In this age of racetrack casinos, the message is very clear: Increase the focus on pari-mutuel wagering and don't consider gaming revenue for purses and other programs an entitlement.
The topic was addressed by a panel Dec. 5 during the second day of the University of Arizona Symposium on Racing and Gaming. Reliance on revenue from slot machines has been addressed many times before in the past 20 years, and probably will be in the future given racing's continued inability to adapt.
Erich Zimny, vice president of racing operations at Hollywood Casino at Charles Town Races, explained how the West Virginia track has experienced growth in pari-mutuel handle the past four years through scheduling, big event days, and gaining more exposure in the simulcast marketplace.
Average daily handle at the Penn National Gaming Inc.-owned Charles Town went from $770,265 in 2008 to $1,019,480 through the first 10 months of this year, Zimny said. Revenue to purses from live and export handle went from $3.7 million in 2008 to about $4.5 million this year.
That means a large amount of the $37 million paid to purses in 2011 at Charles Town came from gaming. But Zimny said "it begins to add to something tangible" and could stave off purse cuts for a period of time should the facility be greatly impacted by expanded casino gambling in neighboring Maryland.
"The industry got billions of dollars in (gaming) revenue, and it's up to us what we do with it," Zimny said. "We're not absolved of the responsibility to making the game the best it can be."
Zimny said self-sufficiency should be an objective for the long-term health of horse racing even if racetracks have casino-style gambling. Gaming laws may dedicate a percentage of money to racing, but that's where it ends, he said.
"There are no provisions in the code that mandate a live operator should hemorrhage money with live racing," Zimny said. "We have racing, so let's make it as profitable as possible."
Justin Cassity, formerly of the Oklahoma Horsemen's Benevolent and Protective Association and owner of AlphaCrucis consultancy, said racing and gaming are two different things despite the common link. He noted gaming generates much more revenue than racing, and casino companies aren't shy of using that to their advantage.
"That's why it goes back to making pari-mutuel racing more relevant," Cassity said. "Everybody seems to want to get away from what we should be doing, and that's racing. Racing has to prove itself to the casino side."
Cassity used Will Rogers Downs, an Oklahoma racetrack and tribal casino, as an example of building the pari-mutuel product at almost no cost. Horsemen worked with Will Rogers Downs to change post times, marketing the racing signal, and even get the product broadcast most of the time on TVG.
In three years, Cassity said, ontrack revenue jumped 72% and export handle on live racing increased 184%.
"The goal was to pay for racing expenditures," Cassity said. "Everybody wins. Pari-mutuel revenue is able to offset losses, the horsemen win, the state wins, track partners win, and the players win. You need quality in what you produce."