| Abstract: | The total volume of wagering at a racetrack is important since it affects both racetrack and state revenues. This paper studies the factors that determine the volume of wagering. One of these factors is the sire stakes, a major form of government subsidy. We conclude that this subsidy has little or no economic impact on the volume of wagers. Unless the state recoups nearly all of the subsidy in other ways, such as sales taxes on racehorses, the sire stakes amount to a direct transfer from taxpayers to the breeding industry. We also develop information useful to racetrack managers. |
