The new HBO series, Luck, is a detailed view of US Thoroughbread horse racing.    The technical density of the series generated more than a few critical comments. 

Alessandria Stanley's review in the New York Times notes that, "... This nine-episode series is maddeningly and needlessly opaque..." There are a number of websites, including HBO's that provide essential terms and practices to the uninitiated. However, the series also takes key plot elements from actual historical events.

The most dramatic [so far] has been the obsesson of  Walter Smith (Nick Nolte)  regarding the death of the famous horse, Delphi. Notle owns a colt sired by Delphi and makes the comment, more than once, that  "They killed your daddy."

To paraphrase Smith, "They spent all the money. They took out an insurance policy for  $30 million.  And then they killed him."

This closely parallels the life and death of Alydar, Calumet Farms stud horse, in 1990. Alydar is ranked number 27 in the ranking of top Thoroughbreads in the 20th Century by Blood-Horse Magazine. 

_______________________

Until approximately the 1970's, legalized gambling of significant scale only existed in Nevada. One of the few exceptions was horse racing.

The justification was based on a number of factors. It was associated with American traditon, having been continuously popular since the founding of the republic.

It was also justified by the rationale that racing contributed to  "improving the breed."

Finally, it was associated with wealth. Not called the sport of kings for nothing, owners of championship horses tended to members of wealthy, upper class families.

And then there was something in it for everyone.  Horse operations generated economic activity. States collected taxes on Pari-mutuel betting. The public liked to gamble.

Any of these arguments might be considered strained on a stand alone basis. But taken together, horse racing appealed to a number of constituencies and managed to maintain an image of harmless fun at best, or a minor vice at worst.

______________________

One common theme is the constant reference to tradition. Owners and breeders weren't just businessmen. It was a way of life.  Whatever it was, it was much more than a casino operation. 

This image was burnished at venues like Saratoga. But nothing matched the rarified air of Kentucky bluegrass country, which hosted the biggest race (Kentucky Derby) and the biggest and most successful breaders.

_____________________ 

The big sports in the first half of the 20th century in the US were baseball, horse racing, and boxing.

Boxing was the first to crumble. It was unable to maintain its hold on the public under the weight of it's increasingly well known corruption. The 1950's provided a look behind the curtain in Hollywood films, including classics like  The Harder They Fall, based on Bud Schulberg's novel of the same name. The highly publicized deaths of Davey Moore and Benny Paret, both on national television in the early 1960's, further marginalized the sport. 

_____________________ 

Calumet Farm was established in 1925 by the founding owner of the Calumet Baking Powder Company.  

Over the years, it became the most successful (as well as profitable) breeding operation in the United States. Its horses include 2 triple crown winners including Citation as well numerous winners of individual triple crown races.

_____________________

What happened to Alydar?

Pretty much what Walter Smith says in Luck.

The family's success at breeding was limited to horses.

In 1980, the farm was turned over to a son in law after there were no direct heirs to run it.

There was a boom in breeding in the early 1980's, with money pouring in from oil countries, Japan, etc.

Calumet expanded into the boom, using a lot of financal leverage.

The cycle turned in the late 1980's.

By 1990, the farm was over $100 million in debt and bleeding cash.

Alydar was insured for $36.5 million by Lloyds of London and Golden Eagle Insurance Companies.

The policy was going to be canceled at the end of December since the Farm had missed premium payments.

The horse, Alydar, died under unusual circumstances.

The best account is the Texas Monthly article titled The Killing of Alydar.

Sports Illustrated wrote a shorter account in 1992, discussing allegations without drawing the inevitable conclusions.

______________________

Did it happen that way?

Very likely. Why didn't the insurers refuse to pay the claim?

I"m sure that they had suspicions, but in situations like this, they either pay or have to essentially prove fraud. Anything in between would just cloud their reputation and likely result in higher a higher payout.

The claim was split between 2 primary insurers, Lloyds of London and Golden Eagle Insurance. It is likely that these companies had reinsurance coverage to mitigate their losses.

Once the claim was paid, the money was immediately used to pay down loans and other creditors, so there was no chance for the insurers to recover anything later. Case closed. 

________________________

Did anyone really care?

A large part of the pubic had lost interest in racing. And a lot of the racing world is always prepared to believe the worst.

Oddly enough, it was people like the Walter Smith character that cared.

People that had been in the business forever and thought they had seen it all. They had never seen anything like this.

People that lived the business saw the good and the evil. And they still maintained the belief that there were certain things that just wouldn't happen. 

A character like Smith had based his life on the idea that inside  a world of sharp practices, there was still an element of basic human decency. 

The Calumet story is no different than any financial scandal where firms with solid reputations became over leveraged and collapsed in catastrophic fashion.

And to most people, it was just another business. But to someone like Smith who lived a life that involved compromises -- but still retained a sense of personal integrity -- it was devastating. 

This is the real point. It was the insiders that were shocked, not the back benchers. For the real insiders, it was the entire story. The realization that even the most successful operations were, in the end, no different than any other business. 

Because when you are in the middle of it -- it is never just business. It is always personal. Very personal.