07/26/2004 11:00PM

'Little guy' can survive merger mania


TUCSON, Ariz. - A few decades back, before simulcasting and long before slots at tracks, the late Kent Hollingsworth, lawyer and author, wrote of the future of racing.

He foresaw, far before the event, the consolidation of tracks and the elimination of those that could not compete. He was right without knowing the vast changes of the Internet, of racinos, of offshore pirates and betting exchanges, of chemistry in racing.

I thought of Kent this week when I read a headline on the website of the Las Vegas Review-Journal referring to the $7.9 billion megamerger of MGM Mirage and Mandalay Resort Group and the $9.4 billion joining of Harrah's Entertainment and Caesars Entertainment. It read, "Small casino operators hardly feel doomed by looming megamergers."

Whether it was whistling in the dark or astute observation, the article said the "little guys" were saying that bigger isn't always better. One of the "little guys," the president of the Hard Rock Hotel, was quoted as saying, "As these big companies become larger, it's more difficult for them to maintain that personal touch. The little things really matter."

Then I read of the bizarre events at Vernon Downs, a 51-year-old harness track in central New York, midway between Syracuse and Utica, that ran out of purse money last week. Its horsemen, in an unprecedented move, asked the state to close the track when purse checks began to bounce. First reports said track owners were surrendering their licenses. They thought better about that, and this week were considering offers from optimists on the West Coast, eyeing the track's unopened racino.

The events at Vernon were atypical because of the people who wound up running it, but its demise is illuminating nonetheless. A little track in a beautiful rural valley, it was founded by Clarence F. Gaines, the father of John Gaines, who also founded Gainesway Farm. Vernon became known as the Miracle Mile in 1955 when a horse named Adios Harry set a world pacing record there, and in the 1960's, 1970's, and early 1980's it was averaging $235,000 a night in handle, with 3,000 people on hand, enough to make money. By the start of the 1990's, nightly handle had fallen to $180,000, bet by 2,100 people. As the 2000's began, average handle had fallen to $103,000 and nightly attendance was down to 1,300.

This, of course, was a phenomenon not limited to Vernon Downs, nor to harness racing. In Vernon's case, the rise of Turning Stone, a progressive Indian casino four miles down the road run by a tribal leader who also was a sharp Harvard grad, hastened its decline. The racetrack was sold to an entrepreneur who wound up in jail for a giant ponzi scheme, then it bounced around and wound up in the hands of Las Vegas promoter Shawn Scott, who attained a reputation as a "track junkie" after buying and selling first Delta Downs in Louisiana and then Bangor Raceway in Maine. He sold Vernon, too, after its debt reached $25 million or more, to a trio that called itself Racing Ventures, which had trouble getting licensed and is giving up the ghost now.

The management woes of Vernon may explain its failure, but not the closing of Batavia Downs. Western Regional OTB bought the track, between Rochester and Buffalo, for $2.5 million six years ago, foreseeing the arrival of racinos in New York. Batavia too became debt-laden, losing $3.9 million last year, and now Western is considering selling the track or reopening next year as a racino.

In Louisiana, Churchill Downs seems poised to buy Fair Grounds next month at auction, enlarging its empire, which, like Magna Entertainment, spreads nationwide.

These convulsions, contractions, and consolidation prove Kent Hollingsworth was right. So, ironically, are the "little guys" in Las Vegas, talking about personalized service saving smaller operators. Racetracks, with or without slots, will have to become racing boutiques, scaled down but styled up.

What few of them of any size see coming is another revolution, a totally wireless world in which horses will need tracks but bettors will not, being able to bet from a bar, a bathtub, a bed, or wherever. Racing will have to adapt to that with updated and upscale amenities, a personal touch, and services now undreamed if they are to survive what is becoming, and will remain, a Darwinian age in racing. It will be survival of the fittest, the finest, and the technically smartest - and the laggards will fall by the wayside.