Monday, May 7, 2018

Kentucky Derby Handle Up, Viewership Down. Does it Mean Anything?

The news is in, and Derby Day handle was up about 8%, with television ratings down about 13%.

Although there's a want to wax on about this apparent dichotomy, I don't think we have to.

Derby business - in fact, any big day business - has seen a strong increase in handle over the last half dozen years. I know a lot of people don't put much stock in branding (and often I agree), but branding big days might not work the first year, or the second, or even the third. But it does work. Your average bettor, big bettor, and bettors who have sat on the sidelines for some time all seem to download and play the big cards in big numbers. It has become a conditioned response, not unlike what we see from the underlying pick 4's and 5's across the sport. These serial bets (some very low takeout compared to others) have branded themselves, as well. We're at the point  where, "I don't really like anything, but I took a 50 cent pick 5," is a common phrase. On big days, serial bets are injected with rocket fuel.

Churchill Downs has not done particularly well since the takeout hike when they race outside Derby week (2013 handle of $322M fell to about $260M in 2016; since rebounded to about $285M in 2017). But their Derby week has been lights out for bettors, and there is absolutely no denying that.

As for television ratings, as we've written for a long while here on this blog, they are dependent upon a lot, so year over year numbers are not really very useful.

More important, in my view, is people are watching network broadcasts of sporting events less and less, in general, because they are finding many other ways to consume sports. It's kind of ironic that Twinspires commercials on NBC might attract thousands of new accounts, and those people can now watch a track feed instead of a red carpet. TV ratings down, but thousands of new punters..... which one would you take?

Horse racing is not in good shape. About 40% of its revenue is dependent upon slot machines; $11B in handle is a paltry sum, especially when we consider inflation; foal crops are leveling but people are racing for similar money with fewer chances to race. But for big days like the Derby it's all roses, and I don't think there are too many storm clouds on the horizon to put a wheel in the spokes of that trend.

Edited to add 2017 CD handles outside Derby week.

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