01/06/2009 1:00AM

U.S. handle down in 2008


Wagering on U.S. horse races in December dropped 20.8 percent compared with betting in December of 2007, according to figures released by Equibase on Tuesday, putting a punctuation mark on a year in which wagering on races fell just over $1 billion to the lowest total since 1999.

According to Equibase, the 2008 wagering total, $13,670,196,938, was down 7.2 percent compared with the 2007 total of $14,723,993,055. The last time that betting on U.S. races dipped below $14 billion was 1999, when wagering was $13.7 billion.

Annual handle totals have stagnated in the United States since the high-water mark in 2003, when betting was $15.2 billion. Total wagering has dropped four out of the five succeeding years.

When adjusted for inflation, wagering declined 20.1 percent from 2003 to 2007. The consumer price index has not yet been released for 2008.

The 20.8 percent drop in December indicates that the rate of decline in wagering on U.S. races is rapidly accelerating. In November, wagering declined 9.7 percent compared with betting in the same month in 2007, despite a 5.7 percent increase in racing days. In October, betting was off 6.9 percent, although race days were down 4 percent.

For the third quarter of 2008, wagering was off 9.85 percent.

The worldwide recession is almost certainly the most significant factor behind the drop. Most U.S. citizens have dramatically curtailed spending since the implosion of the housing market and the bank-led freeze in lending, and all industries have suffered because of a contraction in discretionary spending.

Racing, however, was struggling even throughout the long economic boom of the 2000s, as illustrated by the stagnant figures of the past five years. The recession is expected to hit several racing companies especially hard, most significantly Magna Entertainment Corp., the publicly traded racetrack operator that has lost hundreds of millions of dollars over the past five years. Magna recently hired a firm specializing in bankruptcies as an adviser.

Prolonged disputes this year over racetrack signal rights that resulted in the blackout of many popular signals on account-wagering platforms may also have contributed to the declines.

Unlike in several recent years, purses were not immune to a decline in handle. According to Equibase, total purses distributed at U.S. racetracks fell 1.3 percent in 2008, from $1,175,924,289 in 2007 to $1,160,313,672. Although purses also declined marginally in 2003 and 2005, purse distributions have typically increased at a rate just above inflation over the past six years because of subsidies from slot machines at an increasing number of racetracks, some of which were built solely because of legislation guaranteeing racetracks slot-machine rights.

Race days also declined in 2008 from their number in 2007, according to Equibase. For the year, race days were down 1.2 percent, from 6,168 in 2007 to 6,095 in 2008.