Kentucky racetrack operators said May 20 the state’s horseracing and breeding industries have reached a critical juncture, and without legislative assistance in the form of on-track gaming, the damage could be irreparable.
That the officials held the press conference in the paddock at Churchill Downs wasn’t by chance; Churchill has received permission to drop Wednesday racing because of short fields. Racing interests argue revenue from racetrack video lottery terminals would not only reverse that situation but place Kentucky ahead of other states that have bolstered their industries at Kentucky’s expense.
The press conference came as state officials await budget projections that are expected to be dire. In late May, a report will show whether or not Kentucky faces a $1-billion budget deficit the next two years effective this July.
Democratic Gov. Steve Beshear said a special legislative session hinges on the results of the revenue report. Racing industry officials believe racetrack gaming would be part of the discussion during a special session.
“We’re hoping to crystallize this issue and these thoughts,” Keeneland president Nick Nicholson said of the reason for the midweek press conference. “We feel this proposal is better than previous proposals. This industry is unified as perhaps it has never been, and we are in serious jeopardy if no action takes place and we lose our racing circuit (and leading breeding industry). We did not want anybody to be surprised.”
Along with the reduced Churchill meet, Ellis Park has cut its upcoming summer meet in half, and Turfway Park is planning for the worst—a curtailed September meet that will mark its 50th anniversary. Whether the meet is much of a celebration could depend on what happens in the state capital in the next few months.
“Between now and September, we’re going to sit down with our horsemen and look at dramatic purse cuts and perhaps a dates reduction,” Turfway president Bob Elliston said. “After that, I can’t tell you how clear it is. We’ve always had value-oriented racing with big fields, but that’s not the case anymore.”
“The time to act is now,” Churchill president Bob Evans said. “We simply can’t wait any longer. All we are looking for is to pass a simple piece of legislation. The logic is there, the economics are there, and the feasibility that it can be done is there. All that’s left is the political will to do it.”
Ellis Park president Ron Geary predicted the 2009 cuts will get the track through this season, but he said without action on gaming, there probably would be no Thoroughbred racing in western Kentucky in 2010. He said Ellis Park’s $11 million in annual revenue can’t compete with the $350 million generated by Hoosier Park Racing & Casino and Indiana Downs, two Indiana tracks with slot machines.
“If I spent 100% (of Ellis Park revenue), I still would be short on a competitive purse end,” Geary said.
Kentucky Downs, the all-turf track, will race only four days in September, down from six last year. Track president Corey Johnsen said Kentucky Downs would “like to run a lot more dates” but can’t until the revenue situation changes.
Joe Costa, president of The Red Mile, a Lexington harness track, said there are at least 25 harness tracks in North America with alternative gaming. He said tracks without it are struggling to compete for horses.
“It’s the canary in the coal mine,” Costa said. “Kentucky has three harness tracks that will race 76 days this year. I don’t think anyone here would consider that a circuit.”
Costa also said The Red Mile board of directors has asked him to consider dropping the two-night summer Quarter Horse meet—the only one in the state—in 2010 because of financial considerations.
Rick Hiles, president of the Kentucky Horsemen’s Benevolent and Protective Association, said it’s becoming difficult to recruit horses to come to Kentucky. He said racetrack VLTs are needed to boost purses at all tracks so horsemen have a reason to stay in the state year-round.
“We’ve been asking for this for 10 years,” said Hiles, a longtime trainer. “Now we’re pleading as a last-ditch effort.”
The press conference was attended by track officials, horsemen, patrons, and a few legislators. Before and after the media event, they offered their views on the situation in Kentucky and what could happen if racetrack VLT legislation passed this summer.
Kentucky Downs: Johnsen said the track on the Tennessee border would expand dates to “as many as the circuit could allow and be in the best interests of the industry.” Kentucky Downs is projected to be the second-largest revenue-producer with VLTs, but it races by far the fewest number of days.
Legislation in previous years called for a sharing of purse money generated by Kentucky Downs, but that's not the case in the bill introduced this year.
Johnsen said it’s possible Kentucky Downs would fill the gaps for types of races not offered at Churchill and Keeneland, and also when Turfway, which has no turf course, is open. He said the owners would like to make a “Kentucky Horse Park south” at Kentucky Downs, but have no plans to install a dirt or synthetic surface.
“We think our niche is turf racing,” Johnsen said.
Turfway: When asked if Turfway would front-load purses in advance of VLT revenue, Elliston said that would depend on the timing of any legislation and potential court challenges. He did say if gaming machines were legalized, the Northern Kentucky facility would act quickly to get the devices in operation, using a temporary facility if necessary.
“We’re celebrating our 50th anniversary in September, and we want to be here at least 50 more,” Elliston said. “We want to start investing in the racing product as quickly as we possibly can.”
The Lexington market: Keeneland and The Red Mile, under legislation introduced earlier this year, would share one gaming license and split the revenue 60%-40%, respectively. Costa said the costs of the gaming facility would be split along the same percentages.
Where VLTs would be located remains to be seen. There has been behind-the-scenes talk of a land swap with the University of Kentucky that would move The Red Mile to property that could better accommodate a racetrack casino, but officials haven’t confirmed that particular scenario.
“That is one of the options—if we could acquire a piece of land to relocate The Red Mile,” Costa said.
Also, Keeneland would own 60% of the gaming facility but would hold no interest in harness racing operations even if the VLTs were located on the same property as the harness track. “There is no interest by any parties to liquidate their interests in The Red Mile,” Costa said.
Legislators: Democratic Rep. Susan Westrom of Lexington wouldn’t rate the chances for a special session, but she said if industries like United Parcel Service or Ford were in jeopardy, legislators would be “chasing their tails” to assist them.
“It’s very apparent the handwriting is on the wall,” Westrom said. “We need to come up with creative ways to plug a gaping hole in the budget, and we also have a signature industry that has never been fed.”
Evans said he isn't aware of any one person holding racetrack gaming legislation hostage. Republican Senate President David Williams, believed to be the primary stumbling block, recently said through a spokesperson he wouldn't stand in the way of such legislation if it came to the Senate floor.
"If people can't see the logic in (this legislation), it escapes me," Evans said.
Beshear issued a statement soon after the press conference.
"Today’s unified statement of concern by the leaders of Kentucky’s racetracks provides further compelling and disconcerting evidence about the threat to one of the commonwealth’s signature industries," the governor said. "I don’t want Kentucky to be known as the former horse capital of the world. Too much is at stake – 100,000 jobs, comprised mostly of working families, and $4 billion in economic impact.
"We must act quickly to ensure that we maintain that investment in our state.”
Horsemen: Trainer Dale Romans, who has about 100 horses and keeps some year-round in Kentucky, said he relies heavily on non-Kentucky clients that see no reason to race in the Bluegrass State full-time. He said he doesn’t want to go elsewhere, but might have to if purses don’t increase.
“I have a 100-stall training center about an hour from Turfway,” Romans said. “It would be full all winter if there were bigger purses at Turfway. But right now, I’m looking at New York or the Mid-Atlantic tracks.”
Bennie “Chip” Woolley Jr., who won this year’s Kentucky Derby Presented by Yum! Brands (gr. I) with Mine That Bird, has raced in New Mexico for years. He said racetrack slots solidified the racing and breeding industry in the state.
“I’m a poster child for gaming, I guess,” Woolley said. “States like Kentucky and Maryland are watching their money go across the river, but it doesn’t come back. It makes no sense. In New Mexico, we thought it would be a five-year fix, but 10 years later, it’s just getting better.
“I don’t get it. They watch their money go across the river, never to return. I would never watch my money walk across my shedrow to another guy’s barn.”
Longtime Kentucky trainer Bernie Flint said he left Louisiana 30 years ago to move his operation to Kentucky. Now, he doesn’t like what he sees: Louisiana tracks have slots, and racing in Kentucky is heading in the wrong direction.
“I’m going the other way now,” Flint said, “but these young guys here, where are they going to go? I saw this happen in Louisiana. This is the end of the road. The train is gone, and we need to make sure we catch the caboose.”
Flint alleged hypocrisy on the part of some Kentucky lawmakers who argue against expanded gambling.
“Many of our politicians go (to Indiana riverboat casinos) and play blackjack and eat dinner,” Flint said. “You don’t see me over there.”