05/30/2012 2:08PM

Keith Gisser: Positive gaming developments in Ohio and Illinois

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Horses at Scioto Downs could be racing for three times the purse money by 2013.

Ohio and Illinois have long and storied reputations as strong harness racing states. Unfortunately, those reputations have slid in recent years as the two states have been surrounded by states offering slot machine-enriched purses. But that is about to change, with the first Ohio racino opening at Scioto Downs, just south of Columbus, on June 1 and favorable legislative news in Illinois giving horsemen there some hope as well.

The situation in Illinois has been fraught with more drama than a soap opera. Although approved by the State Senate a year ago, the issue stalled due to the resistance of Gov. Pat Quinn. Other than the governor, it is hard to find anyone in that state opposed to the idea, including many legislators who, although traditionally opposed to expanded wagering, understand the need to support one of the leading agricultural businesses in Illinois. Last week, the Illinois House passed a measure which would include slots at the racetracks, but fell two votes short of a veto-proof majority.

Ohioans can sympathize with their friends in Illinois. After several false starts, the Buckeye State is finally moving forward. Scioto Downs, owned by Mountaineer Gaming Group, which also owns tracks in West Virginia and Pennsylvania, has moved aggressively to open its racino despite a legal challenge to slots at the track. On Wednesday, the challenge was thrown out of court but the judge's decision will likely be appealed.

Scioto general manager of racing operations Stacy Cahill said, “Our target date was June 1st and we were focused on that at the beginning of the design phase. We had always planned to open late spring. That was our main focus.”

That may well have had to do with Scioto’s desire to get the machines up and running during their live racing season, which runs from early May to mid-September. With a short season, Scioto Downs will see far more impact on purses than a track like Northfield Park, which races 220 days a year. But, Scioto plans to increase its race dates in 2013, which could impact the purses.

“I anticipate that the purses will triple - all depending on how well business is – but I can't really predict when the horsemen will start seeing the increase,” said Cahill.

By contrast, the 9-11 percent of profits that go to the purse pool will only increase Northfield Park purses by about $1,000 per race, on average, assuming they keep the same racing schedule. And, while money is not yet flowing to the coffers, Scioto's purse structure is currently more generous than the Northfield’s, with a top overnight of $5,500 as compared to $3,800 at Northfield. Scioto’s minimum is $2,000, whereas Northfield’s bottom class goes for $1,500.

If Cahill’s projection is correct, Scioto would be offering an open pace at $15,000 in 2013, which compares favorably with tracks in surrounding states. Only Hoosier Park, with open paces in the $20,000-25,000 range, would pay more than the Columbus track.

Tracy Root and his wife Kathy operate a small stable based at Northfield Park. They are excited about the prospects slot-enhanced purses bring to northeast Ohio, even if there is a lag before they see those benefits.

“I think it will still be at least a year, most likely 18 to 24 months before we begin to see any real, benefits," Tracy Root said. "In the meantime it will give horsemen time to plan for the future - investing in Ohio-bred horses, sires stakes investments, etc. For many it will make the difference between staying in Ohio or moving out of state. For us, we will start breeding our broodmares back to Ohio stallions. This will get us back into raising and racing horses for Ohio fairs and sire stakes again, something we gave up a few years ago. Being a small stable and racing only our own horses it will allow us to increase our stable from the 2 or 3 we race now to 5, possibly 6 horses since we will not have to race out of state as much.”

Most Ohio horsemen echo Root’s comments, but a few do not. One trainer, who asked not to be publicly identified said, “If money is flowing in from the slots, we should be seeing that benefit immediately.” A couple others had similar thoughts, even if they were nothing but “good-faith efforts to show us that we remain partners.”

While Scioto Downs has aggressively grabbed the bit, other Ohio tracks are a bit behind the curve. Dave Bianconi, the executive vice president of racing operations at Northfield Park, has long said, “at least by being late into the game, we can learn from everyone else’s mistakes.” Northfield recently signed a deal with Hard Rock International, which also operates the eponymous music venues.

Other Ohio tracks are already owned by gaming companies and plan moves to new locations. Raceway Park and Lebanon Raceway both plan moves, although Lebanon hopes to stay in the same general area. But that could be affected by Raceway Park’s planned move from Toledo to the Dayton area, relatively close by. Penn National, which owns Raceway, also plans to move its Columbus Thoroughbred track, Beulah Park, to the Youngstown area. Those moves are set to avoid competition with full-service casinos, which debuted in Ohio last month.

Everyone seem to agree on one thing, which bears out Bianconi’s point: that many tracks consider racing simply a necessary evil to allow them to host the slot machines, as well as table games.

Cahill comments, “The business model on the racing side has us putting a percentage into improvement for the barn area. Track side, we will be able to offer better quality of horses to generate more handle. Racing remains important.”

And Root adds, “As horsemen invested in Northfield as our home track, it is very important to us that the promotion of racing not take a back seat to the casino side of the business. While the success of the racino is critical, it is absolutely vital that the sport of horse racing be promoted and new patrons be drawn in and cultivated in order for racing to remain viable into the future. We cannot depend solely on slot money to survive. The tracks need to promote racing and do whatever necessary to restore the public's interest and confidence in racing and the people involved in it.”

Even with the advent of slots, the Ohio track managers and horsemen seem focused on improving and marketing the racing business and based on their previous track records, that should be the case in the new era.