It's About Much More Than Purses

The following was received via e-mail from W.M. Mac DeHart, a member of the Kentucky Racing Commission from 1980-84. His take on the racetrack gaming issue in Kentucky is shared by others in the state.

"Why does Kentucky need slot machines?

"Because our racetracks have not been able to fulfill their obligation to promote the sport in their ages-old partnership with horsemen. The quest for slot-supported purses is an admission of guilt ... a failure to grow attendance, live handle, fan base. For too long they have had their monopoly. They have grown fat, while windfall profits from off-track wagering brought a false sense of success, as the unattended bubble was preparing to burst.

"In fact, regulators and racetracks have consistently contributed to the mess that we see with policies carelessly applied that have weakened the backbone of the sport: the 'little man.' Where did they think all those fans came from? Where did they go? Check the dropout rate of small owners, trainers, and on-track attendance.

“All the king's horses, all the king's men, couldn't put Humpty Dumpty together again. Regulators and racetracks seem to have forgotten that in Kentucky’s America, horse racing is not the sport of kings. It is the sport of the people. John Madden, the 'Wizard of the Turf,' said as much in 1903. It is no less true today.

"Today, it’s up to the governor and our elected state representatives to pass a bill that rebuilds the backbone of our signature industry by betting on the little man. Success will depend upon a healthy year-round Kentucky circuit, with significant increases in the claiming-race purses.

"For every Kentucky racetrack to have a year-round competitive edge would take no more than $50 million. That’s less than 10% of the projected slots take. The rest of the take ($400 million to $900 million) needs to go into the general fund, where our elected officials can balance the budget and decide how and where to spend the money. Kentucky’s governor, legislators, fans, and taxpayers have every right to expect that, given an edge in purses, our fiercely competitive racetracks will be promoting horse racing instead of getting fat on one-armed bandits at the expense of Kentucky’s signature industry."

Note the mention of "promoting horse racing" in the last paragraph. Despite the overall failure of revenue from slot machines to truly rebuild horse racing in other states, the Kentucky horse industry has been surprisingly non-proactive in this regard thus far. The one thing that has benefitted from slots is purses, but that's only one part of the equation--and one that's not heading in the right direction.

This year alone, slots at racetracks have contributed hundreds of millions dollars to purses. Yet nationally, purses are down 7.5% this year. RED FLAG: Revenue from pari-mutuel handle, racing's dedicated source of revenue, is down even more.

It has been roughly 18 years since the first gaming machines were installed at a racetrack, and we're still hearing the same thing, that racing isn't being promoted at many of these places. Few have figured out that patrons--primarily horseplayers--should be benefitting from slots even if they never put a dollar into a machine. Let's add racing regulation, equine health and welfare, marketing and promotion, backstretch workers, and backstretch facilities to the mix.

I'm not going to argue that purses aren't important. It's beyond obvious Kentucky racetracks need a supplement, and discretionary casino-style gambling--not tax increases--seems a legitimate option. I think DeHart is on the low side at $50 million a year for purses, but the legislation introduced earlier this year was on the high side.

Under that bill, a racetrack like Kentucky Downs, which couldn't complete a four-day meet this year, could produce $20 million to $30 million (a guess) a year in purse money. How would that money be spent? What about the harness tracks in Kentucky that do absolutely nothing to promote their business? How can anyone justify a $50-million purse infusion when those racetracks have shown no interest in building their product--or at least making it look good?

After the gaming bill died in a Senate committee this summer, Republican Sen. Damon Thayer told The Blood-Horse he had prepared several amendments in case the bill made it to the Senate floor. (We all know that wasn't going to happen, of course.) The amendments, however, including creation of a statewide equine marketing fund, addressed some of the above, but didn't go far enough.

Other questions: Why weren't the amendments discussed while the bill was being prepared, and why didn't the horse industry itself offer them?

Somebody's not paying attention to what's happening in other states: reductions in slots revenue to racing, criticism that slots are a subsidy for an industry that can't help itself, and the squeezing out of horsemen by casino companies with other agendas.

It's late October, and the General Assembly session begins in a little more than two months. Instead of hearing about a comprehensive gaming plan to make Kentucky racing--all aspects of it--the best, we're hearing there could be a push for a constitutional amendment on racetrack gaming in 2010. Like Thoroughbred breeder Bill Farish said Oct. 19, this is old news and probably a political ploy tied to Republicans trying to keep their slim majority.

Well, there are Republicans--including yours truly--who despise what is going on in Frankfort. But we also want to see the Kentucky horse industry put forth a better plan than the same-old-same-old that has been marginally successful in other states.

Slot machines aren't the political football. The horse racing and breeding industry is the political football, and all the players on the field are responsible.

It's about much more than purses. It's about much more than purses. It's about much more than purses.

Get it?

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