09/29/2009 5:27PM

FInding the right slot for slots


Dillweed writes, “The popularity of horse betting in the US would explode if we legalized betting exchanges. Unfortunately, Churchill Downs, the NTRA, and the central Kentucky power brokers are against it. They think slots, which don't add a cent to the betting pools nor help the popularity of horse racing, are the answer. Think this sport needs new leadership?”

Dilweed, permit me to take what might be a contrarian view to many: the marriage of slot machines and thoroughbred racing can indeed be the key to the sport’s future.

But that’s only if revenues are used for the long-term benefit of racing.

And unfortunately, most potential benefits have so far been squandered.

The present blueprint is usually as follows. Racing leaders plead to lawmakers that survival of their tracks depends on slots, as does survival of breeding farms valuable to agricultural economy. Once slots are obtained, small chunks of profits go to casino overhead, purses, minor upgrades to racing facilities, and state coffers. The rest goes into the pockets of track owners and investors savvy enough and well-connected enough to cut a sweetheart deal in the first place.

It’s too late to revise history in states already swimming in the deep end of the gaming pool. It isn’t too late to learn valuable lessons from what they’ve done.        

At present, Kentucky and Maryland seem to be clamoring loudest for slots-to-save-the-sport.

 Here’s the answer they should get:

You want slots to save horse racing? Put your quarters where your rhetoric is. that is, every quarter of net revenues should go back to the racing product and state.

Churchill Downs Inc., Magna Entertainment (or whoever is running Laurel and Pimlico ), and their shareholders should get nothing in slots dividends. Zilch. Of course, they can still make a lot of money from the slots. But to benefit from the largesse of a state that approves expanded gaming, they should be required to use slots revenues in hopes of generating more profits for the please-save-me business used to obtain the gaming machines in the first place: horse racing.

Think about some of the problems facing the sport. Unprecedented competition for the gambling dollar. Outdated facilities. The tedium of long meets, and the cannibalism they create among neighboring tracks.

Now think about what a slots windfall used properly could mean.

You can’t turn back the clock on lotteries or sports betting or Native American casinos, but guaranteed mega-profits mandated for racing would give tracks financial freedom to dramatically cut pari-mutuel takeout to be more competitive with casino games (it’s what they should be doing, anyway, of course).

Facilities could be rebuilt to better compete with publicly-funded sports palaces that are spoiling football and baseball fans.

Without feeling a need to grind out small profits over a long calendar of racing, tracks could slash dates to improve quality, shoot purses up to dramatic levels and create regional circuits with stakes and TV schedules that actually make sense.

Racing would have the funding to properly market and promote itself.

Yes, exchange betting could even be instituted to spice up wagering menus without the present fear tracks have of tipping delicate financial scales in the wrong direction.

And states also would get badly-needed money for education or infrastructure or charities. Sure, they’ll probably blow it, but that’s an entirely different can of worms.

Pie in the sky? Perhaps. Tracks could cut dates and work together right now, and it ain’t happening. But slot machines at racetracks is already a reality, and money like that used wisely can solve a lot of problems, add to betting pools and increase the popularity of the sport.

      Racing has an unprecedented window of opportunity, and it's a window that likely won’t stay open forever. 

william scholl More than 1 year ago
I have simply thought ther id too mant racing dates in the US. too many race tracks, too many races. however there are those that will bet any race any where. fine then give them the opportunity to do so. simply put, give mon. tues. wed. thurs to the minor tracks for live racing. Fri. sat., sun too major tracks. keep simulcasting open at all tracks at all days. how to designate, simple. new york, fla., chigago, la. oak,tex.ca. as major tracks, or whatever is decided. shoare the mutual pools in agreed proportions. keep the jobs safe. decide to coperate for the good of horse racing in general.alloe the posting of past performances 3 days in advance. this would give the people who are glued to one track to be involved and benefit from the opportunity to concentrate, and play to there to ther strenths. slots are not the answer, intellectual participation is the key.
Bruce Friday More than 1 year ago
I agree with the notion that significant investment in the industry is required to keep it relevent in today's sporting/wagering environment, but I can't buy into the notion that slots are the way to go. (By the way, in New York State they are Video Lottery Terminals, not slot machines, because slots are illegal in NYS and would require a constitutional change to be legalized. The VLTs are wired into the Lottery Division central computer and each spin of the wheel is the equivalent of an automated scratch-off lottery ticket. A lot of players can't tell the difference but, trust me, there is a huge difference if you happen to be playing video poker.) I agree with the school of thought that says after the "racinos" are up and running there will be continuous pressure to reduce the profit allocated to the racing element (horse welfare) until the horse part of the business is eliminated entirely. Instead, I would like to propose that race tracks decline any of the slot profits. Let all of the slot profit accrue to the slot corporation and the state. If someone wants to lease space and facilities from a race track to locate slot parlors - that's great. The track could collect a revenue stream from rental income. Now in return for the track's forgoing the slot money, I want the state to give up it's portion of the pari-mutual takeout. The track can then use the additional revenue from wagering to advertize the sport, infrastructure improvements, take-out reductions, etc.; whatever is necessary to sustain and build the business. I would expect the tracks to pay corporate taxes on their profits like any other business. If the racing business model doesn't work under this type of arrangement then maybe horse-racing should be allowed to dwindle down to the hand full of boutique race meetings that can actually support themselves financially.
photo4last More than 1 year ago
RE WOOBINE RACING. Yes the Woobine inflated purses look great on paper, but the quality on the track is poor. It's rare to see an Ontario bred win any race in the States. Yet Woobine's on-off track wagering is excellent. But the public does it care about this. They like the lotterys and slots because they are easy to play. Horse Wagering has become far too complicated, confusing with it's wild bets. Even the DRF has too much information. Better to have less info but in BIGGER PRINT... And as a Hall of Fame Jock once told me, horses can't read.
james medley More than 1 year ago
Good ideas, but it'll never happen. Only thing I've seen horse racing do in the last 50 years is shoot themself in the foot, again,and again, and again............
Industry_Head More than 1 year ago
Walt P. Unfortunately you have it wrong about PA. PA is the classic example of how NOT to do it. Why? Because they have become further entrenched with State politics running the outcome of their industry, by taking the short-term solution to the deal. PA is completely dependent upon slot revenue to fuel incentive and purse structures, the 12% you reference. In doing so the tracks have removed themselves from receiving ANY revenue from the pari-mutuel handle taken on racing. Therefore, when the State decides subsidizing the industry from slot revenue is a bad idea, because they need the money. (This is happening as we speak, see the PA news). Guess what? The industry is completely dead broke! So, there needs to be a blended mix of revenues to fuel the sport and as Randy has mentioned, re-invested into ways of becoming self sufficient and inclining. Additionally, by taking federal measures to fix the Interstate Horse Racing Act, to get simulcasting, account wager and a single US tote fix along with splitting the pie accordingly to the purse structure and host tracks. And coming up with new wagering options (exchange) for players and take out reductions. Lastly allowing Interstate Regulations to regulate consistent medication and jurisdiction laws. Then we could start over with a clean slate.
slewofdamascus More than 1 year ago
Wilson wrote: "What next, legalize marijuana, sell it at the track and tax it to boost purses?" I'd imagine, if such a forward-thinking idea became law, they could substantially boost purses from the increase in food sales alone, never mind a tax. Don't let anyone tell you that ganja and playing the races are anything but utterly compatible. Cheech and Chong for Racing Commissioner(s)! It's High Times we had something to feel good about.
Seth Kupperman More than 1 year ago
Betting exchanges are legal internet operations in the UK and Australia like betfair.com that allow bettors to take each other's bets with a fee taken out. This allows one person to offer odds for a horse and another person to accept those odds. It in essence allows an individual at home to be a bookmaker. In the same line as the comment wanting betting exchanges, why not just bring back legal bookmaking to America. It works great in the UK, Ireland and Australia. No more late odds changes after the gates open. Mine That Bird would have been 200/1 as he deserved to be in the Derby. Something must be done. Slots are not the answer. Just look at almost any slots tracks and you see a menu of nearly unbetable races with 5 and 6 horse fields. Small fields are a very good sign that a racing circuit is NOT healthy. It's time to face the truth that horse racing is culturaly invisible in America and it is about to join typewriters and cassette tapes as curiosities from the past.
http://theknightskyracing.blogspot.com/ More than 1 year ago
Every racetrack that is blessed with the slots revenue should be lowering their takeout rates dramatically. I see no reason why the pillaging and plundering of the horse racing bettor should continue at the same rate as the pre-slots era. Either the horse racing fan base is dying off or being taken out of the game due to depleted bankrolls. Lowering of the takeouts on all the pools for a permanent period allows the legions of "break even" type of players to move to the plus side of the ledger, reap in modest profits and come back to wager again tomorrow. Propping up inflated purses (see Woodbine and Philadelphia Park) does nothing for the average horse racing bettor. Generally speaking it's still the same stock as before but with ridiculously overpaid purses. Horsemen, tracks and states have left the horse racing customer out of the equation and they will pay in a few years when the novelty of localized slots wears off. When the slots players have had enough. What then?
wilson More than 1 year ago
In Virginia where I live the argument for allowing Colonial Downs to be established and operate was that Virginia has such a long history with the horse, with horse racing, etc., and that horse racing belongs here. It was embraced only and precicesly because there were to be no slot machines or other unrelated gambling associated with the track. So once horseracing is here and struggling then it is time to talk about slots. The thing is that if slots were to be part of the mix from the beginning then there never would have been Colonial Downs in the first place. The public doesn't embrace slots like horseracing. There is something dignified about horseracing. It is a sport. Any linkage between horses and slots is an artificial linkage. Why would a centuries old traditional sport want to be affiliated with slots? What next, legalize marijuana, sell it at the track and tax it to boost purses?
peter lane More than 1 year ago
please explain exchange racing
bochalls More than 1 year ago
What happens when the slots guys realize they don't need the horses? The horse tail cannot wag the slots dog.
MattG More than 1 year ago
This kind of reminds me of the stadium "arms race" that we've seen in the NFL and other sports leagues. Everybody "needs" a new stadium with additional revenue streams in order to compete. Once everyone gets it you're right back at that same point: the people making the most money are likely the ones with the best product and the best run fanchise. I wonder, assuming tracks continue to get slots (and in the same manner that we've seen in the past and not utilizing Randy's suggestions), at what point will the tracks with the best product squeeze out the ones that can't cut it? If everyone gets slots and some tracks still can't compete, doesn't that suggest they probably shouldn't be in business in the first place...or, at least, should severely alter their business plan? Maybe that's what it will take.
Barry More than 1 year ago
I cannot wait for VLT's in NYC. Slots at other venues have completely muddled the class picture in NY. Hopefully, slots will put NYRA back on top of the heap as far as attracting the best horses for its biggest races. Since fall of 2003, things have not been the same around here.
Walt P. More than 1 year ago
Some good points on slots, and I think if tracks want to do it right, they should take a good look at how it's done in Pennsylvania. In Pennsylvania, 12% of all slot revenue, whether its at a racetrack or stand-alone casino is required to be divided equally between all of the tracks in the state for purses. By itself, this has severely increased the purses at the tracks in Pennsylvania to levels that put purses at the lower levels above what New York offers, and the Allowance purses at levels not much below New York (though if I were running Philly Park, I would be cutting the claiming purses some and putting that money into Allowance purses to get horses to ship down from New York in particular, and with that also perhaps get some of the disgruntled NYRA horseplayers who have complained repeatedly about the lack of higher level allowance events at the NYRA tracks). The slots also have so far spawned two new tracks in the state, Chester Downs, just south of Philadelphia in Chester, which has offered some very high class harness racing, and Presque Isle Downs in the Erie area, whose purses are about the same as Penn National, a track who's purses have also severely increased this year. All of the current purses are without all of the casinos in place. Philadelphia Park is opening its own stand-alone casino called Parx in December, and that will be followed in a couple of years by two stand-alone casinos in Philadelphia. Once those are built, the purses here should shoot up even higher than they already are.
Zal Press More than 1 year ago
You should visit Woodbine sometime. Its a vibrant facility for both casino and racing activities. There's no entrance fee and free parking. And purses are lush. Belmont looks like a poor cousin in comparison - even with the foreign currency advantage. Smart trainers/owners are coming north of the border - Steve Asmussen among them. How many other markets have Maiden races with $70,000 purses? The 2 year old filly our group bought for $30,000 at the yearling sale just earned herself out. For the punter, there's full simulcasting on track, off track and online. Mutuels are fairly healthy and can handle sizeable bets without killing the odds. If you're looking for a successful model, pull out your compass and head north.