08/21/2007 11:00PM

Slots underwrite a big-purse debut

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WASHINGTON - Great racetracks are defined, in part, by the size of the purses they offer. Saratoga, Belmont Park, and Keeneland pay prize money averaging more than $500,000 a day; the money attracts top-class stables and horses that allow the tracks to maintain their lofty reputations.

Now a new track is about to join this elite company. Its location is not in the heart of America's horse-breeding country, nor is it a regular destination for the nation's wealthy horsey set. Presque Isle Downs is situated in unglamorous Erie, Pa., a city that in the past has failed to support even a bottom-tier racetrack. When Presque Isle runs its inaugural one-month race meeting, beginning Sept. 1, it will pay out approximately $500,000 day in purses - the most dramatic example yet of the way slot machines can turn the sport's economics topsy-turvy.

I am fascinated by this development because I grew up in Erie and paid visits back home for decades. I remember when Erie got a racetrack, Commodore Downs, in 1973. The Thoroughbred population consisted almost exclusively of bottom-level claiming horses and the purses averaged a meager $13,455 a day, but even with a low-budget operation, Commodore couldn't survive. The track was revived as Erie Downs in 1986-87, but it failed again, miserably, with total wagering that averaged less than $88,000 a day. Erie wasn't big enough to support it, and the tourists who come in summer to enjoy the Lake Erie

beaches aren't affluent types who could boost business significantly. After live racing went into oblivion, a simulcast facility successfully catered to the needs of Erie's horseplayers.

And then came slots. Pennsylvania, like many other states, went through a long political battle over the potential legalization of the devices. It finally crafted legislation authorizing five stand-alone casinos and six at horse-racing facilities. MTR Gaming Group, a company that runs the racino at Mountaineer Park in West Virginia, made a bid for the Erie license.

"We thought it was going to be a good location - but nobody else did," said Richard Knight, Presque Isle's president. "We thought there was a good market in Pennsylvania and eastern Ohio to draw from."

Unlikely locations have often proved to be fertile grounds for slots, and Presque Isle's slot operation has been a success since the machines started humming in February. Customers have been dropping about $150 million a month into the machines, generating net revenue of nearly $14 million a month. Much of this sum goes to the state, but 4 percent is earmarked for purse money at the racetrack. In the future, the funds will be distributed over a race meeting that runs from May through September, but this year Presque Isle is running only from Sept. 1 to Sept. 29. The slot revenue that is stockpiled for months will be poured into 25 nights of racing.

Ordinarily, the opening of a track in Dreary Erie would attract scant attention, but Presque Isle has stirred keen interest among people who see a golden financial opportunity. "The interest from trainers and horsemen has been extreme, because of the purses," said Knight. "They're coming from all over - Ohio, West Virginia, New York, some from as far away as Florida and California."

Because the vast majority of Thoroughbred owners lose money, any increase of purses is welcome. Even so, as slot money has transformed the economics of the racing business, it has not proved to be an unqualified blessing.

Those of us who follow the Maryland racing circuit have seen the negative effects of slots. Delaware Park and Charles Town, two tracks in neighboring states, had gone out of business because they didn't have enough fan support, but they came back from the dead when they installed slot machines. Those tracks were suddenly able to offer superior purses, and they siphoned horses away from the once-robust Maryland circuit. Slot-funded breeding incentives in other states prompted owners to move horses out of farms in Maryland, whose breeding program had once been a model for the nation. As a result, Maryland's whole horse industry is moribund. I do not believe that slots have benefited the sport overall by propping up two failed tracks while helping to wreck a viable racing circuit.

It remains to be seen how the infusion of slot money in Pennsylvania - at Philadelphia Park, Penn National, and Presque Isle - will impact the sport.

In the best-case scenario, Presque Isle's high quality of racing will attract new fans. Perhaps some of the casino customers will get interested in Thoroughbred racing (although there

usually isn't much crossover between the two forms of gambling). Presque Isle's big purses might generate widespread attention and

stimulate wagering in the simulcast marketplace. With its 5:30 p.m. Eastern post time, the track might take advantage of an uncluttered niche in the racing schedule and become a nationally recognized product.

Knight admits he doesn't know what to expect. "We're taking a wait-and-see attitude," he said. "I think we're going to have to build."

Given Erie's racing history and its demographics, he may have a difficult task ahead of him. Of course, the success of the slot machines insures that the business will prosper, regardless of what happens to racing. But it would be a sad and wasteful spectacle if Presque Isle puts $500,000 a night into a product that nobody (except for a small number of owners and trainers) watches or cares about.

(c) 2007, The Washington Post