The Bottom Line: Slot Machine Gaming Boosts Purses
by Eric Mitchell
Date Posted: 3/30/2001 3:08:45 PM
Last Updated: 5/31/2001 10:36:08 AM

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Published in March 24 issue of The Blood-Horse
Slot machines and card tables had an undeniable influence on the 8% growth seen in North American purses in 2000. Out of the top 10 racetracks in the United States and Canada, ranked by growth in total purses, seven offer slot and/or video poker machines and one offers card games. Leading the list is Sunland Park, the New Mexico racetrack nestled against the Texas border town of El Paso. Gross purses at Sunland Park grew 160%, from $1.69 million in 1999 to $4.4 million last year.

"Two years ago, between the tribal gaming, the Texas lottery, and the New Mexico lottery, we were losing about $1 million a year," said Harold Payne, Sunland Park's general manager. "Now we've just raised the remaining 17 stakes for the meet by $150,000." New Mexico legislators gave racetracks permission to operate 300 slot machines each in 1998. The slots began ringing at Sunland Park in February 1999.

Purses have grown dramatically all over New Mexico. The Downs at Albuquerque ranks second on the list of racetracks with the highest growth in gross purses. The Downs at Albuquerque raised its purses 111% to $2.3 million last year. Eighth on the same list is Ruidoso Downs, which increased purses 34.2% to $2.2 million in 2000.

On the East Coast, the big success story is West Virginia. The Mountain State saved its Thoroughbred industry from extinction with video lottery terminals and reel-spinning, coin-out slot machines.

Both Mountaineer Park and Charles Town Races were ready to close when the video lottery legislation passed in 1994. At the time, Mountaineer Park paid an average of $22,000 a day in purses and Charles Town paid $36,000 per day. Last year, those numbers rose to $111,800 at Mountaineer and $96,000 at Charles Town. Purses are so good that West Virginia trainers are upgrading their stables with claimers from California, according to Dick Watson, president of the Charles Town Horsemen's Benevolent and Protective Association.

As states like West Virginia sweeten their purses with slot machines, pressure increases for neighboring states to do the same. Bills allowing alternate forms of gambling at racetracks were submitted this year in Kansas, Maryland, Ohio, Oklahoma, and New York.

Eugene Christiansen, chief executive with the gambling consulting firm Christiansen Capital Advisers, said he expects efforts to expand gambling at racetracks will continue for some time.

"There are many places with an unsatisfied demand for casino gambling," Christiansen said. "When the market is fully supplied, the revenue will plateau, like anything else, but it will plateau at a higher rate of consumer spending. People will always spend money on slot machines."

Some horsemen are leery of slot machines because they fear the machines will take money from Thoroughbred handle and erode interest in the sport. Many racetrack executives want alternative gaming as a way to get more bodies through the gates and hopefully create new horseplayers.

Christiansen said history shows neither fear nor hope is justified.

"It is bad news and good news," he said. "In general terms, alternative gaming does not seem to make new horseplayers and it doesn't have any lasting negative impact on the handle.

"Handicapping horse races and playing slots are very different and appeal to very different clientele," Christiansen continued.

In broad terms, alternative gaming is good for racehorse owners. The money flowing from slots and card tables into purses is creating more opportunities for owners to get a return on their investments.

Here are some encouraging numbers for owners:

  • North American purses--in the United States, Canada, and Puerto Rico--grew to $1,081,859,753 in 2000, up from $1,002,232,936 in 1999. Many United States trainers and owners are finding new opportunities in Canada where slot machines in Ontario helped increase purses 30% to $75,950,859 last year.
  • Purses paid in the United States grew 6.6% to $987,093,010. Some reports have said U.S. purses exceeded the $1 billion mark for the first time, but that statistic represents the amount of purse money available ($1,031,066,044), not what was actually paid out.
  • The median earnings per starter in North America grew 7.5% to $5,717 and the average earnings per starter grew 7.7% to $15,882.
  • Horses earning $25,000 or more last year represented 16.3% of all North American starters, which is up from 15% in 1999. The percentage of horses earning $7,500 or more rose to 44.7% of all starters, up from 42.5% in 1999.

Continued . . . .

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