On the surface at least, the Saturday of opening weekend at Santa Anita racetrack in Los Angeles was a success. More than 12,000 race-goers filed through the gates lured by the twin promise of a host of top-class races against the panoramic movie-scene backdrop of the San Gabriel mountains.

For anyone savoring their first taste of racing in California, the sport would have appeared in good shape, still able to hold its own against a slew of competing attractions. Saturday's figure was a marked increase upon Friday's opening day attendance of 4,537. But for anyone savvy with developments in the state's racing industry – and anyone whose grey-matter recalls opening day attendances at Santa Anita of 60,000 – they would have recognized it as another grey day for a sport enduring an altogether bleak winter of discontent.

The list of ills facing California horse racing reads like the chart of a patient in intensive care. Hollywood Park, in Inglewood, Los Angeles, once the bastion of the state's racing empire will evict the last remaining horses from its premises by February 1. Hollywood Park Land Company (HPLC), the track owners, will take a wrecking ball to the former playground of Bing Crosby, Jimmy Stewart and a host of bygone Hollywood stars to make room for a proposed shopping center, hotel and some 2,995 residences.

Hollywood Park's imminent demise follows on the heels of the closure in 2008 of Bay Meadows Racetrack in San Mateo, just south of San Francisco. HPLC is an affiliate of the Bay Meadows Land Company that owns Bay Meadows. This will leave only six thoroughbred horse racing venues in a state in which more than 311,000 people are directly or indirectly employed in the racing industry, according to a report commissioned by the American Horse Council Foundation in 2005 – the most recent of its kind.

Hollywood Park was nil-by-mouth for years. Its cavernous grandstand capable of withstanding the weight of 80,000 people has in recent years echoed hollow beneath the feet of mere hundreds on any ordinary race day. The average attendance for its big-race laden autumn meet last year was a little over 3,000.

In many respects, the demise of Hollywood Park is emblematic of the fate befalling the industry as a whole. Simply put, declining attendances has led to diminished on-track betting revenue (handles), which in turn has led to smaller purses and reduced income for the horsemen involved. As pots have shrunk, even the top trainers have felt the pinch. John Shirreffs – a trainer in California since the late 70s during which time he trained 2010 Horse of the Year Zenyatta – recently relocated with around two-thirds of his string to New York, largely disillusioned with his prospects in the state.

Del Mar bucks the trend

Bucking this downward trend is Del Mar – a seaside racetrack north of San Diego that every summer entices thousands of race-goers with its spring-break-for-adults atmosphere. During its once-a-year, seven-week session, Del Mar has for a number of years posted increased betting handles. This year, the meet's average attendance increased a further 2% over last year to 17,656 – a fine figure considering the track's single-day attendance record tops at 47,399.

Alan Balch, head of the Californian Thoroughbred Trainers (CTT), believes that despite Del Mar being something of an anomaly with regards to its brief window of operation, the small coastal racetrack may hold the key as to how to turn things around. Says Balch:

The principles of marketing have to be studied and applied to the problem. Del Mar probably does the best racing marketing in the United States. They apply those principles in a modern way. They have been applying their intellect to the problem, and tweaking and changing it to fit the times. I really don't think there's anybody else in California who does it that way.

Balch was the director of Public Relations at Santa Anita during a halcyon era when California was fly-paper to the best racehorses in the country. But he said that when he took the position at the track, Santa Anita was far from being the state's pre-eminent racecourse – a title it now wears confidently given the lack of pretenders to the crown.

I came here in '71, and I was blown away by Santa Anita - the scope, the size of the place. It was one of the major racing venues in California. But racing was on hard times then, at least at Santa Anita. Hollywood Park was the leading track in terms of attendance and handle. Santa Anita was the fourth largest track in the nation, but only second in California.

The glamour days of Californian racing: Douglas Fairbanks Junior and Marlene Dietrich at Santa Anita

To figure out just how to bring the crowds back to Santa Anita, Balch said that he studied the marketing techniques of other thriving companies. "I stole everything I could from other sports, other business models. I even visited the Dodgers [baseball team]." Within a short space of time, Santa Anita he said was rebranded and the crowds returned. In his last few years as director of PR in the mid 1980s, Santa Anita averaged 60,000 people on Sundays. The car park regularly overflowed.

Balch believes that the same principles that he applied to the task in the 70s needs to be replicated in today's changed marketplace.

"The investment in future growth needs to be done by young entrepreneurial people who see a successful future. And right now, I don't see that except at Del Mar," said Balch. "I see aging people in charge of these racetracks. Change, investment and reinvigoration – that's how you survive."

Santa Anita, at least, has been investing. The Stronach Group – whose founder and chairman is businessman and Austrian politician Frank Stronach – pumped approximately $15m into a major remodeling scheme over the summer. Renovations and expansions have extended to sections of the grandstand and clubhouse in a bid to appeal to modernize the aging facade.

George Haines, president and general manager of Santa Anita, said that they intend to expand their operations in "mini satellites": upscale restaurants "where you can sit at the bar and make your bets".

While Haines believes that the changes at Santa Anita are vital for attracting new customers, he sees the major problems facing racing in the state directly attributable to the trickle-down effect from one thing: the loss of betting revenue from on-track wagering.

The main change has been the shift of the wagering dollar from on-track to off-track wagering. It used to be 100% of wagering was bet here on the track … Now, less than fifteen percent is wagered here. Right now, our total financial model is built upon wagering here on Santa Anita races.

The advent of internet wagering, including the likes of Advanced Deposit Wagering (ADW), has slashed funding for horsemen and purses, the revenue for which is primarily funded from on-track handles that traditionally progressed towards a 50-50 model between the two. For example, the handle for Hollywood Park's 1990 Autumn meet was $138,110,344. Last year, it was $20,285,726. Racing has sought new financial tributaries, to no avail. Attempts to implement on-track slot machines – as happened in New York –have been stymied by the state's Indian Gaming interests. Efforts over the years to legalize on-track sports-wagering have been similarly thwarted.

Haines is skeptical about Californian horseracing ever enjoying the same gambling assets that other states enjoy: "There's even legislation contemplated about internet poker that we might or might not be part of. You always have these initiatives floating around but whether they can come to fruition, I don't know."

One measure that did pass state legislature was SB 1072. Passed in 2010, SB 1072 raised the takeout (the cost of a bet) by 2% on exotic bets on California races to fund an increase in overnight purses. Like a tourniquet to stop the bleeding, the measure was expected to redirect an anticipated $70m dollars back into the sport as a means of stabilizing dwindling field sizes.

The initial signs are encouraging. According to a California Horse Racing Board "End of Meet" report for Santa Anita, the average number of starters per race had dipped to 7.92 in 2011, but was back up to 8.08 in 2012. The average handle per event had increased from $88,980 in 2011 to $110,853 a year later.

Some still view the measure as a double-edged sword. Jimmy "The Hat" Allard, a professional gambler and a colorful stalwart of the Californian racing scene since 1986, said that any increase in the cost of the product will encourage punters to simply look to other gambling opportunities for value: "If you make things more expensive for the people, then guess what: they won't gamble on your sport."

Allard sees gambling as wholly integral to the current decline, and potential renaissance, of Californian racing. He said that one of the main reasons race-goers have been deterred from going racing has been an increased complexity in the menu of bets available:

Exotic wagering has become so complex, you've got highly intelligent people who come to the races intimidated by the intricate list of bets in front of them. They don't know how to make bets any more. But here's the answer: make things simple. Make the bets simple. There's no youngsters coming into the sport, they're put off from coming because they don't understand how it all works. When you walk onto a racecourse nowadays, it's a combination of a convalescence home and a funeral parlor.

Aside from making the betting experience easier for the average punter, Allard believes that racecourses could do more to entice fans through their gates.

The renovations here [at Santa Anita] look beautiful. But I'd like to have seen the $15m spent on the average guy who comes racing once a month with one hundred dollars in his pocket. Once he's paid the parking fee, the entrance fee, the price of a Daily Racing Form, something to eat, that's a huge chunk of his money already gone. Why not make it free for him to come here? The answers are so simple.

Political loggerheads

Darrell Vienna, a prominent owner and trainer in California for over 30 years and a practicing attorney, is another who sees the passage of SB 1072 as problematic for Californian racing by unbalancing the percentage of take-out away from a targeted 50-50 model between horsemen and purses. But he points to the political divides, the squabbling and in-fighting, that have riven the sport as potentially more damaging.

"California's one of the only states, if not the only state, where the owners and trainers are split apart," said Vienna. "When you split apart the owners and trainers, you have some unconsidered consequences. There are very few strands in racing that you can rely on, but one thing you can rely on is the people who devote their life to racing. With trainers, jockeys, owners and management there used to be a continuous stream of understanding. Not now."

Previously united beneath the banner of the Horsemen's Benevolent and Protection Agency, California's owners and trainers ruptured into two approximately fifteen years ago, and the interim years have been marked by a yawning intractability between the CTT and the Thoroughbred Owners of California (TOC). But self-interested parties, in Vienna's opinion, are to be found at all management levels, including that of the state's over-arching regulatory body, the CHRB.

What is happening in racing now is a result of the politicization of a [California Horse Racing] Board in which the majority no longer serve a goal that is in the public interest. Any time that happens, there's trouble. The fruits of that poisonous tree are here: the separation of interests in racing and the allowing of a monopoly.

The consolidation that Vienna refers to arises from the previous Board decisions waiving a section of racing law that prevents private interests from operating more than one racetrack - a law put in place to ensure healthy competition amongst Californian tracks.

Vienna regards the CHRB's decision – justified as a matter of public interest – to allow the likes of the Stronach Group to operate both Santa Anita and Golden Gate Fields in San Francisco, and the same land development company to purchase the ill-fated pairing of Hollywood Park and Bay Meadows, as a significant factor in the closure of the last named tracks.

"The business model for racing is just a bad model," said Vienna.

Political in-fighting, according to Mike Pegram, Chair of the TOC, isn't necessarily the problem so much as a blurring of lines between the aspects of the sport certain groups are intended to represent.

"This battle has been raging now for 15 years," said Pegram. "We've got different view points, and rightfully so. The TOC is supposed to take care of the business affairs of the sport, the CTT is supposed to take care of the back-stretch [the stabling area]. Where we've had problems is where the CTT has been trying to get over into TOC territory."

Yet, despite so many negative factors weighing upon the industry at present, Pegram is optimistic that the sport is finally navigating its way through troubled waters. He cites the increased field sizes and purses that have occurred since SB 1072 came into effect as a cause for this confidence.

"Anytime you have uncertainty in the sport, like you've seen with the closure of Hollywood Park, that does not help things. But I'm encouraged. The state right now is in a much better place than it was two years ago. We're positioned to move forward," Pegram said.

Zenyatta after winning the 2009 Breeders' Cup at Santa Anita. Photograph: Andrew Gombert/EPA

Public perception

Sitting beside his wife beneath the shade of an olive tree in Santa Anita's golden-green paddock, the horses for the first race circling behind, bare-backed and relaxed in the sun, Herman Blake, from San Pedro near Long Beach, California, remembers falling in love with racing as a child.

"I read my first Daily Racing Form in High School. It was 25 cents," he laughed, pointing out that the current cost of a Racing Form ($7.25), means that he can now afford one only very rarely.

Blake has been coming to Santa Anita regularly for about 15 years. He used to bring his daughter – until she went to college. During those 15 years, he's seen the number of people at the track slowly drop away:

I have noticed fewer people out here. I think it started when Chris McCarron [former general manager of Santa Anita and a hall of fame jockey] left. He was a big attraction for people. Everybody liked him.

It was a love for the horses, the desire to witness at close proximity their beauty, their majesty, that brought Blake to the track. And the welfare of the racehorses is paramount for Blake's continued support of the game. "I like to see a level playing field. If someone's cheating or using drugs and others aren't, it's not fair and I can't support that," said Blake. "The problem is, science is advancing so fast."

In California, rules regarding drug use are complex, but they have been tightened in recent years. Horses, for instance, are now prohibited from competing for 30 days after being administered an anabolic steroid. These stricter regulations have been in response to a high volume of race-day fatalities making headlines. During Santa Anita's 2010-11 winter-spring meet, for instance, there were 18 fatalities during racing.

According to Bo Derek, a commissioner on the CHRB and chairman of the drug committee, the drug testing procedures in California are now of a standard comparable, if not superior, to those around the world.

We're one of the leaders in the world on this issue. I think all of our regulations reflect our stance and our position on performance enhancing drugs. There have been new drugs coming along, but we're cleaner than any of the equine sports.

Not everyone is convinced. According to Vienna, public perception of the sport's integrity ranks third on his list of problems within the industry. But he said that trainers, like athletes, have access to the newest drugs on the market, and that the issue exists with testing procedures that aren't sophisticated enough to detect the latest drugs used:

The problem with zero tolerance is there isn't such a thing. Zero tolerance is simply a measure of the sensitivity of the testing. I think we would be foolish to believe that people haven't found substances that can't be tested.

Derek disagrees. She believes that the current testing procedures in California are rigorous and sophisticated enough to detect the latest drugs on the market. Nor does she believe that California should go the way of other racing jurisdictions – like the UK and now Australia – that have banned the use of anabolic steroid use in and out of competition.

"They say that they don't allow out of completion testing, but how much are they testing, actually?" Derek said. "How many horses and on what occasion? I think we're ahead of almost every country in that respect."

"We must be transparent to the bettor and to the general fan," Derek added. "We're constantly trying to make it a level playing field. Everyone's goal is not to give one trainer or one owner an advantage over another. We want the fastest, best horses to win."

As horseracing lurches forward against the tide, and the remaining Californian racetracks pick up the slack left by the closure of Hollywood Park, track safety will come under the microscope. Santa Anita, for instance, will conduct continuous racing for a near six-month period between December 26 to July 2 next year. This will severely test the durability of a racing surface that has undergone a handful of changes – from dirt to synthetic, then back to dirt –during the past seven or so years.

Derek, however, is hopeful that the safety of the horses will determine how the track is managed.

"We've got great track maintenance crews and we've got so many expert eyes and ears on the track," said Derek. "I'm not going to be on the board next year, but I trust that if something is lacking or not functioning properly, everyone will do the right thing. No one is going to run horses at a track that they know isn't safe."

Daniel Ross is an exercise rider and journalist