With fewer fans wagering less money at too many racetracks, U.S. thoroughbred horse racing is galloping toward a reckoning.

Not even racinos — tracks that include slot machines or other casino gambling — have stemmed the decline.
The industry must address a fall-off in attendance, betting totals and horse auction values  to retain its position in the public’s sporting consciousness, executives and analysts said.

“The playing field has completely changed for the industry,” said Ray Paulick, who has covered horse racing for more than three decades and publishes the Paulick Report. “There’s too many tracks, too many race dates and not enough consumers who are interested in the product.”

Horse racing has struggled in the United States in recent years as casinos proliferated. The recession has exacerbated things. The handle, or amount wagered on U.S. thoroughbred races, slid 19 percent to $12.3 billion in 2009 from 2003, and is off another 7 percent through July.

Add weaker attendance, a lower number of horses being bred for the sport and a 32-percent drop last year, to $660 million, in the value of North American thoroughbred auction purchases, and worries abound.

“I’d probably bet the future is more likely down for the next few years than up,” said Robert Evans, chief executive of Churchill Downs Inc., which owns the track where the famed Kentucky Derby is run and others.

Evidence of the tough times is mounting, as large track owner Magna Entertainment filed for bankruptcy protection last year and another large operator, the New York Racing Association, warned of a shutdown  this year.

“It’s not as if one group has any magic bullets here,” said Bennett Liebman, executive director of the Government Law Center at Albany Law School and a member of NYRA’s board.

Many industry executives say subsidies like slots or government support are a must and that more bankruptcies or closures are likely among the country’s 100 or so tracks.

“Running a racetrack is now a negative gross business,” NYRA President Charlie Hayward said.

Another concern is racing’s aging fans. Some worry about finding new ones to replace a majority base of men older than 50.

Tracks are pushing hard to lure younger crowds, turning to music and food festivals as draws. Some even downplay the races to get people in the door in the hopes they will gamble later.

“You really don’t see horses in our ads at all anymore. It’s really all about … coming to the races is a social scene,” said Craig Dado, a senior vice president with Del Mar, a racetrack outside San Diego founded by crooner Bing Crosby in the late 1930s.

The share of Del Mar’s female visitors is up 5 points, to 40 percent, in the last five years, while those younger than 35  make up almost half of the total, he said.

Some executives see things bottoming out. Magna’s assets were purchased by MI Developments Inc. and NYRA, which operates New York tracks at Belmont, Saratoga and Aqueduct, got a $25 million loan from the state, which is moving to approve slot machines for the tracks.

Many believe that in the future, large tracks with the biggest purses and best horses will host races only on weekends, while smaller tracks supply races to televise at other facilities and drive gambling the rest of the time.

“Not even the New York Yankees play in Yankee Stadium 100 straight days,” said Nick Nicholson, CEO of Keeneland, the largest seller of thoroughbred horses in the world and operator of a track that races only 32 days a year.

The Internet offers more hope. If gambling ramps up online to allow bets on cell phones and other personal devices, the potential is huge, especially overseas, said Alex Waldrop, CEO of the National Thoroughbred Racing Association. The U.S. made up a small portion of the $115 billion globally wagered on horse races in 2008.

“Horse racing is still very popular around the world,” he said. “There are still large, new markets that we can access.”