NEWS
A change, but not for the good
Posted: Saturday, October 21, 2000
Tracks with slots revenues are prospering, but their futures are never secure
A quick look at the statistics in this issue's survey of North American track purses (page 20) leads to the conclusion that having a piece of casino or slot-machine revenues is now the road to success in the racing game.
The numbers indeed make that statement, but a significant caveat needs to be added to the raw numbers. The goodies that the tracks have been given can just as quickly be taken away.
Without doubt, casino games have saved several tracks from oblivion. Without slot machines, Delaware Park almost certainly would be closed today. As it is, the Wilmington-area track now pays, for a small-market facility, some of the best purses in the country.
Without the hope of slot machines, Charles Town Races would not have caught the eye of Penn National Gaming Inc., which bought into the track before the 1996 vote that authorized slots, made a significant capital investment, and now is reaping considerable profits from a rejuvenated facility. Mountaineer Park in West Virginia's western reaches similarly has been reborn; New Mexico's tracks also have been assisted by the arrival of slots.
These turnarounds have not been lost on other racetrack owners. Kentucky's racetracks, especially Churchill Downs, have lobbied for video-lottery terminals or slot machines without success.
And they will not succeed in pushing through the appropriate legislation for years to come. The signal event that led to passage of slot-machine legislation in Delaware, West Virginia, Iowa, and New Mexico was the imminent demise of racetracks and the agricultural communities they support.
Without the specter of Churchill's twin spires being torn down to make a parking lot, Kentucky voters are not inclined to have slots in their major cities. Kentucky Governor Paul Patton sensed this mood within the electorate and called an end to the nonsense.
The dream of slot machines also can be a big distraction. In Maryland in the mid-1990s, Joe De Francis and his management team turned all their attention to slot machines, principally because of competition from Delaware.
Within a year, all track operations were affected by the expectation that Maryland's tracks would soon have slots, the money would roll in, and everything would be just dandy. The problem was that, with the silver-sided savior reputedly on the way, customer service slipped-even during Preakness Stakes (G1) week.
Maryland's governor, Parris Glendening, emphatically said he would not approve slots, but Maryland's tracks persisted and damaged their political position. With help from Maryland's horsemen and breeders, the state's tracks now have a capital-improvement fund that is not tied to slot machines.
Another prime example of what slot-machine revenue can accomplish is Prairie Meadows, a brave experiment in central Iowa that opened with high hopes in 1989 but quickly ran into financial difficulties. Then slot machines arrived in 1995.
Prairie Meadows soon was booming, but just as quickly arguments broke out. The horsemen thought they should get all the money from the slots, which was a ridiculous proposition, and government entities thought they should get all the money, which was equally unreasonable. Fortunately, an accommodation was reached, and the Des Moines area track prospers today.
But what if no deal had been cut? Tracks exist in a political environment, and they have or do not have slot machines at the whim or wisdom of government. What government gives, government can take away, and those who govern tend to take more for themselves over time. Delaware should take warning.
Another problem-and it is a big problem-is that the slots revenues drive the purse numbers rather than pari-mutuel wagering handle-either on the track's races or on imported simulcast races.
Running a racetrack is an expensive venture, and running a slots casino is not nearly as costly. Eventually, someone will notice that big race purses are being paid out before empty grandstands. Then the statement will be made by some executive that every part of the operation-racing and slots-must pay its own way. With that statement, racing at that track will be dead.
Slots offer help to failing tracks, but they are not the answer to the industry's deep-seated problems. The cure for Thoroughbred racing is to continue the current heartening trend of more and better marketing and improved customer service.
Don Clippinger is features editor of Thoroughbred Times.
