Freakonomics Radio Episode 653: "Does Horse Racing Have a Future?"

Release Date: November 14, 2025
Host: Stephen J. Dubner
Description: Dubner explores the world of thoroughbred horse racing—its economics, culture, and future. The episode follows the Keeneland Yearling Sale in Kentucky and dissects the state of the industry, the risks and rewards of horse investment, the changing landscape of betting, and the existential threats facing the sport.

Episode Overview

This episode, the third in the "The Horse Is Us" series, investigates the burgeoning yet precarious world of thoroughbred horse racing. Centering on the famed Keeneland Yearling Sale in Kentucky, it examines the economics and emotional stakes of buying, breeding, and racing horses. Through interviews with breeders, auctioneers, buyers, analysts, and professors, Freakonomics unpacks the mystique of horse trading, the shift in gambling habits, and the sport's uncertain future.

Key Discussion Points & Insights

1. The Keeneland Yearling Sale: Where Dreams Are Auctioned

Setting the Scene

• The Keeneland Sale is the world’s largest and most elite yearling horse auction, sending shocks through the racing economy each September.
• Over 4,700 yearlings in the 2024 catalog, with the event involving immense logistics and excitement.
  (00:01–07:00)
• “You travel around by golf cart. The grounds are extremely well manicured. From the first day of the sale to the last, you can smell fresh-cut grass.” — Stephen Dubner (01:25)

Breeder Perspective: Hinkle Farms & Ann Archer Hinkle

• Hinkle Farms only sells horses they have bred—deeply invested in the life story of each animal.
  (03:19–04:22)
• “These horses have been on our farm since when they were in their mommy’s bellies.” — Ann Archer Hinkle (04:22)

High Expectations, High Risk

• Top yearlings can fetch millions, but the majority sell for much less.
  (04:39–05:06)
• “You’re hoping your horses sell for a few hundred thousand dollars at least…have someone that breaks out…hits seven figures.” — Ann Archer Hinkle (04:39)
• The episode spotlights a prized filly sired by “Not This Time,” one of the hottest stallions in the industry.
  (05:01–05:41)

2. The Anatomy of the Thoroughbred Market

Breeding and Stud Strategy

• Successful stallions skyrocket in value: Not This Time’s stud fee rose from $15,000 to $175,000 as his progeny won more races.
  (06:15–06:51)

Auction Mechanics and Global Reach

• Cormac Brannock, Keeneland’s senior director of Sales Operations, explains how the auction is structured for maximum competitiveness and fairness.
  (08:30–15:36)
• “Every horse is led into a live auction ring. Sometimes they’re seen over 100 times per day by potential buyers.” — Cormac Brannock (15:12)

Category, Placement, and Price Dynamics

• Horses are “booked” by perceived value, with median prices dropping by 50% in each successive book. Global buyers now account for a third of sales, with major players from Ireland, Japan, and Saudi Arabia.
  (14:02–14:10)

3. The Psyche (and Economics) of Buying Racehorses

Marketing and Academic Insight: Emily Plant

• Emily Plant, a horse marketing consultant and professor, unpacks the risk-reward proposition of buying unproven horses:
  (18:07–21:37)
  • “If you try to look at buying a horse as a straight, rational return on investment, there’s no explanation there…There is a very small chance you will hit a huge success.” — Emily Plant (20:46)
• Top colts can fetch $100+ million stud deals—if their racing careers pan out.

The Filly HIP144: A $2 Million Gamble

• Ann Archer Hinkle and the Hinkle team, after tense bidding, sell their Not This Time filly for $2.1 million—one of the sale’s top prices.
  Key Segment: 25:15–26:47 (auction process)
• “$2 million is incredibly significant…The farm requires a tremendous amount of capital just to maintain.” — Ann Archer Hinkle (30:03)

The Buyer’s Perspective: Scott Heider

• Omaha investment manager and seasoned horse investor explains his strategy—focusing on fillies for their future broodmare value and the interplay of intellect and instinct in decision-making.
  (31:34–34:08)
• “When it’s the final bid in your head and you know you’ve just made it, all you’re thinking is, drop the hammer. Drop the hammer.” — Scott Heider (33:27)

4. Industry Economics: Booming Auctions, Shrinking Base

Rising Prices, Shrinking Supply

• Despite record sale prices (56 yearlings sold for over $1 million each), the overall supply of horses and number of races is shrinking.
  (34:56–36:49)
• “Our thoroughbred foal crop is smaller than it’s been in a long time.” — Mark Taylor, Taylor Made Farm (34:56)

Cultural & Demographic Shift

• Horse culture is declining as fewer Americans grow up around horses—explaining shrinking interest and foal crops.

5. The Sport’s Existential Challenges

Welfare and Integrity Concerns

• Animal welfare criticism and historical incidents dent public trust, but breeders assert that horses love to run and that industry reforms (like HEISA) are improving safety standards.
  (37:09–39:07)
• “I personally believe horses are born to run…Will we ever have a sport with zero horse fatalities? No, we won’t. But the horses want to participate.” — Mark Taylor (37:09–39:07)

Declining Popularity and Crowds

• TV analyst Richard Migliori recalls regular crowds of 20,000 at weekday races; now many tracks are shuttered, attendance is a shadow of its former self, and the younger generation is disengaged.
  (39:35–40:54)

The Changing Face of Gambling

• With the proliferation of legal online sports betting, horses are losing market share—handle has dropped by 57% since 2002.
  (51:19–51:36)
• “It’s become shark against shark—and more and more monopolized by computer players.” — Marshall Graham, economics professor & expert horseplayer (55:16)

6. Surprising Supports: Subsidies and the “Racino” Model

Hidden Subsidies

• State legislation directs a share of online sports betting and casino revenue to prop up the racing industry.
• “In some states, your NFL and NBA bets are helping to prop up the fading horse racing industry.” — Stephen Dubner (59:03)

Racinos & Historical Horse Racing Machines (HHRs)

• Tracks have increasingly become hybrids with casino-style gambling—HHRs look like slots but are based on replays of historical horse races. Revenue from these machines now outpaces live race betting and subsidizes purses.
  (59:41–61:02)
• “Why not expand the casino operations and let horse racing go?” — Thomas Lambert, University of Louisville (61:14)

7. The Future: An Uncertain Path

Industry Outlook

• Experts generally foresee contraction except at premier tracks (Churchill Downs, Belmont, Pimlico, Breeder’s Cup). The fate of lesser venues remains unclear amid industry consolidation, changing culture, and competition from other forms of gambling.

• “I think the future is discouraging. Racing has had decades of monopoly…but they haven’t adjusted well to competition.” — Marshall Graham (58:23)

Personal Reflection

• Dubner, initially skeptical of “horse people,” comes to appreciate their passion, eccentricity, and stubborn hope in a risky, fading, but richly storied sport.

Timestamps for Key Segments

• Keeneland Sale & Industry Intro: 00:01–07:00
• Breeder/Pedigree Discussion: 03:19–07:09
• How Auctions Work: 08:30–15:45
• Buyers’ Psychology & ROI: 18:07–22:27
• Bidding for HIP144: 25:15–26:47
• Celebrating the Sale: 29:20–31:30
• Buyer’s Strategy: 31:34–34:08
• State of the Industry: 34:56–39:07
• Declining Popularity: 39:35–40:54
• The Horse Betting Ecosystem: 41:00–48:13
• Paramutual vs. Bookmaker Betting: 48:13–51:19
• Industry Decline Figures: 51:19–51:36
• Subsidies & Racinos: 59:03–62:04

Notable Quotes (with Attribution & Timestamps)

• “If you try to look at buying a horse as a straight, rational return on investment, there’s no explanation there…There is a very small chance you will hit a huge success.” — Emily Plant (20:46)
• “A million dollars, when that goes up on the board, it can be a wall and it stops. Two million is the same thing.” — Scott Heider (33:57)
• “Our thoroughbred foal crop is smaller than it’s been in a long time.” — Mark Taylor (34:56)
• “Will we ever have a sport with zero horse fatalities? No, we won’t. But the horses want to participate.” — Mark Taylor (39:07)
• “Horse racing, even overall as a sport, is like joining a cult.” — Marshall Graham (41:00)
• “It’s become shark against shark—and more and more monopolized by computer players.” — Marshall Graham (55:16)
• “Why not expand the casino operations and let horse racing go?” — Thomas Lambert (61:14)
• “I will probably never become a horse person myself, but I see you, horse people.” — Stephen Dubner (62:04)

Memorable Moments

• The tension and euphoria around the $2 million sale of HIP144—champagne and shared disbelief among the breeders.
• The behind-the-scenes look at a sale that is as much about psychology, family narrative, and hope as it is about numbers.
• The frank discussion of animal welfare, where industry insiders argue that horses “love to run,” even as they acknowledge painful history and reform.
• Insights from gamblers and academics on why betting on horses—uniquely among sports—is a fight among bettors, not against a house.
• The “racino” phenomenon: horses as loss-leaders for casino operations, and the industry's reliance on subsidies from gambling on other sports.

Conclusion

Thoroughbred horse racing is paradoxical—an industry ablaze with high-stakes glamour, sky-high prices, and passionate adherents, but facing shrinkage, deep cultural shifts, regulatory oversight, and technological changes that threaten its very survival.
Dubner and guests lay bare both the exhilarating hope and the sobering economics of a sport at a crossroads.

For more horse insights, economics analyses, and quirky human behavior, find all episodes at Freakonomics.com.