Beginnings.

During the 1910s horse racing emerged from a period of financial instability. Formerly dependent on admission charges for their prize money, major tracks began to conduct stake races in which horse owners paid an entry fee that became part of the purse. Stake races included the Saratoga Cup, the Belmont, the Champagne, the Alabama, the Preakness, the Withers, and the Kentucky Derby.

Betting.

Just as thoroughbred racing was expanding, it was threatened by a nationwide reform movement directed at gambling. Bookmakers, who paid a fee to the track owner for the privilege of handling track betting, were a particular target. A Kentucky law passed in 1908 specifically prohibited bookmaking. Churchill Downs remained open by adopting pari-mutuel betting, which was legal, while other tracks in Kentucky as well as those in Maryland, which had a similar law against bookmaking, began to take pari-mutuel bets. In...