08/20/2012 12:03PM

Bergman: Forgetting the 'race' in 'racino'

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A shocking (to the racing industry) report came out this week from New York State Comptroller Thomas DiNapoli that suggested that the racing industry has not fared well since the marriage with slot machines post 2001. The argument was stark, and most likely political, that attendance and handle at racetracks had in fact not increased despite the additional revenue supplied by the slots.

The director of the New York Lottery, Gordon Medenica, also added comments to the report, suggesting that racetrack operators have seen no evidence of crossover potential for slot players to the racing side. He went further to offer that some racetrack owners are actually “losing” money on racing operations.

The comptroller and the director of the lottery took advantage of an easy target to go after. Horsemen throughout the state challenged that their comments were politically motivated since full-blown casinos are on the current agenda.

The crossover argument is one that strikes a nerve. That is because the New York law was passed without any language to inspire racetrack owners to concentrate on their four-legged business. So although racing was in the past their core business, racetrack owners had no legal burden to invest in its future.

Ironically Yonkers Raceway vice president and general manager Bob Galterio, head of the biggest standardbred racino operation in New York, appeared to be very motivated to draw racing fans from slot players. We worked together in 2007 to devise a “bingo-style” game with leading drivers instead of numbers in the 5 x 5 box square. At the time it seemed a novel approach to attract a new audience.

Fast-forward to 2012 and what we see from Yonkers is public relations manager Clare Galterio in numerous advertisements during the racing simulcast. Galterio’s motivation appears to be to draw horseplayers to the lucrative rewards being given to slot players in their Empire City Casino.

So while racetracks have implied to the state that there is little synergy between the horseplayer and the slot player, they have aggressively turned to pull the horseplayer over to the slot side.

It was also in 2007 when Galterio suggested that a players reward system was being worked on to benefit horseplayers as well as slot players. More than five years later there is still no program in place for those who bet the ponies at Yonkers.

Coincidence?

With the way the initial law granting slots at racetracks in New York was written, there is clearly zero incentive for tracks to market racing towards its slot players. The track’s bottom line is strictly based on slot play and the more horseplayers that can be drawn in that direction, the better the bottom line will be for racetrack owners. So why not just frustrate horseplayers who get nothing back for wagers on races and offer them added incentives to play the machines?

Just take a look at the recent upsurge in free play the lottery has initiated at both Resorts World (Aqueduct) and Empire City (Yonkers Raceway) this summer. At Yonkers alone in July, free play soared to over $5 million, more than double the $2.3 million given away a year earlier.

How is racing supposed to compete or grow when the competition within the building has increased its free play budget by $2.7 million on one side and added nothing on the other side?

Can it be changed?

With the future of full casino gambling on the docket in New York State it’s no wonder why these arguments are being floated in the press. What needs to be addressed and should be recognized is that no racetrack in New York should be granted limitless licensing to conduct casino operations. I'm not sure which tracks are squawking about losing money on racing operations, but that shouldn’t be the state’s concern or ours. The racing industry was essentially bailed out when slots were legalized in New York State, yet somehow, more than a decade later racetrack owners aren’t even considered a part of the equation.

That’s where the government got it very, very wrong.

No failing business should be granted a license to print money, which slots essentially do. No director of lottery should be giving advice on anyone else’s business. As we should all know, the lottery takes in millions from day to day operations and pays winners out over 20 years.

Who wouldn’t want a business like that?

If racetracks are seeking the exclusive right to expand their slot operations into casinos without competition from stand-alone casinos, they should be forced to invest in the racing business along with their horsemen.

Racetracks should not only have to invest in racing but show increases as well. Should the racetrack-casinos not show increases within three years they should lose tables or machines within the facility.

What the state comptroller and lottery director should recognize is that they are speaking about racetracks and not casinos. The marriage was the justification for placing machines where they are today. If the racing side is failing, then the legislation as a whole has failed. It shouldn’t just fail for the horsemen.

Or perhaps that is the plan all along for the state. Expose the failure of the racino era and don’t grant them full casino licenses when they become available. That would insure any future casino operations in New York are done without racetrack owner’s inclusion.

It’s more than regrettable that Yonkers Raceway, which had a slot machine exclusive in the New York City area for five years, let the opportunity to invest in racing’s growth slip away. Enough people went through that casino during that period of time and it’s sad that not even one television showing the live racing was available for viewing within the slot floor. It’s hard to believe that Tim Rooney, the same owner who sank plenty of money into live televised racing coverage when Yonkers was only a racetrack, wouldn’t want a single television showing racing in his own building now.

I guess slots changed his vision of racing.