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?

28 Comments

Leave a Comment:

Josh Bauman

I am in agreement that "it" is about much more than purses, however, purses, as large as they may seem to some, are way too small to encourage and sustain horse ownership whether solely, in partnership, or by commercial partnership such as ours. The fact is, the industry from the NTRA to the local racetrack operators to the breeding associations as well as horsemen's associations have no idea how or what to promote. Primarily, all of these entities emphasize the gambling aspect. Naturally, that seems to make sense as it is the most accessible aspect of the sport. However, the ridiculous takeouts and complexity of handicapping have ruined the older players and discouraged potential new ones. Until this industry recognizes the need to promote ownership and return pari-mutuel wagering to some sensible takeouts, our future will be the increase of foreign buyers taking the best horses from the sales out of the country, the overall decrease in average and median prices, and decreased attendance and handle throughout the country. Doing the same thing over and over again while expecting different results can be regarded as insanity. That describes our industry. It's not just about Kentucky, either.

20 Oct 2009 11:11 AM
aspradling

Tom, that is what I have been saying to people all along. There are more issues than purses and more dialogue needs to be exchanged than just politics thrown about.

It's just of the plans out there, slots seems to be the only option getting attention that would legitimately work on some level. I hope our politicians could compromise on the best options to help players, horsemen and tracks.

On my newest blog, there some great points on the lack of marketing and how out of touch the industry is. Whether issues stemming from big money in the way, or older generations not connecting with the younger/up and coming.

A solid base of fans would be more stable, if the pyramid chart didn't look like it was upside down about to topple over.

20 Oct 2009 11:23 AM
Jimmy T

Very Much More than purses in KY and other states as well. I used to go to the track much more frequently than I do today. The reason why I don't go as often- Poor Customer Service by racetrack management groups. The marketing strategies of the industry are very poor at best. It's really a shame that such a great sport has been mismanaged. The industry needs also to focus on retaining its existing patrons and new ones, too. The industry does not focus enough on the customer. Other than Keeneland, Saratoga, Del Mar. and Santa Anita I really could care less if I attend any other track. I can stay home with the races on the Internet and use a wagering site. Unfortunately, they do not care much about the customer either. This past weekend youbet.com lost their signals to all tracks. When I called to express my dissatisfaction and told the customer representative I was considering going through another wagering provider, the representative said "go ahead," there's nothing I can do for you. So much for customer satisfaction. There are to many people who do not see the point of customer satisfaction in the industry and that is one reason why they cannot obtain new fans and are losing many of the ones they already have. The only reason they still have me is because of my passion for the game; otherwise I would already be gone.

20 Oct 2009 12:44 PM
Shawn P

It seems like there is a conflict as to what some want to happen with the industry.

Do we want to turn it into a spectator sport? If so we need ONLY ultra wealthy owners like they have in the professional sports like football, NASCAR, NBA, etc. However, not even THOSE people have a viable product now. Sarver and anyone else who is in the banking industry primarily and is an NBA owner are struggling. Teams are being sold, and think about it, those guys charge THOUSANDS of $ for tickets to 'allow' people to watch THEIR product. Is that going to fly in racing? NO.

The other thing, which most in the industry want and realize is the driving force in the industry, is fair purses.

Try staying in it with the purses that are being cut constantly.

No owners, no product.Unless you guys think people will 'pay' to watch 4 or 5 owners run their horses against each other ALL the time?

You can 'market' it 'til the cows come home, but unless that translates some way into keeping owners hanging around, you'll just have a bunch of spectators who'll soon get tired of watching the same people run the horses.

Slots will draw a different type of gambler who'll find that gambling SOMEWHERE, why not at the track? It's worked in a lot of states.

You can't take any more money out of the handle, gamblers are already screaming, tracks and states don't want to let go of any of their portion. Little Barbie's mom and dad won't pay $50 to take her to see the races and if they do, what's left to gamble?

All this talk about marketing, what better way to market it than to draw fans to GAMBLE and not just watch. What better way to have a product TO market than to innovate and put in something that will draw those who like to gamble but don't 'get' handicapping. Maybe if we GOT them there, they'd gamble on the slots, add to purses, then realize that horse racing is a better bet than the VLT's?

I get tired of hearing how we're out of touch. No we aren't. We're living this. But we know exposure, and lots of people watching and cheering, is only helping track owners and state coffers and doesn't translate into the lifeblood of the sport, gambling and giving a fair share of the pot to the people who ARE the industry. Owners, trainers, jockeys, etc., etc., etc.

20 Oct 2009 1:21 PM
Karen

Speaking as a person who does not go to the racetrack primarily to bet, it is disheartening that tracks in general do nothing to promote horse racing as an interest - something to enjoy, like leaves changing in the mountains on a fall day. Once someone can enjoy the beauty of the sport, they will bet - I do on occasion. When you're interested and learn about something, you have a rooting interest and you might as well try to make a few extra dollars. As for getting more people to the track - how about at least not pushing them away? Tracks should not charge for admission, parking, or programs (I exclude the simulcasting programs with 10 tracks therein). "Wow, I've saved $5 (at least) right from the start. I can afford to make a few bets." And so it goes. Promote the animals and the athletes and celebrate the trainers and owners. I enjoyed it when The Red Mile allowed a group of people to be part owners in a racehorse for a meet. The trainer would welcome you to the barn; you could stand in the winner's circle; you felt like a real part of the industry. Sometimes all it takes is a taste of what it's all about to make a lifelong fan. It doesn't have to take a lot of money, just a bit of creativity!    

20 Oct 2009 1:23 PM
Dean

"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."

Thumbs up Tom. For too long, and in too many other jurisdictions, all the money has been used for supply (eg purses), and/or the government. Growing racing through promotion and takeout reductions is long overdue. The slots money is not going to be there forever, if it passes. Just ask Pennsylvania.

Dean

20 Oct 2009 2:26 PM
Ray

The average fan understands takeout about as well as the NTRA understands the average fan. With online wagering available many players choose not to attend the races or simulcasting. If we need attendance at the tracks to grow, we must allow the fans to receive and the tracks to offer an edge at the tracks. How about reducing the takeout at the tracks? How about trying something drastic at the tracks as far as takeout is concerned? If a wager has a current takeout of 25% at the track and online, let's make the take 10% at the track and at similcast locations. And let's try it for 6 months or a year. The tracks need to offer discounts for concessions and they need the concessions to be of high quality.  The tracks need real players who are marketing people in the real world to run the marketing programs. Many of the tracks hire college grads with MBAs in marketing and NO CLUE about how to play our game. We are out there. Come find us and we will help put fannies in the seats.

20 Oct 2009 4:13 PM
txhorsefan

Bravo, Karen! Like you, I'm not much of a bettor, but I thoroughly enjoy the experience of going to the track - the excitement, the horses, the talent and skills of the jockeys, but mostly it's about the horses - it's all a part of it to me.  I feel like those of us who go for those reasons are being overlooked also. It takes time for many people to learn how to handicap, but one of the last times I was at my local track, standing in line to place my small wager, the gentleman behind me started asking me questions like he must have thought I knew something. Hey, I had just figured out how to box a wager, so I was pretty excited, and I explained to him the little bit I have learned, but please don't put us down because we are not gamblers at heart. Promote the entire experience, get people to have a fun and in time, maybe they can learn to be expert handicappers.

20 Oct 2009 8:20 PM
Greg R.

Until owners can show a profit on 80% of the racehorses they own, instead of the other way around, our sport is on it's way out. Losing thousands per month gets really painful fast.

Maybe day rates charged by trainers, vet fees and farrier costs should be paid out of slots revenue, then the trainer gets the 10% win fee from the gross purse? Slots revenue goes into a general track fund, trainers, vets and farriers must bill the fund, With a track oversight nor bogus billings. Less of the slots revenue goes to purses, but everyone would want a horse! PLUS crooked vets and trainers who drug horses could not bill for snake oil venom!  

20 Oct 2009 9:08 PM
ieshoes

good jordan

20 Oct 2009 9:34 PM
Shawn P

That shows the lack of knowledge. The state isn't going to give up its share, the track isn't, so the horsemen should?

The takeout on WPS bets average around 17%. It's the exotics that have the large takeout.

Reduce the takeout, reduce the purses, lose the owners, the trainers, the jockeys, the breeders.Oh wait, that's already happening.

But as long as we have people sitting in the seats and buying the stuff at the concession stands that'll help an owner pay thousands to keep a horse in training???????

NO, but you guys can sit there and watch the weiner dog races, the camel races, the jockeys running on foot.

Maybe you all should read the Final Turn. That is the reality.

21 Oct 2009 1:08 AM
Shawn P

I base my information on 'fans' from the ones on here.They love the horses, they follow the horses, read about them. But, almost every one of the 'fans' say "I don't bet." Fans are great, but 'just a fan and not a gambler' doesn't help the horsemen. We've got to come up with a way to get people to spend money that will benefit the ones who supply the product. That's it.

21 Oct 2009 1:11 AM
BELLWETHER

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21 Oct 2009 7:07 AM
BELLWETHER

THE FANS WE DO HAVE...THEY R STILL HEAR BECAUSE THIS GAME BECOMES A WAY OF LIFE FOLKS...THE HORSES R OFF THE CHART BABY!!!...EXPOSE THEM...PLEASE...WE DUE...

21 Oct 2009 7:32 AM
ryan driscoll

Finally someone hits the nail on the head. Zia Park had a race with a $302,000 purse last week and it generated a whopping $32,000 in TOTAL HANDLE. Don't you think that money would have been better spent on trying to get patrons to the track? Well done my friend.

21 Oct 2009 9:01 AM
Novanora

For every fan that "doesn't bet," just being there probably generates at least a few $2 bets each day. I am no bettor, but whenever I am at the track, of course I "need" to put in a few $2 tickets (if nothing else) a couple times a day.  

Quarter Horse racing was originally designed to "duplicate the excitement of a stretch run" - it doesn't. You can't duplicate the determination it takes for a horse, after already running a mile (or even 3/4 mile), having to fight back to win. THAT's the excitement of the stretch run.  

I honestly wonder whether better photography of what televised racing there is - some kind of closer view - might attract more "casual fans" (as people like me who don't bet much, but certainly bet a little bit every visit, are considered).  It is a beautiful sport to look at if you can get a decent view.  

21 Oct 2009 9:52 AM
Oldie

Shawn, you sound really burned out. What most of the people you are looking down on said was, betting wasn't the primary reason they followed horse racing, but in fact they do wind up betting. Maybe not thousands a day, but most don't have thousands a day to wager.

I'm afraid what you missed is that there are a lot (and I mean a LOT) of people who would go to the track, follow horses/jockeys/trainers/owners, and bet (the part you're after), if they could follow the stories, feel less like outsiders and more like courted fans. TVG is still on the air 10 years later for several reasons, and one of them is that people love to watch horses run and compete, and they get to hear at least a synopsis of the lives of many horses in a race when they watch on TVG, so they feel as if they know a little about what they're watching, they can pick one to squeeze for, and you know what happens next? You're smart, you know the answer.

Don't give up on those of us who just plain love horses and watching them run. We haven't given up on you.

21 Oct 2009 10:21 AM
MikeM

It's hard to watch a race at the track because for the most part they still have TV's that are 20 years old. That goes for Saratoga,Belmont and Monmouth. How about HD? They should have that in about 20 years.

21 Oct 2009 2:16 PM
MikeM

I would love to show a profit on 20% of the racehorses I have owned. Owning a racehorse is a fools' game. Take a poll of how many trainers own racehorses.

21 Oct 2009 2:23 PM
Shawn P

I'm not 'looking down' on anyone. I'm just saying that the purses are what drives the industry. No way around that.

I see the farms here shutting down, the trainers and owners getting out ot the game and the breeders shipping to places where the incentives are better and that is due to the revenue from the VLT's.

I love when the track is packed with fans, but even though some of the biggest races are packed, the handle is down at those tracks.

Like the person talking about Zia?

Well they have VLT's and THAT is why they can offer those big purses and breeder incentives.

I think following the stories and people in racing is great. But what happens on a lot of blogs is it becomes a trashing session for people to complain about the individuals and the game itself.

The problem I'm addressing is the fact that 'some,' not all, people think the 'fans' can carry this game and they simply can't. Because the track owners profit from that, not really the horsemen.

Some bad decisions have been made (by the NTRA and BC), like selling the product to ESPN and then they never show races and there are still a lot of folks out there who WOULD be fans but they don't have cable/satellite in these tough economic times.

TVG is the same thing as far as availability.

I do feel that the sport will be here in some form, the horsemen who love it will see to that. I do fear that the capital of the TB racing world, Kentucky, will need to have something done to help us or it will be racing in Penn, NM, Indiana, etc. Places where the handle doesn't decide who can afford to stay in the game because the handle doesn't seem to be going anywhere.

I think I'm frustrated and sad more than anything that the realization isn't out there that with inferior purses comes an inferior product. Then WHO at all would want to even watch that?

Read Chip Wooley's comments about when he came for the KY Derby and how he was shocked at the state of racing in KY. How VLTs saved NM horse racing, increased the purses, bettered the breed and is drawing folks from all over to run there.

21 Oct 2009 2:47 PM
rayctrac

Novanora, you are an idiot. QH racing was not originally designed "to duplicate the stretch run."

21 Oct 2009 3:51 PM
Shawn P

Mike M. Almost every trainer out there owns horses or is in partners on them. Some have a % ownership. You know that Wayne Lukas owned a % of Winning Colors?

Nobody really knew that at the time though.

Frankel, Jill Baffert, Lukas, Jones, Hollendorfer etc, etc, etc all own or co own horses. There are TOO many to list who do.

It's hard to make a profit, but at least a break even is nice, that's what the good purses do. Just the 'one' horse can get you in the black. That is what keeps people in the game.

Funny, some of the best businessmen in the world own racehorses.

Now YOU definitely sound burned out, sour grapes or someone who was in over their head from the getgo.

21 Oct 2009 5:03 PM
BELLWETHER

"Mac THE KNIFE"!!!...RIGHT ON TIME...THANKS MY MAN...

22 Oct 2009 2:39 AM
Graeme Beaton

Tom

You are right. There has to be a more comprehensive plan to save racing, but that plan has to be applied nationally. Kentucky is only part of the story. Similar conditions exist everwhere where racing is held. Slots are good as a temporary prop while we sort out are fundamental problems. Nothing more than that. Because if we don't place racing on a sound basis, then nothing will save us in the long run.

We are losing fans, bettors and owners because:

1. People are tired of the cheating, doping, and breakdowns and the perception that we are hurting the animals. And that is eroding our fan base and our betting handle and purses. Remedy: Ban all race-day medication. Fine and suspend and BAN trainers and veterinarians uniformly across all 38 jurisdictions. Legal drugs (lasix etc) are masking illegal drugs. Drugs (bute etc) are masking injuries and infirmities which result in breakdowns. Get rid of them, as all other major racing nations have done. And how much would banning medication save owners annually? We either do it ourselves or let PETA et al push the States/Feds into forcing us to do it.

2. Lower takeout nationally and uniformly. Ours is an inferior betting product not only for reason 1., but because it is a lousy deal compared to other forms of gambling.

3. Introduce nationally a humane whip. Other countries and some states are trying it. Nothing seems to turn prospective fans off more (apart from perceived doping and break-downs) than crazed jockeys whipping the snot out of horses who have run themselves into the ground already. It is cruelty, plain and simple, as is asking horses to run when they are not sound - and medication feeds into this perception as well.

4. We have to treat these horses as athletes about to give their all. Allowing them to warm up properly as they do in other countries is only humane. We jog them next to a (often) fat-assed pony that can barely raise a canter and expect them to be ready to burst out of the starting gate from a standing start with all muscles properly conditioned. Get rid of the ponies! They are another unnecessary tax on the owner.

5. Yes, promotion is important but there is not one racing body that appears to know what to do in this regard, despite the millions spent on hiring 'experts' and forming committees, think tanks, alliances, associations etc etc etc.

The only solution I can see to all of the above is to form a truly national league office and the only way to do that is to get the heads of the NTRA, the Breeders' Cup, the Racing Commissioners International, the HBPA, the Jockey Club and the other main horse racing organizations in one room and lock them in there until they come up with a truly national compact covering everything from medication to takeout. Yes, they will have to go back to their respective States and win endorsement from politicians and political appointees and bureaucrats. It won't be easy, but it would be better than standing by and watching racing die one day at a time, one track at a time. Or possibly worse still, stand by as the Feds and PETA come in and seize control.

22 Oct 2009 7:53 AM
Edward

You have to be blind if you compare the issues in horse racing to the mild downturn in major sports caused by a slow economy. The NBA makes money hand over fist Shawn, even in a down year. One out of how many horses become stallions syndicated for a payment of $50 million? Pro athletes sign multiple contracts that dwarf this sum; hence, you can ascertain that the teams make huge money. Horse racing cannot be fixed by anyone currently involved in the industry. There are way too many groups that once you get past the single thing they all have in common, horse racing( even though everything else is placed on top of this), they have no common interest at all. In fact, they have competing interests. Its an industry filled with small people with small imaginations.

22 Oct 2009 11:33 AM
Edward

Kentucky Derby Purse is not $10 million? Contemplate that and a lot of the cockroaches come into the light.

22 Oct 2009 11:42 AM
Will

The declining handle can be sum up by a couple things. It is the complexity of this game and failure of the NTRA marketing.

One main problem is the condition book getting so complicated nowadays. If you read the old racing forms you would not have to memorize every possible notation in it. It only had claiming, allowance, starter allowance, and stakes with just restriction on age and sex. These days you would have state-bred or no win in the last 3 months, and optional claiming that typical gamblers would have problem figuring it out, never mind someone who rarely goes to the racetrack.

The takeout rate is not important unless you are a professional trying to squeeze every cent possible arbitraging every race. If you are a causal fan or gambler, that would not be an issue. My only concern would be the odds that would justified my risk. Does anyone think about the takeout rate when they buy a scratch ticket (up to 50% takeout at some state if not more since the jackpot is paid in an annuity) or sit on a blackjack table?

It's probably not possible to change the condition book because it helps breeders and owners so they can race their horses that have no place to be running if it wasn't for the differentiation in class and condition. It's probably still possible for NTRA fix it by better marketing.  

NTRA failed miserably at marketing the sport. They attempted to advertise the glamorous by interviewing celebrities who they like at the Derby. At the end of the day, they are only there to be seen on the Millionaire's Row on the first Saturday in May. What they have to focus on is GREED!!! That is the essence of horse racing if you are not the owner who races the horses try to make that quick buck. The bottom-feeders and small gamblers that are trying to hit the jackpot on a daily basis at the simulcast parlor.

Why don't I see them advertising by interviewing or showing someone winning 10 thousand dollars on a trifecta bet by tri-boxing 3 horses or someone who just hit the sole ticket on a 5-day carryover? I was born in Hong Kong, and what keeps bringing people back to the races is hitting the triple trifecta (having the trifecta at each of the 3 designated races on the race) that pays out on average 250K USD every race day. They can also play the greed angle that the betting menu is catering to different people (i.e.Win Place Show for people to play it safe or Superfecta for people that swing for the fences).

They should get it by now considering how much they pay an advertising firm to advertise. Slots are definitely a temporary solution to subsidize the declining handle. If they want to improve this game, they will need to improve from within.  

22 Oct 2009 2:10 PM
Shawn P

I'm starting to think 'WE' are failing because with 'fans, supporters and writers' like these, who needs enemies?

23 Oct 2009 5:13 PM

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