I agree with you that slot racing's future in the US most likely involves clubs and home tracks, as is the case in the rest of the world.
As for the original question, surely the reference to "slot car racing [fading] so quickly in popularity in 1967-68?" specifically means the commercial raceway slot racing scene, for no other part of the hobby experienced the precipitous downturn mentioned.
Regarding the "hobby which is about highly-detailed, brightly-colored race car models, which are to reasonable 1/32 scale, and work reasonably well", it seems to me that the functional quality and durability of most 1/32 RTRs is not high, resulting in "racer" participant frustration, at least based on posts made to other boards. I suspect it has also caused some to exit the hobby. Perhaps the pendulum has swung too far in the direction of modeling in the 1/32 plasticar arena?
Many of us have made the comparison between model railroading and slot racing and I still think it is a valid one. The model railroading hobby has achieved a far better balance between the modeling and performance aspects, and has elevated itself to a level of maturity (for lack of a better word) that slot racing would do well to emulate.
Sorry, Cheater, don't agree with your points here. I have been involved with the current resurgance of SCALE 1/32 racing with today's RTR plastic chassis cars. Oh yeah, the reports of these cars as being "junk" is only from those whose expertise is in pro commercial racing. It is like comparing apples to oranges. 1/32 plastic car racing is very much enjoyed for reasons of highly-detailed AND good-performing cars. And the fact that non-traction magnet racing is growing in popularity lately is proof that real scale racing can and does work! And when some 1/32 cars are issued that begin to lose their scale appearances, these makers take some harsh criticism. The fact remains that in 1/32 plastic cars, scale is where we want it to stay.
And high cost need not be a factor! Take this example of the Scalextric $17 retail (yes!! I paid the actual retail of only $17 !!!) modern F1 cars, just added my own paint and decals, and had a great racer right out of the box! And right up to today's cars such as under $50 RTR Slot.it cars that perform perfectly with or without traction magnets. And it is this very type of 1/32 SCALE car that has thousands of new racers join this hobby each and every year, especially in the past 10 years, more so in the more recent years. And this is due to cars going from toy-like in appearance to real SCALE.
Another post tried to point out that commercial raceways have not used this approach with results to prove thoughts like mine. Well, look at the commercial tracks: all are made and designed for the fastest cars, and today's 1/24 commercial faster cars are high priced, and do not resemble what many of us think of as a slot car. The tracks are huge and swopping, full of high speed banks and straights.
Today's growth in this hobby is in 1/32 and HO scale, with home/club smaller road courses, and are mainly only four lanes. And take a look at the amount of cars and money spent by 1/32 racers today, compare it to today's 1/24 commercial racers. And I am talking about the AVERAGE buyer, enthusiast, and racer, not the pros, who are only in the minority.
And NO - there are not 1/32 scale racers leaving the hobby due to poor performing cars. The cars and parts, as well as tracks and accessories have been contantly improving in the past 10 years. Look at this past decade in 1/32 scale plastic cars and tracks, and compare it to slot car racing in the 1960 era decade. Today we have GROWTH, then we had a fad, and then near death.
Today in 1/32 scale, there is constant talk of racers keeping cars from a few years ago current to new issues with both manufacturers as well as after market parts. Older cars also become collectible, not turned into yesterday's trash, as in the past.
You and others may not agree, but the facts remain the facts, like them or not. Home/club tracks thrive because raceways have not jumped aboard this train and made tracks that will attract the 1/32 racers, nor do the commercial raceways stock the cars and parts for these cars. So - commercial raceways try to carry on with a old and unsuccessful method of doing business.