for owners and breeders that tracks sales and the state of the market.

Barnes won by a nose in his debut.  

DraftKings became a naming sponsor for the 2024 Travers Stakes in Saratoga. 

Despite the Freehold Raceway closure, Penn Entertainment said in a statement it’s looking to expand gaming tied to horse racing.

“In those states where commercial gaming is not yet approved at the racetracks, such as Texas, we continue to educate lawmakers on the success we’ve seen,” said Eric Schippers, senior vice president of public affairs for Penn. “Gaming has helped to revitalize racing, driving higher purses, enhanced breeding programs and the preservation of family farms and open space.”