What's Going On Here : Steve Beshear

Shrinking Starters - by Dan Liebman

Blood-Horse Staff — Tue, 12 May 2009 13:55:00 GMT

(Originally published in the May 16, 2009 issue of The Blood-Horse magazine. Feel free to share your own thoughts and opinions at the bottom of the column.)

Speaking to shareholders May 7 via conference call, Churchill Downs Inc. president and chief executive officer Bob Evans said, “The solution for tracks without slots is to cut purses, to cut races, and race days, or to cut all three.”

At its signature track, Churchill Downs in Louisville, Ky., the company has already cut purses and races, and a published report May 10 indicated the track would request to reduce its live racing schedule from five days a week to four for the remainder of the meet that runs through July 5.

The fact is many horsemen are electing to run instead in states such as Indiana, West Virginia, Delaware, and Pennsylvania, where Thoroughbred purses are augmented by revenue from other forms of gaming.

On May 9, the Saturday following the Kentucky Derby Presented by Yum! Brands (gr. I), Churchill had 62 starters in its 10 races, an average of 6.2 runners per race. During the first 12 days of the track’s spring/summer meet, the average number of starters per race was 7.55; excluding Kentucky Oaks and Kentucky Derby days, the number drops to 7.31.

Also on May 9, the average number of starters per race was 7.83 at Charles Town Races & Slots in West Virginia, 7.11 at Delaware Park, and 8.11 at Indiana Downs (for its nine Thoroughbred races; the track also ran three Quarter Horse races with 10 starters in each event).

It has always been the case that every starter translates to higher handle, which in turn equates to more dollars for purses. But in today’s pari-mutuel world, it is even more important to have larger fields because more than 80% of dollars are bet off-track. In the days when on-track attendance mattered most, a bettor might not be intrigued by a four-horse field (Churchill had two four-horse fields May 9) but still might wager on the local product. Today, there simply are many more options; thus, a bettor who sees no more than six starters in a track’s first five races—as was the case May 9 at Churchill—may simply turn away and play another track’s races.

Unfortunately, Churchill Downs does not release its attendance or handle figures, but even without the numbers, it is easy to assume that handle is down significantly.

Kentucky Gov. Steve Beshear’s latest quote about the horse industry, repeated often in the past few weeks, is, “What we don’t want to happen is to become the former horse capital of the world. This is our signature industry, and we will aggressively protect it. We will remain the horse capital of the world as long as I am governor.”

Kentucky’s racetracks have been actively seeking slot machines at their facilities for more than a decade. Looking back 10 years, on May 15, 1999, the Saturday following the Kentucky Derby saw 10 races run at Churchill Downs with 8.8 average starters per race. On the same date five years ago, the 10 races run on the third Saturday of the meet saw an average of 8.2 starters per race.

Like most other states, Kentucky has a budget crisis. Later this month, the new revenue forecast will be unveiled. Yet despite the fact slot machines at Kentucky’s racetracks would protect the state’s “signature industry” by increasing tax revenue and saving thousands of jobs, another legislative session has come and gone without the passage of a bill to aid the men and women who make Kentucky famous for its horses.

Budget forecasting is a tough job in any economy, but it is especially hard in light of today’s economic conditions.

Without slots, one wonders what forecast the horse industry in Kentucky would project for the next five years.

Even without slots, Kentucky may not become, as the governor says, “the former horse capital of the world.”

But, without his support, Kentucky horsemen will help see to it that Steve Beshear becomes the “former governor of Kentucky.”

Going Green - by Dan Liebman

Blood-Horse Staff — Tue, 06 Jan 2009 16:28:00 GMT

During most of the past 200-plus years, the Kentucky General Assembly convened for only 60 days every two years. To poke fun at the lawmakers, a group of Frankfort, Ky., citizens once printed bumper stickers calling for the group to instead meet two days every 60 years.

Now, the Kentucky Legislature meets annually, 60 days in even-numbered years and 30 days in odd-numbered years; the 2009 session is set to begin Feb. 3. And, once again, the horse industry is in need of help from its elected officials. Unfortunately, the state budget, as it should, will be the primary focus of this short meeting of Kentucky’s state senators and representatives.

Though several bills have either been pre-filed or proposed to aid Kentucky’s ailing horse industry, lawmakers must deal with a projected $456-million state budget shortfall, making it a tough time for any industry to lobby for funds that would make that deficit even larger.

Kentucky’s equine industry had high hopes a year ago when Gov. Steve Beshear took office. As a candidate, Beshear received considerable support from industry participants and made the need for alternative gaming one of his key platforms. Alas, those in the state who make their living from horses were again disappointed as gaming legislation went nowhere yet again. The bill to put the measure on the ballot as a constitutional amendment for Kentucky citizens to decide on video lottery terminals was not pushed hard by the governor, nor by Speaker of the House Jody Richards.

A day after this column is printed, Jan. 5, an election for speaker will be held, with the representatives from Kentucky’s 100 House districts choosing between Richards and Rep. Greg Stumbo, a former Kentucky Attorney General and House Majority Leader. Stumbo has pre-filed a bill authorizing video lottery terminals at Kentucky’s racetracks, giving those in the equine industry a keen interest in the House Speaker vote.

Last summer, by executive order, Gov. Beshear created the Task Force on the Future of Horse Racing in Kentucky. The group, chaired by owner/breeder Tracy Farmer, made its initial report public last month. Though alternative gaming was not specifically called for, the report noted how states such as neighboring Indiana increased their purses with revenue from slot machines. The report also includes data from a recent Thoroughbred Racing Associations study that claims: “Among racetracks with legalized alternative gaming as of November 2008, combined annual purses are forecast to increase 45.5% by 2013, while combined annual purses at racetracks without legalized alternative gaming are expected to decline 11.9% by 2013.”

Other main points contained in the report call for additional staff members for the Kentucky Horse Racing Commission, a pari-mutuel monitoring system, licensing and regulation of advance deposit wagering companies, and the establishment of a nonprofit research and testing laboratory.

It is often easy to identify problems and offer solutions, while it is much harder to find mechanisms to fund such initiatives. In a recessionary time, that becomes much more important.

Increasing takeout and reducing purses, both discussed in the report, should be non-starters.

Horse racing and breeding is the most important industry in Kentucky, accounting for $4 billion annually and responsible for upward of 100,000 jobs. Unfortunately, many elected to represent the citizens of the state continue to see the industry only as wealthy breeders, wealthy owners, and wealthy racetracks, despite study after study showing that not to be the case.

Gov. Beshear said alternative gaming will not be brought up this session; he wants to raise the state’s cigarette tax, one of the lowest in the nation, 70 cents a pack. In fact, had the governor pushed through alternative gaming legislation a year ago, Kentucky might already be on its way to reducing its deficit through video lottery terminals.

Members of the legislature will not dip into the state’s General Fund to help horsemen, meaning though the task force has made some interesting recommendations, finding the money to implement them will not be easy.

Losing Gamble

Blood-Horse Staff — Tue, 01 Apr 2008 16:22:00 GMT

In 1987, the Kentucky Democratic primary for governor included two men who had previously held the post (Julian Carroll and John Y. Brown Jr.), the incumbent Lieutenant Governor (Steve Beshear), and Gov. Martha Layne Collins’ cabinet secretary (Grady Stumbo).

Wallace Wilkinson, then an unknown, entered the race with a political consultant who at the time was also not a household name—James Carville. Wilkinson’s campaign focused on a single issue, one that had been floated during legislative sessions in the state with mixed support. But, pumping millions of his own money into his campaign, Wilkinson, with Carville’s help, put together an ad campaign that proposed a state lottery, and Wilkinson closed a gap in the final days of the campaign to win the race in stunning fashion.

Obviously, Beshear remembers that time well, because 20 years later he focused his campaign for governor primarily on one issue—casinos. Beshear’s 19-point margin of victory over incumbent Gov. Ernie Fletcher was a clear mandate that the citizens of the Commonwealth of Kentucky wanted the opportunity to vote on the issue as a constitutional amendment.

Wilkinson did what those who elected him requested—he championed the cause, as a bill authorizing the vote on a constitutional amendment passed in the 1988 legislative session. Three weeks later, a special session passed the enabling legislation. In November, 60% of those who cast ballots voted to approve the lottery, and the first tickets were sold April 4, 1989; first-week sales generated $27 million.

Since that time, hundreds of millions have poured into state coffers because Kentuckians have been able to play the lottery within the state’s borders.

Kentuckians have made their feelings known that they also want to be able to play a slot machine without traveling to Indiana to do so. Each day, cars with Kentucky license plates cross into Indiana to spend money at casinos, dollars that should remain in the state to help purses and fund state programs.

The horse industry heavily backed Beshear and heard him repeatedly say he would work hard to get a constitutional amendment on casinos passed. (Full Disclosure: This writer was among those who contributed to the Beshear/Mongiardo ticket.) But alas, another legislative session has passed with the state’s signature industry left yet again to agonize over why it cannot garner needed help from its elected officials.

Beshear and his advisers completely fumbled the ball, coming out late with a bill and having no true support from legislative leaders. But Beshear should not take all the blame. House Speaker Jody Richards also performed miserably, the perception by many being that he was not even for the bill.

Wallace Wilkinson did what the voters asked him to do. Steve Beshear did not. Wilkinson helped bring in revenue when facing a budget deficit. Now, the deficit is much larger, yet Beshear has done nothing.

“The bill is dead,” Beshear said March 27. So, too, is the governor’s support from the horse industry.

LESS AUTHORITY

There was more bad news when it became known the budget for the Kentucky Horse Racing Authority might be slashed as state legislators grappled with a budget bill containing drastic cuts and no new revenue streams.

Past assessments to the state’s four Thoroughbred tracks—based on handle and number of days raced—which were suspended during the Fletcher administration, may be reinstated. But Senate President David Williams is pushing to exempt the state’s two smaller tracks, Ellis and Turfway.

It costs the same to oversee a day of racing at Ellis Park as Churchill Downs, at Turfway Park as Keeneland, and everyone should help foot the bill of the regulatory agency’s expenses.

Less staff means less oversight, and less oversight means an open invitation to cheaters.

Not a good week in Kentucky.