12/09/2008 12:00AM

Study: Racing boosts track slots

Email

TUCSON, Ariz. - The amount of money bet on slot machines at racetracks with the popular gambling devices increases on days in which live horse races or simulcast races are offered, according to a study conducted by a horse racing economist.

The study, which was performed by Lexington economist Richard Thalheimer, appeared to make the case that horse racing operations at casinos pay their way by giving gamblers a reason to visit the facilities aside from slot machines. The study was paid for by four organizations representing Iowa horsemen.

According to Thalheimer, the study showed that receipts from slot machines at Prairie Meadows racetrack and casino in Altoona, Iowa, increased significantly on days when horse racing was conducted. In addition, slots revenue rose when the Iowa track offered full-card simulcasts.

Prairie Meadows holds its meets during the warm-weather months and its weekly racing calendar is weekend-heavy, two factors that should account for an increase in spending on leisure activities. However, Thalheimer, who has conducted dozens of horse racing economic studies, said that his study controlled for those factors and others.

According to Thalheimer, the increase in slots revenues due to the presence of horse racing at Prairie Meadows amounted to $25 million annually. The total purse expense of conducting the horse racing activities was $17.8 million annually, resulting in a $7.2 million net positive impact of horse racing on the total operation, Thalheimer said. However, that number does not include other expenses associated with running a racetrack, Thalheimer acknowledged.

The study could be used by racetracks and horsemen's groups as a lobbying tool for protecting slot-machine subsidies for the racing industry. Those subsidies could easily be targeted for a reduction by many states during the current economic downturn, which is putting pressure on states to raise revenues from rapidly contracting budgets.

Thalheimer presented the study results during one of the opening panels at the University of Arizona's Race Track Industry Program Symposium on Racing, an annual event that attracts more racing participants than any other parimutuel conference. The symposium started Tuesday and concludes Thursday.

Thalheimer's conclusion that racing activities lead to increases in casino revenues was welcomed by racing officials who have grown concerned about the cannibalization of in-state handle that typically results from the legalization of casino-type gambling in racing states.

According to Jack Ketterer, administrator of the Iowa Racing and Gaming Commission, figures associated with parimutuel wagering and breeding activity in Iowa have all been steadily falling since 2000. The exception is total purse distribution, which in large part is determined by slot-machine revenues. Ketterer spoke on the same panel as Thalheimer.

For example, annual ontrack handle on Iowa Thoroughbred races has declined from $6.8 million to $4.5 million from 2000 to 2007, Ketterer said. In addition, the annual Iowa Thoroughbred foal crop has declined from 637 foals in 2000 to 353 foals in 2008, Ketterer said, contradicting arguments made by many horsemen and tracks that slot-machine subsidies will result in growth in the breeding sector. Slot machines were legalized in Iowa in 1994.

"I don't think anyone should expect that [slot-machine gaming at racetracks] is going to improve wagering on parimutuel races," Ketterer said. "It obviously can improve the bottom line of the facility."