On the heels of a successful opening weekend at Ellis Park comes word of a few initiatives that, if they come to fruition, could generate or repurpose revenue for Kentucky racing. But will it be enough to keep stables of horses from leaving the state to race elsewhere?
Industry representatives the weekend of July 10 indicated movement regarding Instant Racing, legislation for which died in the Republican-controlled state Senate in late spring even though the office of the Democratic attorney general said Instant Racing could move forward with only statutory changes.
Instant Racing machines, offered at two Arkansas racetracks, resemble video lottery terminals but the outcome of games is based on previously run races, which makes them pari-mutuel in nature.
Officials said the Kentucky Horse Racing Commission, which would implement rules for Instant Racing, may address the plan at its next meeting July 20. Democratic Gov. Steve Beshear would have to sign an emergency order should the KHRC pass regulations.
A tax rate, however, would have to be set by the state legislature. Some expressed concern over talk of the state wanting to take twice the amount of revenue the state of Arkansas receives from Instant Racing, which in Kentucky was introduced as a way to increase purses and breed development funds.
The devices haven’t been tested in a crowded gambling market, so revenue projections for Kentucky tracks are sketchy. A hefty tax rate could keep tracks from building facilities to accommodate Instant Racing, officials said.
“We heard (Instant Racing is in the mix), and we also heard the state wants to over-tax it,” trainer William “Buff” Bradley said July 10 at Ellis Park. “We’ll just have to wait until something happens.”
“I can’t help but think that in a Democratic form of government, the legislature will hear the wishes of the people and see that its signature industry is fading away,” Ellis Park owner Ron Geary said. “But I always try to be realistic. It’s really hard to handicap.”
When legislation authorizing racetrack video lottery terminals made no headway in the General Assembly earlier this year, and Instant Racing was torpedoed later in the session, there was speculation little if anything would happen the rest of 2010. Action on Instant Racing, as well as a look at pari-mutuel statutes, could change that.
Republican Sen. Damon Thayer said July 11 proposed legislation has the working title “Horse Racing Reform Act of 2011.”
“I am reviewing all the statutes affecting racing in Kentucky and considering reforms that could help the industry,” Thayer said. “A potential bill could include some of the elements the Senate passed this year, like (advance deposit wagering) reporting and transparency, as well as changes to Kentucky Thoroughbred Development Fund eligibility that would allow funds to be used for claiming races.”
Thayer said he met with David Switzer, executive director of the Kentucky Thoroughbred Association, to seek input. The KTA, he said, has formed a working group to offer suggestions and ideas.
Thus far there has been no public discussion about the prospects for racetrack VLTs in 2011, which will feature a gubernatorial election in Kentucky.
Surprises at Ellis Park
The racing opening weekend at Ellis Park, located about three hours west of Lexington, caught some by surprise. Purses averaged $176,000 over two days, while average field size was 9.63, according to The Jockey Club Information Systems.
Also-eligible lists and excluded horses were common when entries were drawn. Most of the higher-level maiden and allowance races filled.
“We’re pleasantly surprised based on the Churchill Downs meet and the problems they had filling races,” Kentucky Horsemen’s Benevolent and Protective Association executive director Marty Maline said. “I think our cheaper races and turf races will work really well as long as the turf course holds up.”
Geary, who purchased Ellis Park from Churchill Downs Inc. in 2006, credited racing secretary Dan Bork for the early success.
“We’ve had total cooperation across the state of Kentucky,” Geary said. “Dan has been monitoring it and said a lot of Kentucky trainers are going to leave some horses here to take advantage of the good purses. I’m optimistic now, and usually I’m pretty guarded.”
With Indiana Downs and its turf course ending its Thoroughbred meet July 14, Ellis Park will catch a break before Hoosier Park in Indiana opens July 30 to overlap the rest of the Ellis Park meet through Labor Day. But Ellis Park has a turf course; Hoosier Park does not.
Geary said cutting live racing days in half to 27 last year was out of “desperation,” but proved a success, so he requested a similar schedule for 2010. He currently plans to apply for 2011 dates, but isn’t sure how many.
Ellis Park benefited from a 2009 purse underpayment of a couple hundred thousand dollars, money that helped increase purses for 2010. Geary said the shutdown of full-card simulcasts saved operating costs and is part of the survival plan even though the track generates no off-season purse revenue and would rather not lay off more than 70 employees.
The track will close Sept. 30 and probably not reopen until spring of 2011.
“It worked out to be a good plan—better than we thought,” Geary said. “A good portion of our purses comes from live handle. Anymore, our simulcast handle is not a major contributor to purses. Long-term it’s not going to get us there, but it gives us a chance for survival down the road.”
Maline said the Ellis Park shutdown, approved by the KHRC, took about $200,000 in purse money out of the mix for the Turfway winter/spring meet. He said when full-card simulcasts became law in 1994, the revenue splits were predicated on all tracks being open year-round and contributing to purses.
“It really can’t work unless everybody is rowing in the same direction,” Maline said.
Ongoing Turfway Park concerns
Maline said horsemen are dealing with the fallout from the July 6 announcement that Turfway Park has eliminated this year’s Kentucky Cup Day of Champions to save $400,000 that will go to maintain overnight purses at about $125,000 a day. A cutback to four days of live racing from five for the late summer-early fall meet wasn’t unexpected.
“The problem is the purse structure up there,” Maline said. “When it was formed, the idea was for breeders to help sponsor Kentucky Cup. When simulcasting was new in Kentucky, purses averaged $250,000 a day at Turfway, so we were able to sustain the purses without sponsorships.
“The day-in and day-out horsemen saw themselves losing several hundred thousand dollars in purses. Last year it almost looked like we’d have to cut purses after Kentucky Cup.”
Bradley, a member of the Kentucky HBPA board of directors, called the Turfway situation “depressing.” He will race in Kentucky through the fall, then probably ship to South Florida like he did last winter.
“It’s hard to believe Kentucky’s signature industry is in so much trouble and we don’t see anybody (doing anything to help it),” said Bradley, whose father, Fred, was a Kentucky lawmaker in the 1980s. “Someone needs to take control of this.
“You can’t have a whole stable and run across the board (with horses at various levels) in Kentucky anymore. We’ve got to look at the whole picture of Kentucky racing. People are trying out different circuits (with tracks that have purses aided by gaming revenue) to experiment, but at some point, they’ll leave Kentucky entirely.
“We really need a year-round circuit to keep everyone in the state.”
Turfway president Bob Elliston said the combination of a purse overpayment necessitated by four-day weeks in March and a 17% decline in full-card simulcast handle created problems for the upcoming meet, which runs through early October. Elliston indicated, however, the horse population should be sufficient.
“What the quality of the racing will be, I don’t know,” he said. “We’ll probably have to card more claiming races than we would prefer to see, but there are a good number of Kentucky-bred horses in proximity to us when they come back to prepare for the Keeneland and Churchill meets.”
Longtime owner Mike Bruder, who has reduced his stable from more than 20 horses to less than 10, said he ships horses to Indiana Downs and Presque Isle Downs in Pennsylvania whenever they can get in races because of the purse structures. Years ago, he raced predominantly in the Bluegrass State.
“If they don’t get alternative gaming in Kentucky, put a fork in it,” Bruder said. “This place is in dire straits, and Turfway is in dire straits. Until the legislators in Kentucky come up to the plate, it’s going to be like a rollercoaster going downhill without any breaks.”
Said Geary, who is a tad more optimistic this year: “As a Kentuckian, never in my wildest dreams did I think the Kentucky legislature would turn its back on the horse industry. That being said, it doesn’t mean we can’t find a way to make it work.”