Horse racing stakes future on racinos
Video gambling could create cash to beef up race purses and keep quality horses in the state
Mar 26, 2013
Horse racing, which has been limping along in Ohio and Kentucky – indeed, nationwide – for decades, is on track for a comeback.
The reason: racinos – race tracks with video lottery terminals, or VLTs, which are similar to slot machines.
Money – a cool $1 billion – and crowds have poured into the state’s first racino, which opened last June at Scioto Downs, a 54-year-old harness racing track in Columbus. Six more racinos are in the works – at three standardbred harness tracks and three thoroughbred tracks, including River Downs in Anderson Township and a new complex in Warren County’s Turtlecreek Township. Both are expected to open in 2014.
“We’re very excited about it,” said Bob Schmitz, chairman of the Ohio State Racing Commission.
Ohio Gov. John Kasich authorized racinos in 2011, and backers envisioned bigger crowds spending more money. That, in turn, would lead to bigger purses, increased track proceeds and more money for horsemen and breeding programs.
Taxpayer subsidized racing isn't attracting more attendance because it's a dead industry.
That’s what’s happening at Scioto Downs, Schmitz says. In the nine months since the racino’s June opening, $1 billion was wagered on VLTs. The net win – what’s left after winnings are paid – was $100 million, according to the Ohio Lottery Commission, which oversees racinos.
The horse industry’s take will range from 9 percent to 11 percent, a figure that is still being negotiated, Schmitz said.
In Kentucky, debates over whether to expand gaming to include racinos have dragged on for years.
Turfway Park general manager Chip Bach would welcome turning his track into a racino. As it is, Turfway’s purses are directly tied to handle – the amount bet on races. Racinos, he pointed out, can supplement purse money with gaming revenues.
“We can’t compete head-to-head with (racinos),” he said. “Those tracks offer a lot more money for horses that win.” Since horsemen go where the money is, “We have a difficult time competing for the horses.”
Better horses means better races and more business.
It’s the same argument once heard in Ohio. And it’s why Ohio racinos can’t come soon enough for Jim Yaegel of Maineville. “It’s taken way too long to get these things going,” said the horse owner and trainer, a former president of the Ohio Thoroughbred Breeders and Owners Association.
He fondly recalls the late 1960s and early ’70s, probably the golden age of horse racing in the region. “At River Downs, you couldn’t even get a seat in the grandstand. It was just packed.”
In those days, horse tracks had little competition for gambling dollars. Now, though, the crowded field includes state lotteries and casinos, not to mention other sports and entertainment options.
Last year River Downs had $11.7 million in revenues, but it lost $1.6 million. In 2011, it lost $2.2 million. Such struggles are not limited to that track, or to Ohio.
The Jockey Club, an organization focused on thoroughbred breeding and racing, released a national report in August 2011 that cited significant declines in horse-race wagering (down 37 percent from its 2003 peak); race days (down 14 percent from 2000); and number of horses per race (down 23 percent since 1990). Without new growth strategies, the report said, those trends would continue
None of which was lost on Yaegel. “We’ve lost a whole generation (of fans). The people from (age) 30 to 50 aren’t at the track anymore.”
That’s also noted in the Jockey Club report, which said the average age of a horse-racing fan now is 51 (compared to 43 for football and 35 for basketball), and will increase by six years by 2020.
Horse racing has been hurt even more by advanced deposit wagering, or ADW, said Jerry Knappenberger, general manager of the Ohio Harness Horsemen’s Association. Since the advent of ADW in the 2000s, people no longer must go to the track to bet; they can do it online or by phone. Through ADW, tracks and the horsemen who own and train horses receive only about 40 percent as much as when bets are made at tracks.
Subsidizing horse racing through racinos makes sense, Schmitz and others say, given racing’s impact.
“It’s still an agricultural state,” Knappenberger said. “And so each horse that’s raised and stays in Ohio is eating Ohio grain, Ohio hay and resting on Ohio straw, plus all the other agricultural (necessities), including trucks, trailers, harnesses and so forth.”
A 2005 study commissioned by the American Horse Council Foundation said horse racing generated 8,200 direct jobs and 16,000 total jobs in Ohio. Its total economic impact in the state was $731 million, the report said.
While thoroughbreds accounted for two-thirds of that, Ohio has been a leader in producing standardbred horses. Standardbred harness racing is held at 65 county fairs in Ohio.
The same report said that horse racing in Kentucky generated 20,300 direct jobs and 39,800 total jobs. Total economic impact: $1.6 billion.
Despite the optimism, racinos won’t necessarily be racing’s long-term savior, some horsemen say.
“At some point,” Yaegel said, “horse racing has to learn to stand on its own.
“We all know how politicians work. They’re going to need money for schools or roads, and they’re going to look at the money (going) into thoroughbred purses, and our percentage (of the take) will keep dropping.”
Already there’s concern that racino operators view racing as an afterthought. The Ohio State Racing Commission has said plans for several racinos, including the one being developed by Miami Valley Gaming & Racing in Turtlecreek Township, lack sufficient seats for racing. Lebanon Raceway will move to that complex.
“The only reason (racinos) have racing is because (by law) they have to have racing,” said Yaegel, adding that it’s important to maintain an adequate number of racing dates.
It’s easy to see why owners might be focused on the mega-millions from VLTs. But as Schmitz noted, “The horse brings them to the dance.”
http://news.cincinnati.com/article/20130327/NEWS/303270039/Horse-racing-stakes-future-racinos
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