High-Stakes Games - By Eric Mitchell

(Originally published in the July 31, 2010 issue of The Blood-Horse magazine. Feel free to share your own thoughts and opinions at the bottom of the column.

By Eric Mitchell

By Eric MitchellMonmouth Park’s great experiment may all be for naught. The Jersey Shore racetrack was told last year it needed to do something bold to prove that Thoroughbred racing has a future in the Garden State. It rolled out a 50-day meet with $50 million in purses. The meet has been a rousing success as far as attendance, field size, and handle goes. But before Monmouth can complete its experiment, a state advisory committee July 21 recommended that the state get out of the racing business altogether. Sell Meadowlands. Sell Monmouth Park.

No one has to dig too far into Monmouth’s numbers to realize the handle figures aren’t high enough for the track to support a 50-day, $50 million meet on its own. The state is surrounded by racinos, so continued success still depends on a share of the Atlantic City gaming revenue.

Why support an industry that cannot sustain itself? Because wherever this debate occurs, it’s important to see that the racetrack is only part of the equation. State Sen. Jennifer Beck, R-Monmouth, points this out in a recent editorial.

“The report wrongfully dismisses horse racing as less important to the state than casino gaming, when in fact this $4 billion industry brings in a proportional share of revenue, as well as supplying 13,000 jobs and protecting approximately 200,000 acres of open space,” Beck wrote in a piece that appeared in the Asbury Park Press.

It’s about jobs. It’s about highest and best land use and quality of life.

Even if Monmouth Park is sold to a private company, what is that racetrack worth without the prospects of alternative gaming? Quick, name the companies that have been the most active in acquiring racetracks over the past four years. Answer: Harrah’s and Penn National Gaming Corp. Would a private owner have the leverage to get Atlantic City to continue paying a $20 million gaming subsidy? Not like the kind of leverage Trenton wields. So if the state wants the tracks in private hands, then give those hands the tools to compete. Not only in the gaming market in New Jersey, but in the entire region. Beck supports putting a casino at Meadowlands and makes this important point: racing and casino gaming can no longer be treated as separate entities. “As long as we continue to ignore this trend and refuse to look at gaming from a statewide point of view, we will continue to lose gaming dollars to other states,” she wrote. The good news is that this battle has only begun. The state General Assembly must approve any plan, so let the bargaining begin.

Farther west in Kentucky, the state’s signature industry was thrown a ring buoy in the form of Instant Racing, a video lottery-type machine that uses the outcome of historical Thoroughbred races to generate the number combinations a player wagers on. It’s meager relief from the once-mythical and now very real armada of riverboat casinos on the Ohio River and in easy driving distance from Lexington, not to mention the racinos in numerous other states. The armada has battered Kentucky’s supremacy as the epicenter of the Thoroughbred industry and brought segments of the once-proud industry to its knees. Instant Racing might not be the answer—indeed it might be akin to putting a bandage on a gushing artery—but the Kentucky Racing Commission should be lauded for its July 20 approval of the game.

Recent events in Kentucky underscore that any relief cannot come soon enough. Keeneland, which for years had among the highest daily purse distribution in the country, has slashed fall purses by $1 million. And Turfway Park, which has one of the country’s largest riverboat casinos located just minutes away, gutted its fall stakes program and eliminated the Kentucky Cup races. Meanwhile, Churchill Downs officials have coyly suggested the future of racing in Louisville is no guarantee.

Instant Racing’s success is unproven in a “mature gaming” market, meaning people may not want to play it much when they have a lot of other choices. Kentucky racing executives anticipate it will generate only modest revenue. Slot machines or VLTs have more proven success. Yet even the modest relief offered by Instant Racing must clear the courts and the legislature, with its myriad of opponents weighing in, by the end of the year for it to be most effective. Remember that Ohio has already approved a land-based casino for Cincinnati. Time is not on our side—for Kentucky or for New Jersey.

28 Comments

Leave a Comment:

Vin C

Ive been a horse racing fan for thirty years.In no way should the state fund the racing industry.Its time to stop bailing out insolvent businesses. If Monmouth Park can not fund its racing program it should close.There are just too many racetracks and not enough horses

27 Jul 2010 4:20 PM
TENMD2

How sadly true. I have finally accepted the fate of KY racing and will be sending my mares to Indiana to foal this November. I NEVER thought our legislature would let this happen to us.

27 Jul 2010 4:36 PM
RK Thoroughbreds LLC

or Michigan.  We are down to two days per week and next year we will likely have no racing at all.  

All of our racing stock and breeding stock is currently for sale at www.rkthoroughbreds.com

27 Jul 2010 5:03 PM
Ken Woodall

   How many regular season pro sports within 50 miles of CD or Keeneland? How many pro sports in NJ?

Tes,TBred racing is constricting,trying to fight local control for wider standards of all sorts; almost all TBred organiations have their narrow agenda (NTRA said recently promotion is not their main mission right now).

    The economy will recover, but will racing be ready for an influx on new money from new owners, bettors, and a distinct massiver group of potential non-betting fans? I have my doubts. The greed of owners to steal a penny from independent contracting jockey pant sponsors is a terrible message to send to potential sponsors, and the current major racing sponsors are not seeing connections made to the general public. It is fine if racing only wants [ersoma; disposable income (handle), but all major sports live and die by TV spoinsir revenues and sharing of that revenue. Besides the few big days,racing has TVG and HRTV depends heavily on drawing current handle contributors to their wagering websites.

   A recent survey of USA gambling habits showed many more times potential interest in horse racing betting than actual persons betting.

Without connecting to the general public, the slide continues.

27 Jul 2010 5:48 PM
dab

this is an easily solved problem with monmouth park  sell the track to a private owner with a liscence for vlt's  there will be buyers nockin down the down the door immediatly, they would be able to put any price they wanted and get it, then they can charge a certain  amount of money for each machine installed, and then get  a percentage of the vlts income,, or just callect the tax from moneys made  duh!! same goes for all the other struggling race tracks in ky even thought they are privately owned goverments just charge for each machine and  collect revenue from them,  that also  includes michigans pinnacle racecourse,

its not that hard to figure out

27 Jul 2010 6:03 PM
badtrip

racing has been a staple in america for ever  racing has paid its dues now its time for racing to get back   its the ripple effect  no racing means unemployed vets farriers feedstores vendors trainers  not just people employed at the track    michigan and the automotive industry ring a bell  

27 Jul 2010 6:36 PM
FourCats

I've been a horse racing fan for 50 years and a small-time owner for 10.  I have nothing against slots.  I have nothing against creating jobs and keeping the land in the hands of farm owners.

But the issue here should be; how do we make HORSE RACING thrive?  Not slots; not land use; not jobs.  I mean, this is about HORSE RACING, isn't it?  Can it be done?  I don't know; nobody has tried.  The track managers have done virtually nothing to market and promote the sport (Monmouth's 50 million meet aside).  We need to increase the number of fans.  But if you go to most tracks, you see a cavernous dump that hasn't had a coat of paint in years.  You see horrible customer service and lousy, expensive food.  In many cases, you can't even find a place to sit down.  The racing has deteriorated with small fields, shorter and shorter distances (5 furlongs seems to the be the norm now) and star horses that run once every 2 months if you're lucky.  How can you create new fans with that?  You can't even keep the existing fans.  I could go on and on, but these points have been repeated ad nauseum by many.  Management just doesn't care; they just want to push for slots because it's easier for them.  And the state governments certainly couldn't care less.

27 Jul 2010 6:48 PM
Dale

This is the outcome of owners in 80's and 90's retiring their winning horses to the breeding shed and not continuing to race them and bring more fans into the sport.

I followed horse racing for years and saw the retirement of popular horses as being the deathknell of the industry. People do come out to see famous horses: look at Rachel and Zenyatta for example.

In many respects I find it amusing that breeders are wondering where all the owners are. Did they ever think that yesterday's fan is tomorrow's owner?

27 Jul 2010 7:27 PM
Giddup

I have to agree with Ken that the future of racing depends on connecting to the fan. I also think he is correct that one of the roadblocks to finding solutions to the ever increasing pressures and problems is that every track and industry group seems to have their own narrow agenda. The race executive,owner,breeder,trainer,jockey and fan in every state should be just as concerned as to what goes on elsewhere in the industry as in his or her own backyard and until that happens it will be hard to have much optimism for the future.

27 Jul 2010 8:52 PM
ENAMMELD

Unforntunately like many other things the racing industry was killed by one thing only, greed.

When owners decided long ago to retire the best three year olds to stud for more profit it really left horse racing ranks thin.I've always maintained that Secretariat was the best horse to race anywhere at any time but for the sport of racing his early retirement was a disaster as it encouraged more owners to follow that road.

Think about the best ranked horses (sixteen) in north america in this century all but secretariat ran past their three year old season.This not about the horses but the owners greed. Let the best horse run until 5 or 6 years old then racing will come back on it's own. In short you need a national commission that doesn't allow healthy 3 year olds to retire to stud and if they are injured still don't let them breed until their 5th year.

27 Jul 2010 11:53 PM
Bellwether

RITE ON BADTRIP...A REEL FACE...A REEL PROMOTOR...REEL EXPOSURE...OUT OF THE SAME OLD BOX DUE DUE TO CHANGE..."THE GAME" IS ON IT$ WAY BACK...GET STUNNED & WATCH...LONG LIVE THE KING!!!...PLEASE...ty...

28 Jul 2010 12:48 AM
RUBEN FLORES

There are a lot of problems in horse racing, but it is one of the most spectacular things in the world. I grew up at agua caliente and had to see how it desapeared, i would hate to see it happen at other race tracks, first i would lower admission fees, food prices and give kickbacks to the player who bet certain amounts of money, it has worked for the casino industry for a long time, but it seems that nobody is willing to give something back, also the owners spend way too much money on training fees and medication, if fees were lower there would be more horses in training, the medication issue is simple anything other than lasix should not be allowed, the top trainers in the eastcoast all have been fined or suspended multiple times and yet they are still training, if you cheat 3 times your license has to be permanently suspended (Pletcher, Doutrow,Assmussen)TVG and HRTV should be on open air TV not on pay TV, that is my humble opinion. I really miss having racing near my home, as a racing fan i would hate for more people to have to go trough the same thing, so please be less greedy and the way i see it if you teke a little less there will be more to go around.  

28 Jul 2010 1:47 AM
markinsac

You all miss the point:  When 20% is extracted from all bets, it's hard to beat the game and we all know that 95% of horse players lose each year.  Horse racing executives have refused to admit that their product isn't competitive or attractive to gamblers any more.  And change is hard to do, especially when they don't know what the problem is.  Fact:  Most executives aren't horseplayers.  And trying to bring new fans into the game is so complicated.  Imagine if you never bet on a horse before, but walked into a track for the first time. Who there is going to show you how to bet or how to read a racing form?  Back to the 20% takeout.  This didn't make players lose at such a fast rate when there was only 9 races a day.  But now, in this simulcasting age, 20% multiplied by 60 live and simulcast races makes losers out of most of us, and some are just giving up and betting on other things.  It's not too hard to figure out how to play a slot machine or bet on a football game.

28 Jul 2010 2:00 AM
Frank

Probably most race fans go to the rscetrack to make some money betting on the horses.  Give them a better chance to win some money get the repeat business by lowering the mutual takeout to 6% on all types of bets.  At 16 to 25% takeout now, the fans don't have a chance to win and lose interest quickly.

28 Jul 2010 2:56 AM
Brian Russell

Considering you have about a 30% chance of their antiquated self-service betting machines accepting your voucher or cash and the fact that whomever runs the TV's is completely incompetent (96 minutes to a Sunland quarter horse race frequently shown instead of a track Magna owns), Gulfstream has shockingly found a way to get young people to the track.  In 2009 they started offering $1 draft beer and it worked.  They also don't charge for admission.  I am there virtually every day and the crowds the last 2 years have been larger and younger.  These people must be betting at least a little as Gulfstream's handle has outperformed the industry during this time period despite the coldest winter in 25 years this year.

28 Jul 2010 10:31 AM
marc

If horse racing cant make it on its own;let it fail.most if not all horseplayers lose money.WHY should racetracks be bailed out? there is no reason!

28 Jul 2010 11:30 AM
David C

The problem is the whole thought that racing "cannot support itself." The racing industry is taxed on every dollar in handle, and then taxed again on any operating revenue. Players pay a takeout "tax" and if they hit anything sizeable are then taxed again, and at the right price money is withheld. All of these asinine government interventions make it impossible for racing to support itself.

If the government would simply get out and let racetracks set their own takeout rate and then simply tax them like any other business, and if horseplayers were treated like poker players and not had crazy amounts withheld and double taxed, then horse racing would be able to compete.

It is completely disgusting that the government makes claims that racing can't compete. That would be like blindfolding a guy, tying an arm behind his back, and putting him on a basketball court then declaring he was incapable of competing. Stupid.

28 Jul 2010 11:33 AM
fb0252

this fellow has a limited conception of marketing possibilities, and so, more doom and gloom talk.

28 Jul 2010 12:08 PM
Kevin L

One of the things that I hear most often at the track is complaints about the length of time between races. Last winter Philadelphia and Aqueduct started off within 5 minutes of each other. Hours later Philly is posting results from race 9 and Aqueduct is showing the post parade from race 8.That is hour difference! People are willing to sit at slots for hours and lose hundreds because it seems to be a constant adventure. Horse racing is an exciting 1:08, or 1:49, but what does the casual racegoer do for 25 minutes, or longer if there is an inquiry? I love racing, but nobody else I know is willing to spend the time. Yes, better marketing, yes, lower takeouts, more casino money, wonderful, but the basic experience needs to change for horseracing to move up.  

28 Jul 2010 12:38 PM
dk

NJ politics kill everything. Mon Park was very viable as a stand alone private entity even without any simulcast revenues. State took it over and padded the NJSEA with political appointees at $100k per year salaries, pensions for life and benefits for part-time or no- show positions. Just look at the inside of the MP and Meadowlands program covers to see how many people are listed on the racing commissions - and multiply it by 3 or 4 for the retirees or people ousted when the administration changes and you see that there are an awful lot of people taking thier parts of the pie.  The South Jersey politicians have wielded way too much clout over the past decades in protecting the Atlantic City casinos - who return virtually no trickle down revenue to the state -they are multi-national companies taking profits out & enjoying unbelievable tax breaks. Put slots at MP, sell it for a few hundred million+ and get the politicians out of the horse game. The AC executives know this would work that is why they have been giving the $10-$20 million supplements every year! Monmouth Park is virtually on the beach, an hour from NYC and Philadelphia, minutes from breeding and training farms of Colts Neck & Lincroft,  Gateway National Park and located in one of the wealthiest counties in the country. Private ownership with some fresh ideas and a revenue stream supported by slots would keep the horse business healthy for many more generations to enjoy.    

28 Jul 2010 3:58 PM
the harv

private ownership is the answer, for both NJ and NY racing. No more "authorities" i.e. govt waste/patronage; govt runs Social Security-going bankrupt; local govt Authority (MTA) runs mass transit-losing money, in the hole; Govt runs med insurance for the poor and retired (Medicaid and Medicare-losing money. Govt spending worsened the Great Depression-read the studies!- and guess what our nation is debating more govt spending to "stimulate the economy"

We are an Acorn led nation blind to the facts surrounding us- get govt out-start by throwing out the bums on both the federal and local levels this fall

28 Jul 2010 9:28 PM
Giddyup

The biggest thing hurting the horse racing industry is a lack of leadership at the highest level. Bill France took stock car racing from an obscure regional sport in the Carolinas to a point where NASCAR became a mega phenomenon with a fan base second only to the NFL. That is the kind of person that thoroughbred racing needs.

29 Jul 2010 10:42 AM
bellesforever

Out of all the ideas given I like Brian's idea best!We need the younger generation on the track..getting to know what horse racing is.As far as letting the tracks fall by the wayside..I just can't believe that anyone here wouldn't want to do whatever it takes to save racing..isn't that why we are all here in the first place?

29 Jul 2010 3:19 PM
robertinraleigh

Unless racing gets to a larger and younger audience it will die, there should be a way nationally to play the races. Really do not need extravagant OTB's everywhere but think of how easy it is to play powerball a simple ticket machine in as many states and as many places as possible. This would also spawn a free TV station. Now add in TV revenue, wow, ESPNR, R for racing.

30 Jul 2010 9:40 PM
Dingus

If you don't want the state to prop up racing, then give racing the tools to compete.  We arbitrarily prevent tracks from using other gaming to spread their revenue.  Look at gas stations - very few make their money selling gas, they sell candy bars, beer etc in attached convenience stores.  Why not let the tracks run slots or even card rooms as the crossover between horseplayers and poker players is pretty high.  In most jurisdiction the state 'sells' the gaming rights establishing a single provider at a cost of millions in 'licensing fees'.  In other states (and nationally as well) the casino lobby keeps steady pressure against allow expanded gaming run by the tracks.  If Kroger or Safeway successfully prevented your local gas station from running a Kwikee Mart would you feel the same?  Would you say that a gas station that can't make it on gas sales alone should be out of business?

31 Jul 2010 7:52 AM
morris99

i repeat for the 100th time..let A.C. get legalized sports betting and let the tracks have poker and slots...both should be independent of one another and the state will get their share from the revenue stream of both entities. Sports betting would be an instant shot in the arm for A.C...we did legalize marijuana in N.J. didn't we? so there is a smattering of progressive thinking in the state..and Governor  Christie seems to have an abundance of common sense..try it for 2 years..if it fails then end it....stop playing political football and start using our brains..  if Pa.is smart enough to do it , why isn't N.J.?

31 Jul 2010 11:52 AM
Post-Time

The paramutal system in horseracing is broken. Many years ago when horseracing was the only game in town, it worked. Now with the many FIX-ODDS OPTIONS, horseracing cannot compete. Ever study have shown that bettors want to know how much they will get if they WIN. The casinos have used it, and the lotto also, horseracing have come up with stupid garantee "pools". Horseracing was once called "The sport of kings", maybe the track operators should take a look that there are no "KINGS" in thier stands.

01 Aug 2010 4:19 AM
BayonneFrank

It is time to put a full fledged casino in the Meadowlands. It is time to put slots at Monmouth Park. The two racetracks will have more than enough money to pay purses if this happens and they won't need subsidies.

The casinos have sat on their collective behinds as competition grew around the region. They have the greatest asset any gambling region could ever have in the Atlantic Ocean and miles of beaches and boardwalk. They have done nothing to exploit this incredible advantage. Atlantic City should be the nations biggest family destination. It is time to stop protecting folks and make them compete and succeed or fail. Maybe the state and AC would be better off with fewer casinos and more hotels that cater to non-gamblers.

07 Aug 2010 5:35 PM

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