The shift from the nonprofit industry in general to the specific industry of horse racing, and the nonprofits associated with it, requires knowledge of the history of racing in the United States. Horse racing is truly an international industry, with races being held in over twenty-five countries each year (Table 3.4). Although mounted games and chariot races were recorded to have taken place during the Greek Olympics of 642 BC, official racing as we now know it began in England in the late 1600’s under the reign of King Charles II. This monarch took racing from little more than the matching of two horses to settle disputes and wagers, to a national pastime complete with cups and cash prizes. To increase competition in these new races, England began to import horses from other countries such as Italy, Spain, North Africa and the Eastern Mediterranean. These horses contributed to racing not necessarily as great runners, but as improvements to the available bloodstock.

The largest advances in the manipulated evolution of Thoroughbreds came from the Arab nation. The Arabians were the most successful group of people to selectively breed superior horses. Muhammud, an Arabic trader and prophet in the 600’s, is credited for developing breeding techniques that resulted in the creation of the pure-bred Arab horse and the foundation of the contemporary Thoroughbred (Edwards, 1977). Muhammud exposed his horses to a series of tests of loyalty, endurance, courage and speed. The horses that performed well, or at least survived, were bred; this ensured that his bloodstock remained absolutely pure. Muhammud was fanatical about horses and religion, sometimes combining the two. After his death, Muhammud’s techniques on breeding, selecting and training horses were found to be inscribed in the Koran (Dossenbach, 1983).

Muhammad’s stringent techniques resulted in the creation of the three foundation lines of the Thoroughbreds. The three stallions, the Byerley Turk, the Darley Arabian and the Godolphin Arabian, found their way into Britain in the sixteen and seventeen hundreds, just as modern racing was developing. The Byerley Turk, once used in battle for his owner Colonel Byerley, became the great-great grandsire of King Herod, an extremely successful racehorse who was able to pass on his running ability to his offspring. Descendents of the Byerley Turk make up about 5% of the Thoroughbred population. The Darley Arabian was described by his owner, Thomas Darley as “a horse of exquisite beauty” (Edwards, 1977, 118). He was the great-great grandsire of what is reputed to have been the most famous racehorse of all time, Eclipse. Nearly 80% of all modern Thoroughbreds can be traced to the Darley line. The Godolphin Arabian, to which the last 15% of Thoroughbreds are traced, was found in 1729 pulling a coal cart through the streets of Paris. His owner sold him to Lord Godolphin of Britain where the Arabian grandsired Matchem, another outstanding racer. Godolphin’s line of Thoroughbreds is perhaps most famously known for producing Man o’War, a celebrated Thoroughbred in the United States in the early 1900’s.

Figure 3.1 -Man o’War, July 21, 1945

Source: Morgan and Barich, 2001

While racing was continuing to flourish in Britain, the English settlers brought horses and the love of racing with them to the New World. Quarter Horses, which typically are able to sprint short distances much faster than Thoroughbreds, initially dominated racing in North America. This was because preparing quarter mile racetracks was much easier for the hardworking settlers than the four mile tracks to which England was accustomed. The restriction to short tracks of land or to village streets also encouraged the development of the Standardbred, which trotted or paced while carrying a cart or carriage (Edwards, 1977). However, as time passed and more open land became available, Americans lengthened races to at least one mile. Racing on longer tracks required the use of Thoroughbreds, which have more endurance than the Quarter Horses.

Figure 3.2 -Thoroughbred in motion

Source: Anderson, 1942

The first full-sized North American racetrack was built in Long Island, NY in 1665 (Biracree and Insinger, 1982). Tracks were also built on land cleared for tobacco crops in the South. However, just as racing was starting to get underway in the United States, the Revolutionary War of the late 18th Century caused a great disruption for the sport. Trade embargoes with Britain halted the exchange of bloodlines across the ocean. It wasn’t until nearly 100 years later, after the Civil War, that progress once again was made in Thoroughbred racing and breeding. Even after the Civil War ended, Americans from the North and South still fought battles on the racetrack. The most famous North-South conflict occurred in the 1870’s at Long Branch, New Jersey. The South was represented by Longfellow, a Thoroughbred born and trained in the Bluegrass Region of Kentucky. The North had Henry Bassett, also born in Kentucky but trained in New Jersey. Thousands gathered to witness the race, each taking pride in the horse that represented their side of the battle in the two-and-a-half mile race. Although Henry Bassett was the betting favorite, Longfellow finished over 100 yards ahead of his competitor, winning the race for the South (Sugar and Richardson, 2003). The North-South track battles eventually wore down as Thoroughbred racing began to win the hearts of all North Americans and helped unify the country in foreign competition.

Figure 3.3 -Thoroughbred in motion

Source: Anderson, 1942

The forty years following the Civil War are referred to as the “Golden Age” (Edwards, 1977, 121) of racing. The infamous “Triple Crown” was instituted around 1905, when the Belmont Stakes debuted in New York, the Preakness Stakes at Pimlico course in Maryland and the Kentucky Derby at Churchill Downs in Louisville, Kentucky. Racetracks such as Jerome Park in Long Island displayed the magnificent luxuries and impressive amenities one would expect during a “Golden Age”. The clubhouse of Jerome Park featured dining rooms, a spacious ballroom, a skating rink and a trap-shooting range. Overnight accommodations were also available for wealthy business people and horse owners who would leave the facilities after a day of racing with plans to build their own tracks.

All the new tracks that were built during the “Golden Age” of racing paved the way for gambling and wagering on the races. The revenue the tracks received from gamblers and bookmaker fees provided funds for great expansion. However, as the tracks grew in number and size, it became clear that a governing body was needed to oversee racing operations and ensure the purity and integrity of the Thoroughbreds. Thus, the Jockey Club, which in 1750 was a group of seven Thoroughbred owners who had little influence in the racing industry, was restructured, modernized and given responsibility for organizing the sport. The Jockey Club “exercised complete executive, judicial and legislative control over racing” (Biracree and Insinger, 1982). The responsibilities of the Jockey Club includes licensing all jockeys, owners, trainers and horses, appointing racing officials, assigning racing dates, enforcing suspensions and fines and supervising breeding.

However, as the twentieth century approached, the public image of racing began to weaken. People became concerned with the chicanery of crooked bookmakers and trainers; anti-gambling sentiment began to take hold in the country. Even the efforts of the Jockey Club to legitimize gambling were not enough to keep several states from outright banning bookmakers. The loss of revenue from gamblers caused nearly all the racetracks to crumple and close their doors. Maryland and Kentucky were the only states where gambling was still legal, and even there the future of racing was questionable. Thousands of Thoroughbreds, unable to make a living in the United States, were exported to other countries. Britain, fearing a surge of American horses would threaten the purity of the English counterparts, passed the Jersey Act in 1913. This prevented any horse that was not traceable to Britain’s General Stud Book from being respectably raced or bred in England (Sugar and Richardson, 2003, 68).

Figure 3.4 Bookmakers at the Track

Source: Morgan and Barich, 2001

The 1908 Kentucky Derby witnessed the ban on bookmaking for Kentucky. However, just as Kentucky racetracks thought there was no hope for surviving the ban on gambling, the general manager of Churchill Downs, Col. Matt Winn, remembered eleven pari-mutuel gambling machines in storage that had been imported from France in the 1800’s. Pari-mutuel machines calculate odds in direct relation to the amounts staked on each horse without the intervention of a bookmaker. Before bookmaking was banned, the pari-mutuel machines didn’t have a chance to compete against the bookmakers. However, the legal and social environment in 1908 was far different than in the 1800’s and pari-mutuel machines happened to be the answer to the deteriorating racing industry. The pari-mutuel machines at that 1908 Kentucky Derby attracted $67,570 in bets, which was five-times as much as was staked in the 1907 Derby through bookmakers (Biracree and Insinger, 1982).

Pari-mutuel machines also provided racetracks with a reliable source of tax revenue, which amounted to 16% of all bets (Sugar and Richardson, 2003, 134). This influenced ten states, in addition to Kentucky, to authorize “machine betting” as the only legal form of gambling on horse races. The substantial revenue that the race tracks brought in was the subject of many disputes of power between the Jockey Club and the states. The states were reluctant to leave the control of such large revenue to the “elitist” (Biracree and Insinger, 1982, 144) Jockey Club, but could not deny the organization’s strong expertise and political influence. The result was the formation of State Racing Commissions that share the responsibilities of making racing rules, licensing racing personnel and allocating racing dates.

Figure 3.5 Pari-Mutuel Board, 1930’s

Source: Morgan and Barich, 2001

While the Jockey Club and State Racing Commissions run the day-to-day governing of races, Local Racing Associations developed to produce entertainment for race-goers and improve the overall value of the races. Local racing associations can be private, public, for-profit or nonprofit. Local Associations conduct their activities under licenses granted by the State Association. The Local Association “hires” (Biracree and Insinger, 1982, 147) the horses and horsepeople, provides the facilities to race, train, exercise and live in, produces programs to provide the best competition, attracts fans through advertisements and promotions, provides seating, refreshments and concessions, pays off winners, collects state and federal taxes, etc. The Jockey Club and State Racing Commission do most of the governing and setting of rules, but Local Associations determine the quality of racing and entertainment for their track.

The United States once held the “premier position on the world racing stage” (Edwards, 1977, 122). This “global connection” (Edwards, 1077, 117) has been apparent in the history of Thoroughbred racing already presented. While the United States still has a sizable edge over the rest of the racing world (Table 3.4), Britain, France, Saudi Arabia, Italy, Japan, Australia and many other countries now share the sport, continuously interacting, exchanging breeding stock (The Jersey Act of Britain was repealed in 1949) and hosting international races. The Washington International, which is held every November in Maryland, is an example of one of these international races. A system of “grading” has developed so that different countries can compare their horses using a universal scale. Although globally connected, true global competition is still impeded by barriers such as racing seasons, training methods, climates, tracks, etc. Even though true global competition may not yet be possible, Thoroughbreds are still “the basis of an international industry linking five continents” (Edwards, 1977, 117). See Table 3.4 in the following section for evidence of the world-wide interest in horse racing.