03/23/2004 1:00AM

Goose may lay plain old egg


TUCSON, Ariz. - It wasn't just a bad dream after all.

It was reality.

For more than two years now, I have been hearing the voice of Bill Eadington ringing in my ears, almost like tinnitus, warning of the economic dangers threatening racing in the legislatures of America.

Eadington is the well-known professor of economics at the University of Nevada-Reno, director of the Institute for the Study of Gambling and Commercial Gaming there. I heard him last on the morning of Dec. 10, 2002, telling a big and attentive audience at the University of Arizona Race Track Industry Symposium here in Tucson that racing's window of opportunity was closing, and the politicians were closing in.

That drumbeat has been ringing in my ears since, and suddenly I look up and there are Eadington's specters, not ghosts but real men, noisy and nasty and saying exactly what Bill Eadington predicted they would say that December morning more than a year ago.

There is Michael Busch, the speaker of the House in Maryland, saying no one cares about racing in a state where it is a major agricultural industry and home of one of racing's greatest races, and wielding his formidable power to make sure the state, and not racing, benefits from alternative forms of gambling if they come.

There is state Senator John Cullerton in Chicago, another influential politician, saying he made a mistake voting five years ago for subsidies to racetracks from the state's 10th casino license to make sure that racing wasn't destroyed by a casino in Chicago. Now he is roaring that he and the Legislature in Springfield would have to change that to make certain racing didn't benefit from the casino, likely to be operational near O'Hare Airport sometime in 2005.

And Illinois Governor Rod Blagojevich recently was quoted as saying, "It could very well be the subsidy is no longer appropriate."

There are the legislators of Pennsylvania, who have blocked their governor for more than a year now from helping the state's racetracks survive and thrive.

And there is Bill Eadington again, saying - as he did in Tucson - "The real question is, why should state legislatures grant this windfall to racetracks instead of trying to capture the economic value themselves via a bidding process or some other mechanism?"

His voice certainly was heard in Chicago, where last week Isle of Capri, which owns one racetrack in Florida and 14 casinos elsewhere, won the big bidding war with its offer of $518 million for the vacated Emerald Casino license. And Isle wasn't the high bidder. Harrah's Entertainment bid $520 million, but Isle of Capri was savvy enough to say it would have the casino open eight months after final approval, which could mean an extra $50 million to the state of Illinois. That bidding process was Topic A this week in Harrisburg, the capital of Pennsylvania, 800 miles away.

Eadington predicted, in his 2002 speech, that "many states are going to be fiscally desperate because of state deficits. The last time I looked there were 40 with substantial deficits. . . . and because of that, gaming in general is going to get more attention than it has since the early 1990's." Racing, he said, was likely to get the most attention, and the least sympathy.

"Contributions to purses or other financial support for racing," Eadington said at the time, "are an inefficient subsidy of an activity that cannot sustain itself with its own market characteristics. That is a very important fundamental. It is the political challenge. Even where the racing industry is successful in gaining exclusive privileges to offer slot machines at racetracks, there will be considerable political pressure to reduce or eliminate those subsidies for racing. It's inevitable, whether you like it or not, someone is going to notice that those subsidies that the racing industry has been able to politically garnish should be redistributed to their causes. Racing's beneficiaries are relatively few in number, and I suspect some legislators are going to notice that those beneficiaries perhaps are not their core constituencies."

Racing, Eadington also said, unfortunately may still not have addressed the realities of supply and demand for the racing product.

The racing people in the room that day - myself included - did not like what Eadington said. We thought immediately he was overlooking the agribusiness element, the thousands employed, the green space, the tradition, the lure of racing for those who love it.

Like it or not, he is turning out to be an accurate prophet, and his words are echoing loudly in legislatures across the land.