In one of the most eloquently written columns, Dean Tower's "Crush and Brush" in Harness Racing Update (page 4) is a scathing commentary regarding the state of standardbred racing (I suspect our quarter horse and thoroughbred brethren have similar issues) and the reason why the number of foals born every year has been dropping. Yes, we have people buying into each other's horses as a form of diversification to ensure a constant cash flow, which while troubling, is perfectly legal. As Towers mentions, the loss of people willing to buy horses has more to do with the inability to get a fair chance more so than making money.
Yes, there are people who race horses to make money, but as I can personally attest to, there are those who buy horses for the excitement, ego, love of horses,and fun. However, like those people who stop betting, many people who own horses get out of the game because owning horses is no longer fun when it seems like you are constantly hitting your head against the wall because the game is seemingly stacked against you.
What is the solution? Quite honestly, I don't know the answer. However, if the sport can't clean itself up, Federal regulation may be the last best hope. In the interim, in an effort to get more people to buy horses, it may behoove the industry to pay a 15-25% premium in overnight and stakes races to those horses who continue to be owned by those who bred or purchased the horse at a yearling sale.