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The answer to the question depends on how the laws are written. If the states make a racing or gaming license a condition of obtaining a sportsbook license, then legalized sports gambling will be a boon to racetracks. We’ll see part II of what has happened with the racino experiment. Hopefully, this time they will get it right.
The economic reality is that racing needs subsisdies. You cannot operate a track at a 10 percent takeout. The mistake the states made in part I of the experience was subsidizing supply. RHDF funds were utilized to augment purses benefiting the tracks as they no longer needed to fund a major expense (track purses). As a result in some states you had artificially large purses for 5k claimers with 6 horse fields. This does nothing to attract the bettor. Further, the tracks did not nothing to update the racing facilities, etc.
The smartest way to subsidize racing would be to subsidize demand, not supply. Hopefully, they will get it right this time. There are tremendous agricultural benefits by subsidizing racing, but the Racino experiment has showed you cannot blindly subsidize purses and expect those benefits to be enjoyed by many.
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