The sport of horse racing is shrinking every day.  Its fan base is drying up, losing 4 percent a year to death and disinterest.

There are fewer horses being bred, born or raced and, when they do run, they run less. Racetracks, particularly those without expanded gambling to fatten purses, are scrambling to attract enough entries to put together a “full field.”

Bettors, who fuel the sport through pari-mutuel wagering, prefer races with more horses. These days, they are betting much less, largely because of the economic downturn.  And if the industry doesn’t act now, the situation could be much much worse by 2020.  To those in the racing and breeding businesses, this is no surprise.

To get a feel for the depth of the problem, The Jockey Club commissioned a new, in-depth evaluation from McKinsey & Co. that was unveiled Aug. 14 with several suggestions for how tracks and others in the horse industry can fight back.  The study found that racing is not attracting new fans.

Betting, fans said, is too complicated and too hard to figure out, especially on account-wagering Web sites.  Horse racing is the only legal online betting, but the industry has been too slow to leverage Web tools.  Less than 1 percent told Jockey Club consumer researchers that their first involvement with the sport came through online sources. Most, 53.7 percent, got into racing because a friend or relative took them to the track as an adult.

Duncan Taylor, president and CEO of Taylor Made Sales Agency, said racing has blown a big online opportunity.  “Our biggest competitor is the lottery. Low bet, long odds but big payoff,” he said.  Racing needs something like that, a bet that people can make without a graduate degree in handicapping, he said.

Tracks such as Keeneland aren’t waiting for The Jockey Club to come up with the answer. The Lexington track announced Thursday it had worked out a deal with NBC and the Versus cable sports network to televise four days of the fall meet in October.  “There’s some things already in development,” said W.B. Rogers Beasley, Keeneland director of racing. “We have a host of social media coming down the line.”  James Gagliano, Jockey Club president and chief operating officer, said last week that The Jockey Club was developing efforts, including TV and social media, aimed at new fans.

Racing had an all-time low of about 43 hours of national coverage, prior to Keeneland’s announcement of four more hours, this year compared with 175 hours in 2003.  The Jockey Club said it will commit $10 million during the next five years to put together a TV package of new coverage of racing, and it plans to build a free-to-play social media game around that.  In the days after that announcement, Gagliano said, they have been pitched at least a dozen good ideas for reality shows, as well as games.

A simple bet with a “super jackpot” is the direction they are heading, first with a free-to-play game that offers great prizes and builds rooting interests.  Then, probably after the first year, new fans can be transitioned to online gambling, he said.  “What a tremendous opportunity that is,” he said.

But Gagliano acknowledged that racing must do more to address problems such as betting integrity and racehorse welfare that drive away new and old fans. Over and over, polls have shown fans and horseplayers think the drug rules are too lax.  “We think there’s a whole host of integrity issues that we need to confront,” he said. “I don’t think it’s as stark as ‘if we don’t get rid of Lasix, we won’t get new fans.’ ”  But, clearly, fan perception is a big part of the reason The Jockey Club and other industry groups are calling for phasing out all race-day medication, including anti-bleeder drugs such as furosemide, also known as Lasix. But that hasn’t been a popular move with many owners and trainers, who say horses need anti-bleeders because they suffer from exercise-induced pulmonary hemorrhage. About 95 percent of the horses running in U.S. Thoroughbred races get a shot of the drug four hours before a race.

“You know, if that’s their concern and they know Lasix is good for a horse, shame on them,” Mike Repole, owner of Uncle Mo and Stay Thirsty, said recently. “I would hope it’s not a perception thing and that it’s a reality thing. But everything I hear from trainers to vets supports it. It’s like no one is for this except the good old boys, and they’re the guys who have been killing the sport for the last 10 to 15 years. It’s time for them to step aside.”

Another of McKinsey’s recommendations — eliminating some races or moving dates around — also has some tracks wary. The Jockey Club is working on a predictive program that could help tracks figure out the best placement of races but won’t go beyond that.  “We’re not calling for tracks to close or elimination of race days,” Gagliano said. “But there’s a smaller foal crop, and at some point we’re going to have to have fewer races. Economically, there’s a lot of races that don’t pay for themselves.”

The McKinsey study found that top-level races, such as graded stakes, still attract bettors and fans. But the vast majority of bread-and-butter races don’t.  The study also found that moving races around, sometimes by just a few minutes to give bettors more time, can make a big difference in handle.  Gagliano said more drastic action might be needed in some cases. “We run a lot of our race days when we think it’s the best opportunity, which used to be live-race attendance,” he said. “But most wagering in the U.S. now is made off-course.”

Tracks run the biggest race of the day, the feature, as the next-to-last race, he said. “That’s no longer valid.”  If some tracks schedule their feature for earlier in the card, it could improve handle significantly, he said.  Even minor adjustments could be lucrative: In 2009, three big spring races were held on the same day at Keeneland, Oaklawn and Aqueduct within a half-hour. If those had been spread out even 15 minutes more, McKinsey estimated, they could have drawn $4 million more in handle.

Big days prove that racing can still draw a crowd when it does things right. From 2003, the peak, to 2010, overall handle fell by 37 percent. But in the past 10 years, handle on Grade I and Grade II stakes races is up 23 percent.  Attendance, betting and TV ratings are still strong on the best days, such as the Kentucky Derby and Breeders’ Cup.

Tracks such as Churchill Downs have been forced, through the lack of expanded gambling, to find ways to get new fans in anyway. And they’ve done it, creating special “Downs After Dark” racing events that draw thousands and pumping up handle considerably, proof that when racing does things right, it still has legs.