Subsidizing a Dead Industry

In Massachusetts, as part of the current proposed Slot Barn legislation, taxpayer will subsidize the horse racing industry - a Dead Industry.

No one is asking why.


Race track advocates see future in gambling bill
By: JIM SUHR


Former Illinois Gov. Jim Edgar doesn't hide the fact that he races some of his own horses in neighboring Indiana. His reason is simple: The payouts across the border are bigger, in part because Indiana's racetracks have slot machines.

The Republican has been lobbying in favor of expanding gambling at Illinois' struggling horse tracks by adding slot machines under a bill passed by the Legislature in the spring. Edgar and others argue the machines could help save Illinois' horse-racing industry, which many believe is on its last legs after the amount of money wagered last year plunging to a 35-year low.

"The (horse racing) industry is going to rise or fall on this," said Edgar, who recently was among a delegation of horsemen that visited Springfield to lobby on the bill's behalf. "If it doesn't happen, you could see horse racing pretty much disappear in Illinois."

The measure certainly has the potential to bring more revenues to the tracks. But whether it would save them is less certain, and opponents aren't sympathetic to the decline of the state's oldest form of legalized gambling — already propped up, for now, with subsidies from Chicago-area riverboat casinos.

"If that sport is past its time, and people don't want to go anymore, they should just let it die," said Doug Dobmeyer, spokesman for the Task Force to Oppose Gambling in Chicago. "Horse tracks are for horse racing, not mechanisms to get more people to gamble."

Other states have found "racinos" draw more people, even if they didn't translate to actual increases in wagering on horses. Indiana's two racinos, each allowed to have 2,000 slot machines, have seen their adjusted gross receipts surge from a combined $392 million in the 2009 fiscal year to $457 million last fiscal year. That's despite seeing the amount of money wagered on horse racing drop from $190 million in 2005 to $139 million last year.

Whether Illinois' five major tracks get the slot machines permitted in 13 other states is anything but a certainty. Though the 400-page bill narrowly passed the state Legislature last spring, Gov. Pat Quinn has voiced concerns, chiefly over whether it includes adequate regulation. Lawmakers, lacking enough votes to override a veto, have yet to turn it over to Quinn, hoping to craft a "trailer bill" that includes fixes to placate the Democrat before the fall veto session begins later this month.

The bill would not allow the now-closed Quad City Downs near East Moline to get slot machines unless it reopens for racing.

"Definitely, the horse racing industry is on life-support," said Democratic state Sen. Terry Link, one of the measure's chief sponsors. He says the cash-strapped state has a choice: Stop subsidizing horse racing altogether, or let the track operators become self-sufficient with the additional revenue and attendance that the slot machines may bring.

According to a recent overview of the state's gambling industry by the Illinois Commission on Government Forecasting and Accountability, the Legislature's bipartisan financial specialist, the amount wagered at Illinois horse tracks last year totaled $726 million — its lowest showing since the mid-1970s. That total wagering — called "the handle" — is down 34.2 percent over the past decade, dropping each of the past eight years.

The bill's backers blame some of that on what they call uneven competition with neighboring Indiana and Iowa, where tracks feature slot machines they say pad the purses, making racing for horse owners like Edgar more potentially profitable than in Illinois. When good horses defect from Illinois to race elsewhere, the watered-down card becomes less appealing to potential bettors, racing advocates say.

"I think everyone is trying to keep up with the Joneses," said Mark Simon, editor of Thoroughbred Times, an industry publication based in Lexington, Ky.

Illinois track operators clamoring for help got a welcome though temporary lift recently — more than $140 million, representing a 3 percent sliver of revenues generated by Chicago-area casinos over the past five years. Some $80 million of that money will go toward boosting the purses next racing season at the five major Illinois tracks — Arlington, Balmoral, Hawthorne and Maywood all near Chicago, along with Fairmount Park near Collinsville east of St. Louis. The remaining money would be devoted to track operations or improvements.

Tim Carey, president and general manager of Hawthorne Racecourse, said they are working with the gambling bill's sponsors to make it more appealing to Quinn. His track received $29.8 million of the casino funds, second only to Arlington's $45.2 million, but still is struggling.

"I don't know if it's dire. Somehow, someway, we do survive, but surviving and thriving are two different things," Carey said. "I'm confident the governor will be happy with the changes and I really do believe he is going to sign it."