NEWS
Racing worrying about losing revenue
Posted: Thursday, February 05, 2009 1:59 PM
by Ed DeRosa
Arlington Park President Roy Arnold offered some sobering numbers on Thursday regarding the business results at Prairie Meadows, a racino outside Des Moines, Iowa., at the joint meeting of the Thoroughbred Racing Associations of North America Inc. and Harness Tracks of America.
The casino operation earned more than $150-million last year but the racing operation lost $30-million. Revenue from the casino helps fund purses, but Iowa politicians are considering an end—or at least a change—to that model.
“People are out of work and the state needs money to keep teachers, policemen, and firemen employed, and you’re a politician who just heard that the racing operation loses $30-million but the casino makes nine figures,” Arnold said. “You owe it to the people you represent to ask the public policy question, why should racing get that money.”
“Racing is overshadowed by the revenue that slots generates,” said Bill Eadington, Ph.D., of the University of Nevada-Reno. “This is the challenge racing has. It has to overcome that fundamental that the racing customer is diminishing in importance. Over time, you will see management who are specialized in managing a gaming operation.”
“As racetrack managers are eliminated from boardrooms, we’re losing advocates,” said Thoroughbred industry consultant Lonny Powell. “Who’s going to be standing up for the racing industry when the question comes as to why racing deserves revenue from gaming operations?”
Powell and Harness Tracks of America Executive Vice President Stan Bergstein both said that racing benefits when racing companies run racinos, though Eadington questioned why a company would devote racing management toward an operation that generates 90% of its revenue from gaming.
“This is a huge problem best defined by the Harvard-educated Harrah’s Inc. Chief Executive Gary Loveman,” Bergstein said. “Speaking at a gaming conference in Toronto he asked, ‘Why do we need racing?’ It’s a dangerous question.
“I’d rather have a Churchill Downs Inc. with a racing background and its history than some gaming company stepping into the picture and use racing only as a means to get slots. Say what you will about Frank Stronach, but he’s a racing guy. I’d rather have that type running the racetracks and racinos.”
Woodbine Entertainment Group is considered one of the more successful racinos in North America, a reputation WEG President Nick Eaves credited with the racetrack’s relationship with the Ontario Province government.
“Our job is to ensure that the government is the largest beneficiary because it’s their investment and they want to get money from their investment,” Eaves said. “You have to invest in your product, too, and not only in the brick and mortar sense of the word, but invest in the customer. Keep the ones you have and get new ones.”
Eaves said it is more difficult for racetracks to keep the customers they have when there are other gaming options at the facility. He said that more racing customers bet on other forms of gambling versus casino players who try racing.
Ed DeRosa is news editor of THOROUGHBRED TIMES
