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The Demand for Parimutuel Horse Race Wagering and Attendance

Author

Listed:
  • Richard Thalheimer

    (Department of Equine Administration, University of Louisville, Louisville, Kentucky 40292)

  • Mukhtar M. Ali

    (Department of Economics, University of Kentucky, Lexington, Kentucky 40506 and Department of Applied Statistics & Operational Research, City Polytechnic of Hong Kong, Kowloon, Hong Kong)

Abstract

There has been a long history of patron participation in parimutuel horse race wagering and attendance, which are major recreational products in consumer budgets. In this paper, the demand for parimutuel horse race wagering and attendance has been specified and estimated for both Thoroughbred and Standardbred racetracks in a multistate market area. The data are annual over the period 1960--1987. It is found that demand is price elastic in every case. Racing quality, personal income, the number of racing days, competition from a state lottery, and from professional sports (baseball, basketball, football) are all significant determinants of these demands. Both attendance and wagering are found to increase with an increase in racing quality. However, it seems that the new patrons, attracted by quality racing, tend to wager less than those who attend regularly. The presence of a state lottery is found to have resulted in a substantial loss in attendance as well as in wagering at each of the racetracks. This, in turn, has resulted in a loss in both attendance and wagering-related revenue to racetracks, horsemen at those racetracks, and state governments. Professional sports are estimated to have a negative impact on attendance and wagering demands. For example, an additional 10 days of competition from professional sports in 1987 would have resulted in a 4% decrease in both attendance and wagering. Both attendance and wagering can be increased by lowering the takeout rate from present levels or by offering more quality races.

Suggested Citation

  • Richard Thalheimer & Mukhtar M. Ali, 1995. "The Demand for Parimutuel Horse Race Wagering and Attendance," Management Science, INFORMS, vol. 41(1), pages 129-143, January.
    • Handle: RePEc:inm:ormnsc:v:41:y:1995:i:1:p:129-143
    DOI: 10.1287/mnsc.41.1.129
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Richard Thalheimer, 2008. "Government restrictions and the demand for casino and parimutuel wagering," Applied Economics, Taylor & Francis Journals, vol. 40(6), pages 773-791.
    2. Vickner, Steven S. & Koch, Stephen I., 2001. "Hedonic Pricing, Information, And The Market For Thoroughbred Yearlings," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 19(2), pages 1-17.
    3. Kelly Busche & W. David Walls, 2001. "Breakage and betting market efficiency: evidence from the horse track," Applied Economics Letters, Taylor & Francis Journals, vol. 8(9), pages 601-604.
    4. Terance J. Rephann, 2011. "The Economic Impact of the Horse Industry in Virginia," Reports 2011-02, Center for Economic and Policy Studies.
    5. Mukhtar Ali & Richard Thalheimer, 1997. "Transportation costs and product demand: wagering on parimutuel horse racing," Applied Economics, Taylor & Francis Journals, vol. 29(4), pages 529-542.
    6. Richard Thalheimer & Mukhtar Ali, 2003. "The demand for casino gaming," Applied Economics, Taylor & Francis Journals, vol. 35(8), pages 907-918.
    7. John Eakins, 2016. "Household gambling expenditures and the Irish recession," International Gambling Studies, Taylor & Francis Journals, vol. 16(2), pages 211-230, August.
    8. Richard Thalheimer, 1998. "Parimutuel wagering and video gaming: a racetrack portfolio," Applied Economics, Taylor & Francis Journals, vol. 30(4), pages 531-544.
    9. Thalheimer, Richard & Ali, Mukhtar M., 1995. "Intertrack wagering and the demand for parimutuel horse racing," Journal of Economics and Business, Elsevier, vol. 47(4), pages 369-383, October.
    10. Lambert, Thomas, 2021. "US Gambling Stagnation: Will New Gambling Forms Make a Difference?," MPRA Paper 108549, University Library of Munich, Germany.
    11. Douglas M. Walker, 2013. "Casinonomics," Management for Professionals, Springer, edition 127, number 978-1-4614-7123-3, December.
    12. Jim Landers, 2008. "What's the potential impact of casino tax increases on wagering handle: estimates of the price elasticity of demand for casino gaming," Economics Bulletin, AccessEcon, vol. 8(6), pages 1-15.
    13. Kent Grote & Victor Matheson, 2011. "The Economics of Lotteries: An Annotated Bibliography," Working Papers 1110, College of the Holy Cross, Department of Economics.
    14. Douglas M. Walker & John D. Jackson, 2007. "Do Casinos Cause Economic Growth?," American Journal of Economics and Sociology, Wiley Blackwell, vol. 66(3), pages 593-607, July.
    15. Douglas M. Walker & John D. Jackson, 2008. "Do U.S. Gambling Industries Cannibalize Each Other?," Public Finance Review, , vol. 36(3), pages 308-333, May.
    16. Lambert, Thoomas, 2020. "Kentucky and the Thoroughbred Industries: Prospects and Challenges as Gambling Popularity Declines," MPRA Paper 105077, University Library of Munich, Germany.
    17. Richard Thalheimer, 2012. "The demand for slot machine and pari-mutuel horse race wagering at a racetrack-casino," Applied Economics, Taylor & Francis Journals, vol. 44(9), pages 1177-1191, March.

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