Paulick: What The 2022 Jockey Club Fact Book Tells Us, And What It Doesn’t by Ray Paulick|03.08.202203.09.2022|6:17pm10:14am Random thoughts while scrolling through the 2022 Fact Book from The Jockey Club. The average field size in 2021 stood at an all-time low of 7.09 starters per race and the 2021 North American foal crop dropped 6.3% compared to the previous year. You don't need a mathematician to see that tracks and horsemen in many racing jurisdictions are going to have to come to terms with a significant reduction in the number of races scheduled going forward or face further deterioration of the racing product through even smaller field sizes than we've been seeing. While pari-mutuel handle may be an afterthought at tracks where slots and casinos fund a substantial portion of purses, this gravy train is not going to last forever. At some point, tracks in slots-funded states that have ignored the quality of their product are going to realize the importance of wagering. Field size is a critical factor. The 2021 North American foal crop of 19,200 is the smallest since the mid-1960s. In 1965, when there were 18,846 foals, North American tracks ran 47,335 races. In 2021, there were 37,647 races, 20% fewer than in 1965. So with everything else being equal, you'd expect a higher average field size in 2021 than in 1965, right? Wrong. Everything else is not equal. Average field size in 1965 was 8.59 starters per race, compared to the 7.09 in 2021, a 17% decline despite there being 20% fewer races. The difference is that horses averaged 5.71 starts a year in 2021 compared to 10.88 average starts per year in 1965. We can attribute the drop to various factors, not the least of which was the addition of win percentages for trainers added to past performance information in the late 1980s or early 1990s. Racing horses into condition lowered a trainer's win percentage. Training them into condition raised a trainer's win percentage but lowered a horse's average number of starts per year. Another factor that may have led to fewer average starts per horse is advanced diagnostics that help a trainer know when to stop on a horse. Unsoundness, whether it's due to breeding for speed, breeding for the commercial market, permissive medication rules or something else, has contributed to a nearly 50% reduction in average starts per horse over the last 50 years. The Fact Book indicates that, in the late 1980s and early '90s, less than 20% of the annual North American foal crop sold at a yearling sale. The 2020 foal crop hit an all-time high, when 35% of North American foals sold at a yearling sale. Fewer breed-to-race stables exist today and, for better or worse, a greater percentage of breeders are engaged in the commercial market. For good reason: 2021 average yearling price of $80,145 was an all-time high. What's driving those yearling prices? There is considerable wealth in the United States, with much of it accumulated during the last two years of the pandemic. On top of that, gross purses and average purse per race in North America reached record levels in 2021, thanks to a bounce in wagering but also with casinos, slots and historical horse racing machines contributing significantly. Purses would grow even higher if horsemen's groups better understood the impact from the shift of wagering activity from on-track to advance deposit wagering. In 2021, according to the Fact Book, of the $12.96 billion wagered in North American, only $693 million – 5.34% of the total – was wagered on-track. On-track wagering was severely impacted in 2020 by the coronavirus pandemic, when many horseplayers began using ADW accounts out of necessity. Many of those players have continued to bet through their phones, even after they have returned to the races All wagering dollars are not equal when it comes to generating purse money. A dollar wagered on-track contributes significantly more than a dollar bet on that same race by someone sitting at an off-track betting facility or using a cell phone to make an ADW bet. One thing all tracks and horsemen's groups should do is insist that wagers made through an ADW while the customer is physically inside the confines of a racetrack be treated as an on-track bet. The technology is there to geolocate ADW customers. An even smaller percentage for purses comes from offshore rebate outfits who negotiate low signal fees with tracks and horsemen's groups in exchange for the supply of high-volume players, some of them employing robotic or computer assisted wagering. One thing the Fact Book doesn't say is how much of the $1.27 billion in North American purse money was generated by pari-mutuel wagering and how much came from slots, casinos or historical horse racing machines. It also doesn't tell us how much of the betting volume is coming from robotic/computer assisted wagering and what overall percentage of pari-mutuel handle contributes to purses. Until those statistics are available, some of the fundamental economics of the the industry will remain a mystery.