10/08/2001 11:00PM

Racing product needs smart pricing, expansion


TUCSON, Ariz. - North American racing's simulcast directors, 350 strong, descend on Louisville this weekend for the ninth annual international simulcasting conference.

Whatever else they learn in Louisville, they will learn firsthand about one of the fundamental issues of their trade - pricing of the product - which is what racing's latest internal dispute is all about.

The divide between Keeneland Race Course, which has lowered its takeout, and the 10 Mid-Atlantic tracks that until Tuesday had declined to carry Keeneland's signal since, was basic Simulcasting Economics 101. Both sides believed their economic welfare was at stake.

Nick Nicholson, Keeneland's president, is deeply disturbed that his lowering of takeout has brought discord rather than accord. The press hailed his move as a gift and a service to his betting patrons, and it would appear on the surface to be as admirable as the flag or apple pie. But some buyers of Keeneland's simulcast signals see it differently.

By lowering the price of a bet for the public without lowering the price it charges tracks to take its signal, Keeneland incurred the wrath of its Mid-Atlantic simulcasting partners, who felt they were left carrying the entire burden of Keeneland's largesse to the public. They wanted Keeneland to share that cost by reducing its simulcasting fees to them.

This issue - how much a simulcasting signal is worth to a receiving track - is not new, but it is troublesome and will become more troubling in the months and years ahead. As Magna Entertainment and Churchill Downs build formidable networks embracing all time zones, their simulcasting power has increased, and smaller tracks whose welfare lies largely with incoming simulcasting signals are increasingly concerned about relying on the goodwill of their suppliers.

Meanwhile, the simulcast conferees in Louisville may not deal deeply with alternative gambling, but events at two little tracks in Ontario make clear that this is another issue that can and will alter the face of racing in North America.

Many in the sport have never heard of the Ontario towns of Elmira and Elora, or Barrie and Innisfil. There was no compelling reason to do so, at least until now.

Rural harness tracks have been a viable and valuable part of the economy of the towns in which they are located. In Elmira, the local agricultural society has been putting on fairs and racing for 147 years, and a little community harness track named Elmira Raceway has operated there in modern times, quietly and happily, as part of the town's entertainment life.

Three years ago, the province of Ontario invited the 15 rural municipalities with a racetrack to pass enabling legislation permitting slot machines.

Thirteen of them quickly did so.

Two of them, Elmira and Barrie, did not.

Both towns now are without racetracks.

The owners simply picked up and moved to nearby towns that legalized slots, and now will operate "racinos." Barrie Raceway moved to a town named Innisfil, and a new track called Georgian Downs opens there on Oct. 30, with 400 slots.

Now Elmira Raceway is closing and moving to a village called Elora, eight miles away, which voted to accept slot machines and will open a new track in two years, with 200 slots.

Five percent of revenue from slots at tracks in Ontario goes to the local municipality. In the case of little Elmira and Barrie, it means somewhere around a million dollars a year.

For perspective, another little track called Hanover Raceway is 45 miles or so north of Elmira. It used to operate 21 days a year.

Now, with 100 slot machines, it operates 365 days a year, and in the six months that it has been open, the Toronto Star says, its customers have pushed $1.3 million through the machines.

"Enriching the town, the track, the people that race the horses, and most of all, the Ontario Lottery and Gaming Corporation," according to the track general manager, Rick Rier.

"They saved horse racing, at least as far as Hanover is concerned. It has been good for the breeders and good for the farmers that supply the breeders."

As "racinos" become legal on a wider plane, racing will rely more and more on them for success and survival. The Toronto Star railed that gambling is not an industry because it doesn't produce anything, which may be true with pure casinos.

But racing produces something - horses and the huge agricultural industry that surrounds and supports them.

In seminars in Louisville next week, the technicians of simulcasting need to pause and consider these twin developments - pricing of the product and alternative means of expanding it.

They are issues that will not quickly disappear.