The story of this event being diminished in Seattle is more about Seattle than unlimited hydroplane racing. True, the events are fewer overall, but the real issue is Seattle is such a changed city from when this sport was huge.
In the 50's KING TV made it an annual TV event, by the 60's, all three network affiliates offered live television coverage. It was "The" event of the year. Of course, there were no pro sports in town, other than a minor league baseball team, and the Sonics in '67, (but out of season). The U of W was the only competition, but in the summer, (before the football season), even they had no sway.
As Seattle gradually added pro teams the event became diminished in the late 70's. As mentioned, KIRO TV became the sole provider of TV coverage until that ended. Another factor is the migration to Seattle from other States in the 80's through especially the past half decade has made the event less significant to the masses.