Chips Are Falling - By Tom LaMarra

(Originally published in the February 25, 2012 issue of The Blood-Horse magazine. Feel free to share your own thoughts and opinions at the bottom of the column.

By Tom LaMarra - @JerseyTom on Twitter

By Tom LaMarra What has horse racing learned from 20 years of racetrack-based casino gambling?

A review of the landscape indicates the answer to that question is: not much.

Tens of billions of dollars, primarily from slot machines and video lottery terminals, have been generated for racetracks, purses, breeders, and state governments. Troubled racetracks have avoided shutdowns, jobs have been created, horsemen have an opportunity to get a nice return on their investments, and, perhaps most importantly, the economic impact has been broad and varied.

Racetrack casinos and horsemen have done a good job touting economic benefits through various state-by-state studies, primarily out of the necessity of keeping legislators from redirecting revenue or increasing taxes. But the continuing disconnect—in some cases animosity—between racetrack casino operators and horsemen’s groups has stymied progress.

It’s easy to blame politicians for developments in West Virginia and Delaware, and more recently Pennsylvania and Ontario, Canada, where lawmakers have taken away revenue—almost all of it from purses and breed development—to pay for other programs such as workers’ compensation or supporting the general fund. It’s also easy to blame horse racing for not preparing for the inevitable.

The Ontario situation is particularly surprising. A key government report suggests using some of the $345 million racing gets from slot machines to help offset a $16 billion shortfall in the provincial budget. Most of that money, however, goes to Woodbine Entertainment Group, a non-profit entity that funnels its 10% from slots revenue directly to racing and capital improvements. Shifting revenue may help the budget short-term, but it could hurt Ontario’s economy. Also Woodbine’s commitment to horse racing shows, though obviously more can be done.

Many of the other Ontario tracks, mainly Standardbred, are privately owned or controlled by casino companies that regularly battle with horsemen over reductions in racing dates. Such counterproductive behavior has no doubt played a role in the potential action by the provincial government.

Though racetrack gaming in Pennsylvania has been held up as a model, the flaws have become apparent. The state is back again looking for revenue from the horsemen’s side, which collected roughly $1 billion from slots over a four-year period.

The economic benefits for the state are easy to tout. But in Pennsylvania, where all six racetracks are wholly owned by casino interests, horse racing in most cases has failed miserably to promote itself outside of purse increases, which are lost on the general public.

To their credit, horsemen have stepped up with funding for weekly televised racing programs and even live cable coverage, mostly on the harness racing side. But with the exception of a Department of Agriculture fan website, there has been no cohesive effort to use even a small percentage of slots revenue to promote horse racing across the state.

The same can be said for Delaware, West Virginia, New York, and other racetrack gaming states. The goodwill that could come from funneling percentages of gaming revenue to things such as marketing campaigns, racehorse aftercare programs, backstretch workers, equine research, fan development, and compensation for reductions in pari-mutuel takeout rates was passed over for what could be characterized as a quick and perhaps unjustified grab for cash.

Any educated lawmaker would ask whether a $5,000 claimer needs to run for a $25,000 purse in Pennsylvania, or whether a $7,500 claimer should be competing for $29,000 in New York.

And while many racing companies with gaming basically refuse to spend more than the minimum on marketing of racing, horsemen haven’t come to terms with the new reality. At a time when the foal crop is getting smaller and gaming revenue is being taken away, racing dates must be examined.

In a perfect world, average daily purses would increase with fewer racing days, and horse racing may have an easier time selling itself to the public with a more event-driven schedule. But it’s hard to criticize horsemen for protecting live racing dates from companies they believe want as little racing as possible—if any.

The true test of racetrack gaming could be Kentucky, should the General Assembly approve a constitutional amendment on expanded gambling for the November ballot. If it were to be approved, the enabling legislation will tell the tale on the state’s commitment to the horse industry, as well as the industry’s commitment to itself.

Every Thoroughbred track in Kentucky is wholly or partly owned by racing interests, which is very unusual today. These people own horses, breed horses, and actually like betting on horses.

The public in the Bluegrass State embraces horse racing and is far more knowledgeable about its nuances. The racehorse is much more part of the culture there than anywhere else in the United States.

It would be nice if one jurisdiction could get it right.

6 Comments

Leave a Comment:

asado

Check out New Mexico, still a model of consistency.

23 Feb 2012 10:16 AM
Frank J.

Nice article Tom, one that interests me alot since I live 5 miles from Mohegan Sun at Pocono Downs here in PA. I was pissed but not surprised to hear a few weeks ago when our wonderful Governor made his decision to rob the fund of casino money set aside for horse racing, etc. which when of course when he was running for office said he would never do. Mohegan has done a pretty good job trying to get the message of horse racing out there and trying to get people to visit. Hell, we had the Breeders Crown series here a few years ago. During racing season, they feature live bands, reduced drink prices and try to get a younger crowd to visit. Purses have gone up considerably in the last few years and Pennsylvania has even brought back Smarty Jones to one of their farms. I just hope the money taken away from horse racing doesn't stop horsemen from racing or breeding their horses in Pennsylvania.

23 Feb 2012 1:02 PM
PipeDope

Well this is very easy to understand for any forward-thinker in the horse racing industry.

Those running race tracks everywhere (including the racing end of so-called 'racinos') are simply NOT OPERATING THE RACING END EFFICIENTLY, and in the way it should be operated.

Drum it through your collective heads that racing and casinos are being operated the same way, each as if the customers' loss is the house's gain.  So the operators on both sides of the partitions sit idly by with their respective hands out.  Each showing exactly no outward interest in whether the on-site customers win or lose.

In all reality, track operators need to be REMINDED that their revenue comes NOT from how much the public loses, but instead racing's revenue is realized as a product of HOW MUCH THE PUBLIC WAGERS.

Pari-mutuel horse racing entities need only practice BLATANTLY ASSISTING THEIR WAGERING PUBLIC at doing better, collectively, vs. the nation-wide simulcast pools, and the HUGE, empty HOLE which stands between track operators and the next level of common sense, will be easily filled.

Horse racing should have taken it TO other forms of gambling/gaming in this way decades ago!!!

When, by the very make-up of your game of chance, YOU can afford to ASSIST YOUR PUBLIC blatantly and directly at knowing better financial results collectively, then it is absolutely ludicrous that you don't DO SO first thing each day!!!!!

Racing has for many years been playing some sort of 'defense' (or perhaps a 'stall' of some sort - stalling its own demise in the minds of some) when all along horse racing should have been playing OFFENSE in the way of capitalizing on the very pari-mutuel wagering which sets it apart from all other forms of gambling.

Does anybody believe that Thoroughbred horse racing in North America HAS another 20+ years to blindly waste in the present oblivious fashion??

It is time to utilize common sense and innovate in this area.

24 Feb 2012 10:11 PM
MikeM

With the exception of Gulf Stream there has been no effort to improve the fan experience at the racetracks.Lets face it, the last thing the casino operators want is to promote other forms of gambling.It's inevitable that the politicians raid the revenue generated by the racinos. Why, because they can.

25 Feb 2012 10:55 AM
Gina Powell

I can tell you what I learned strictly from a small TB owner/trainer. My parents and me supported the Woodbine racetrack 4 years. In fact, a large portion of horsepeople were small outfits (1-10), and we all made a living.

We struggled, but fought hard for the racino concept. Enter Woodbine racino. The "new" management conducted the "sweep & clean" approach. We were denied stalls OR they were reduced to the point where you could no longer make a living.

Now Woodbine horsepeople are the HUGE outfits or training 4 board members. Very few exceptions. The big money wiped-out almost entirely the small outfit. So the big money was concentrated in very few hands.

Look at these other tracks; it is the same trainers getting 40+ stalls year in and year out. That isn't competition, rather a monopoly enjoyed by few. So based on this experience I would rather keep the casino and big money out and get back to the old days of better horse racing where the best horse wins, NOT the best connections!!

26 Feb 2012 10:43 AM
keystone

Racing decline can be acccepted only if they are given an even playing field with the casino portion of the same owners business.  They sure knew how to promote racing when they were looking to close the area competition in the hopes of the casino license in the future. Right after that racing delcined.  Could it be there was no longer a grandstand to watch live racing on the track.  Could it be that there is absolutlely no marketing of the industry- not even an inch on the bottom of the full page casino ads.

Do you reaize that there is not even a sign on the street or building letting potential customers know that racing is still going on?  Most people I speak to remember going to the track when there used to be horses running there.  Guess what- they still are and no one knows.

I am sure that soon the operators will go to the state crying broke and that racing revenue is down. Do you know of any business that has a chance of success without exposure.  Apply the same effort into racing that is spent on the casinos and you will see different results.  The Smarty Jones statue that was promised at Parx has never materialized and probably never will.  After all it was his name in the state casino voting that was helped pass the bill to begin with.

06 Jun 2012 7:02 PM

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