California Screamin'--Issues Get Airing Out

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Issues impacting the long-term health of California horse racing were dissected Dec. 9 and produced a general message: Think outside the box, because the prospect of revenue from gaming is very dim.

The California scene was discussed by a panel at the University of Arizona Symposium on Racing and Gaming in Tucson. Panelists were Joe Harper, chief executive officer of Del Mar Thoroughbred Club; David Israel, vice chairman of the California Horse Racing Board; and Norm Towne, a legislative consultant and lobbyist.

The lively, quick-moving panel was moderated by Daily Racing Form national correspondent Jay Privman, who noted representatives from other California organizations--horsemen, for example--were invited to participate but declined.

Following is a look at the issues and some of the commentary:

Increase in pari-mutuel takeout

Harper said the hike, which takes effect Dec. 26, isn’t ideal but is necessary under current circumstances.

“It’s an increase in process, and you hate to do that,” Harper said. “I don’t think any one of us wanted to do it. I think the vast majority of hard-core (horseplayers) understand it; they know the game like the rest of us.”

Harper did apologize, however. “We hated to have to make that decision.”

Harper and Israel said that even with the takeout increase California is lower than many jurisdictions, and that they don’t expect much pushback from players.

“I think we’re within the margin of error,” Israel said. “You’re not going to get a better shake in many other places.”

No bettors were on the panel, though they have expressed displeasure with the takeout hike through various online outlets. Some have called for a wagering boycott of the California racing product.

Slot machines

Towne said the powerful Indian gaming lobby and its large “war chest” make it nearly impossible for horse racing to lobby for slots. Also, he said the “well was poisoned” when racing attempted to win approval for gaming through a referendum that failed.

“That left a bad taste in the mouths of the tribes,” Towne said. “It’s now difficult to establish relationships with the tribes.”

Israel said California is so far in debt the legislature doesn’t look to racing as a means to raise billions of dollars in revenue.

“We’re better off focusing on how to improve the game instead of running back to government to give the industry handouts,” Israel said.

Marketing and promotions

Israel again said the emphasis must be on making the racing experience and entertainment experience in an effort to attract new patrons, particularly younger ones that can sustain the business.

“The average age of our ontrack customer is deceased, and the average age of our satellite customer is decomposed,” Israel said. “If you don’t get people to come to the racetrack and sell it as an entertainment experience, no one is going to go to their computer and turn on TVG or HRTV. Nobody wants to do that without first experiencing the thrill of live racing.

“You’re not hitting the critical mass with (either TV network). Their whole job is to move people to their computers to make bets.”

Towne noted total handle in California fell from $2.9 billion in 1990 to $1.9 billion in 2009 despite a growing population that now stands at 37.5 million.  He and Israel said racing shouldn’t lose sight of the importance of “ancillary revenue”—food and beverage, for instance.

“We have to go out there and find marketing experts to get more people in the seats,” Towne said. “If you lose ancillary revenue, you’re struggling even more.”

Israel noted the importance of such revenue to major league sports. Harper said food and beverage on opening day at Del Mar this year produced $1.3 million in sales.

“We need to draw people to the racetrack rather than settling on increasing the market of advance deposit wagering,” Israel said.