12/06/2005 12:00AM

Focus shifts heavily toward gaming issues


TUCSON, Ariz. - For clues to the direction of racing today, look no further than the new title of the University of Arizona Race Track Industry Program's annual conclave, "The Symposium on Racing and Gaming." The reference to "gaming" - a term adopted by the casino industry 10 years ago - was added this year.

The change in title is certainly reflected in this year's panels. Of the 26 Symposium panels scheduled at tfrom Tuesday through Thursday, 11 were to deal exclusively with casino operations, including a panel entitled "What's Cooking?" that examines food service for casino patrons. Thirteen were scheduled to examine purely racing issues; another two do not lean one way or the other.

The Symposium, in its 32nd year, has gradually been adding casino panels for several years, but this year, the number of offerings is almost overwhelming. Still, the scheduling reflects the racing industry today: Few tracks are doing well without slot machines, and the ones that do have them appear to be prospering.

Doug Reed, the coordinator of the university's racetrack education program, which conducts the Symposium, said that while the number of panels examining casino operations is certainly larger than in any other year, the addition of the panels was a response to where the racing industry is headed, and, in many states, where it already is.

"These are the issues that the industry is dealing with," Reed said.

Not surprisingly, slot machines were the dominant topic on Tuesday morning, with an opening panel called "Words of the Elders." While the title conjured up images of longstanding industry stalwarts such as Churchill Downs Inc. chief executive officer Tom Meeker or Hall of Fame trainer Allen Jerkens, the panel was actually an examination of how slot machines at racetracks have evolved over the past decade.

They have certainly proliferated. Walt Hawkins, the director of business development for IGT, a maker of slot machines, showed during the panel that 30 racetracks have slot machines; the number is expected to increase to at least 36 by the end of next year as tracks in Florida and New York come on line. Pennsylvania could add another seven as well. In addition, while in 1992 the number of slot machines at tracks was 165, the number today is 39,700.

The effect of this proliferation has been dramatic, at least to horsemen and racetracks where the machines have been legalized. At racetracks in Ontario, Canada, for example, purses have increased from $104 million in 1998, the year before slots were legalized, to $306 million in 2003, according to another panelist, Karl Gagesch, the vice president of development for the Ontario Lottery and Gaming Commission, which oversees the distribution of slots revenues in the province. At the same time, however, handle has barely budged, according to Gagesch's numbers, increasing from $1.1 billion in 1998 to $1.2 billion in 2003, an 11 percent increase that didn't beat inflation over the same time period.

Because of the numbers associated with state revenue and purses, Ron Sultemeier, the president of Delaware North Companies Gaming and Entertainment, said that the legalization of slot machines at tracks has "no negatives." Delaware North owns Finger Lakes racetrack in western New York, which opened a casino last year, and several other greyhound tracks that have casinos, including Wheeling Downs in West Virginia.

However, Sultemeier also said that Delaware North has learned over the past several years that there is no so-called "crossover effect" that benefits racing from having slots players walk through the door. That effect has been cited numerous times by slots supporters as being one of many valid reasons - other than the hundreds of millions of dollars that racetracks reap from monopolistic arrangements with state legislatures eager to find tax-free sources of revenue - that the racing industry should support slot-machine gambling.

"You can't drive your racing business from gaming," Sultemeier said. "If you hold a racing promotion, it will help gaming. But if you hold a gaming promotion, it won't help racing, I'm sorry to say."

Of the four panels held on Tuesday morning, only one had a strictly racing focus, a two-hour workshop put on by the Thoroughbred Owners and Breeders Association to address issues important to horsemen and breeders. Somewhat predictably, the talks started off with a one-hour discussion on slot machines: How to get legislators to support efforts to legalize them, and how to protect a cut of the revenues once the machines are installed.

Jim Whelan, the president of the Ontario Harness Horsemen's Association, said during the discussion that horsemen in Canada are beginning to fear that harness racing will be pushed aside as the government looks for the best use of the slot-machine money. More and more, Whelan said, the relationship between the casino operation and the racing operation is becoming antagonistic. The comments indicated that racing may need to find a way to pay its own way, or else have its slots subsidies pulled out from underneath it.

"The slots have become a competitor to us," Whelan said. "We're getting shunted aside. The focus has gone from helping the racing industry to generating revenue from slots."


The Symposium on Racing and Gaming continues on Thursday at Loew's Ventana Canyon Resort in Tucson, Ariz. The following is a schedule of panels and events (All times Mountain Standard):


8 - 9:15 a.m.:

"Canadian Racino": The impact of slot machines on Canada's racing industry
"Wagering System Policing": Ensuring integrity of the bet-processing network

9:30 - 10:45 a.m.:

"Expansion to Non-Electronic Gaming": Introduction of table games at racetracks that have slots
"International Simulcasting Issues": Examination of the domestic export of racing signals in foreign jurisdictions

9:30 a.m. - noon:

"Track Superintendent Workshop": Discussion of racing surfaces and track maintenance

11 a.m. - noon:

"The Wall Street Perspective": Analysts discuss small gambling companies
"Change Baby Change!": Presentation by a marketing consultant

1 - 2:15 p.m.:

"Asian Racing Federation /International Federation of Horseracing Authorities Reports": Synopsis and outcomes of recent international conferences
"Security: Racing vs. Gaming": Merging security departments at tracks with casinos

2:30 - 3:45 p.m.:

"Handling Negative Publicity and Crisis Communication": Workshop for public-relations officials on how to communicate during a crisis

2:30 - 4:30 p.m.:

"New Track Surfaces": Examination of synthetic and all-weather racing surfaces

4 - 5 p.m.:

"And Now for a Commercial Break": A look at racetrack commercials from around the world