Night of the Living Racinos

To me, the scariest thing in horse racing is not breakdowns, synthetic surfaces or Frank Stronach.  The darkest horror in horse racing is that which began with the best of intentions, but like Dr. Frankenstein’s  monster, it has gotten out of control and threatens to destroy the industry it was promised to save —

RACINOS

(cue shrieking)

I came to this conclusion after doing a research project about Penn National Gaming.  The company has grown and flourished despite the economic downturn, and has even begun expansion into Las Vegas, the ultimate gaming market.  However, the company that began as a pari-mutuel horse racing organization has all but forgotten its original mission.  In the company’s 10-k, there are pages about its casinos, but the whole of the racing report is condensed to 2 paragraphs.  As you can imagine, the company is not planning on building a race track on The Strip.

When first pitched to regulators, adding casino games was to be a much-needed injection of cash to struggling racing jurisdictions.  The revenue from slots and other “dummy games” (as my mom calls them) would go into the dwindling purse accounts and help keep the horses from fleeing the poorer states for better racing areas.  With success, the higher purses could even attract better-quality horses to the racino states, or so went the line of thinking.

What actually happened, in many cases, was that racing became the red-headed stepchild to the more profitable slot machines.  The purses grew, yes, but the quality of racing remained the same – $5,000 claimers running for $10,000 purses.  There aren’t any Bafferts or Pletchers sending horses to Penn National.  The track doesn’t even run a graded stakes race.

Earlier this year, scandal hit Penn National when a series of horrific breakdowns caused a jockey strike – some blamed the horses’ controversial owner while the horse owner blamed the condition of the track itself.  This incident did not reflect well on the track by any angle – why would a track allow unscrupulous people to race there?  Why would a place seemingly raking in the dough with its slots be skimping on track safety?

Because racing by itself is not paying the bills.

It costs much more for a track to maintain stabling and the racing surface, and also pay into purses, than it does to purchase & plug in a slot machine.    The slots also generate much more revenue than pari-mutuel handle.  Why invest in a weaker product?  Just get by with what you can get in the starting gate.

Racino states are parasitic.

Nothing illustrates this more vividly than the crisis in Kentucky.  Yes, KENTUCKY, the Horse Capital of the World, is on the brink of losing its signature industry to surrounding states with racinos.  Ohio, Indiana, Pennsylvania, and West Virginia are seeing an influx of former Kentucky-based owners, breeders and trainers due to their slots-fattened purses and state-bred bonuses.  The dummy gamblers have left Kentucky’s beautiful race tracks for riverboat casinos, and the state’s horse industry has cried out to its legislators for an equal footing.  They want slots in Kentucky.

I just can’t stomach the thought of going to Keeneland and having to schlump through a room full of “Wheel of Fortune” and “Lucky 7s” to get to the track.  The two types of gaming are total opposites: dark, artificial, smoke-filled casinos vs. bright, outdoor, scenic racing.

But aside from asthetics, adding casino games does not solve the deeper problem racing faces.

What can be done to boost racing itself, which will increase handle?

I can see a day in the not-too-distant future where some of these racinos will lobby to dump racing completely to focus on the money-making slots and table games.  This worst-case scenario is playing out in Rhode Island, where Twin Rivers Racing and Casino, a greyhound facility, has lobbied the state for permission to discontinue dog racing and become a full-fledged casino.  True, greyhound racing has faced tremendous pressure from animal welfare groups that has shut it down in most other New England states.  But the same forces are working against horse racing as well.  A business that is successful is a lot easier to fight for than one operating with huge losses.

There are a few racinos that have reinvested their windfalls into racing.  Sunland Park in New Mexico hosts the Grade 3 Sunland Park Derby, which Mine That Bird used as a launching pad to his Kentucky Derby victory.  Prairie Meadows in Iowa hosts the Iowa Festival of Racing, with three graded stakes that attracted full fields of competitive, quality horses in 2010.

But these success stories don’t lessen the greater worry about racinos – a quick fix that ignores the core, a beautiful, wonderful game that has much to offer on its own.  In my next entry, I will describe my ideas to boost racing itself and stave off the creeping menace of racinos.

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6 Comments

Filed under racinos, rants, RTIP classwork

6 responses to “Night of the Living Racinos

  1. ThomasMc

    Just because a track dosen’t have a graded race should you knock it. There is nothing wrong with claiming horses running for large purses. It costs a fortune to train a racehorse.Again, there is nothing wrong with claiming horses running for large purses. Do you think there is a room full of stake horses sitting around somewhere waiting for a new racino.That said of course companies like Pennational would love to dump racing. We need to force them to advertise racing and show the gamblers that it is a good bet.God forbid some one would get up from a slot machine and bet on a horse. God forbid you could have a mutuel machine next to a slot machine!

    • Thomas, Thanks for reading the blog & taking time to comment 🙂 I don’t have any issues with claiming horses, they’re the bread and butter of the sport. I also own horses (pasture pets, but still ya gotta feed ’em), so I know the expenses involved. It just seems to me that some of that casino money should be used to actually improve the racing product- lower takeout maybe, different types of wagers, improvements to the facility, better promotion of the racing – it takes effort but the racing game is worth playing. One thing I neglected to mention about Sunland is that they have a program called “The Science of Horseplay” that teaches people how to bet, answers questions about the sport and horses in general, and also has racing-related contests. They have a casino, but it is clear they are passionate about horse racing. With Penn, I don’t get that feeling at all.

  2. rerali

    The problem that you don’t seem to understand is that we NEED the casino money. The number of people in the industry that are hurting financially is a huge number and expanding. The racino tracks are the only place owners and trainers have a chance of coming out ahead and can pay their bils. The big curcuits are not immune to this. The truth is that it is better to join them than fight them. Every penny of slot revenue that goes into the racing game in absolutely needed. Perhaps it is a sad statement and no doubt you are right the industry should do a whole lot better job at fixing its issues. But Racino’s give us hope, think of where we would be without them?

    • Thanks for reading & commenting:) I believe that there are MANY things racing can do to improve the pari-mutuel side before even considering casinos. Jurisdictions that do not have them yet have not tried truly innovative ways to promote, improve and expand the pari-mutuel menu. Without racinos, I think that the fragmentation of the industry would have been addressed a lot sooner, there would have been more standardization of rules and the off-track revenue splits would have been brought up to date. Overall, I believe racing would have had to become more cooperative as a true “league” rather than the patchwork of powers that we have today. With casinos, the industry is still stuck in the “I’ve got mine” attitude that has held it back throughout its history.

  3. jd

    Just found your blog, very interesting! I hope people listen to your comments, as a Rhode Islander I can verify that you are absolutely correct. Racing suffers in the long term by taking casino money. Casino players do not cross over and become race players, yet race players do cross over and become casino players. The reason for that is because casino games have a much quicker learning curve and instant feedback. Racing is cerebral, slot machines are not.

    • Hi JD, thanks for reading & taking time to comment:) You’re totally right that racing is a game that requires skill and deeper thought than the one-armed bandits. That is why it has hooked a fan for life with me. I am convinced there are ways we can make our game more newbie-friendly, shorten the learning curve and increase handle. It will take cooperation and a will to innovate, but it must be done.

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