01/05/2018 1:50PM

Handle up slightly in 2017 as tax changes pay dividends

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Handle on U.S. horse races in 2017 rose slightly compared with the year prior as the number of races held at U.S. tracks continued to decline, according to year-end figures released Friday by Equibase.

Total handle for 2017 was $10.9 billion, up 1.6 percent from 2016. The 2017 figure was nearly identical to the figure in 2012, showing that handle on horse races in the U.S. has been essentially flat for five years, without adjusting for inflation. Still, this was the third year in a row that handle had not fallen, an encouraging sign for an industry that had experienced perilously sharp declines in business from 2008-12.

Even as handle strengthened somewhat, the number of races held at U.S. racetracks dropped 1.7 percent to 37,628, perpetuating a decades-long slide that has accelerated in the past 10 years due to a major contraction in the number of operating racetracks and in the foal crop. The number of races run at U.S. racetracks was last under 38,000 in 1960.

Per race, however, average handle was up 3.4 percent, from $280,345 in 2016 to $289,774.

The 2017 figures did benefit from a strong final two months of the year, with total betting up 6.4 percent in November and 3.9 percent in December. The jumps coincided with the implementation of new tax rules regarding automatic reporting and withholding that are highly favorable to horseplayers.

The organization that lobbied for the rules, the National Thoroughbred Racing Association, said in a statement that it believed the tax changes were partly responsible for the late-year growth.

“With a robust economy, significant changes to the tax code for most, and a full year operating under the new withholding and reporting regulations enacted in late September, we are optimistic these positive wagering trends will continue in 2018,” said Alex Waldrop, president of the NTRA.

While total U.S. purses were down 0.8 percent for the year, the decline in the number of races meant that the average purse increased 1.3 percent to $28,695. That is the highest average figure ever recorded and is double the number from 20 years ago, disregarding inflation. Purses at U.S. racetracks are heavily subsidized by casinos.

Despite the decline in races, U.S. racetracks continued to struggle to maintain field sizes, with the average field size dipping 1.0 percent, from 7.80 in 2016 to 7.73 in 2017. The average field size dipped below eight horses per race for the first time in 2012, and the figure has remained below eight ever since, in concert with sharp declines in the foal crop.