Protecting Gaming Purse Funds a Challenge
Protecting purse revenue from alternative gaming can be as hard, or harder, than winning legislative approval for it, horsemen said June 30 during a National Horsemen's Benevolent and Protective Association roundtable discussion.
Ownership of racetracks by casino companies and repeated attempts by legislatures to grab purse money for other programs in various states have forced horsemen's groups to change the way they operate. They often find themselves forced to defend the money they get from slot machines, video lottery terminals, and other forms of gaming.
"We have to defend our money every single year," Stephanie Beattie, president of the Pennsylvania HBPA said during the forum held at Prairie Meadows Racetrack & Casino as part of the National HBPA summer convention. "We had to get really aggressive in our legislative work."
After the Pennsylvania Race Horse Development Fund lost 17% of its revenue in 2009, the state came calling again this year. It appears a potential loss of $72 million a year has been reduced to $5 million split among all horsemen's groups, Beattie said.
The Pennsylvania HBPA, which represents horsemen at Hollywood Casino at Penn National Race Course and Presque Isle Downs & Casino, invited lawmakers to the racetrack and took them on a tour of the backstretch to meet the people that work there on a daily basis. Beattie said it was worth the effort.
"They got to speak to people who moved to Pennsylvania and put money into the state's economy," she said. "They got to see face-to-face the people who work in this business. It seemed to make a difference."
Owners, breeders, and trainers formed an equine coalition to present a united front, but it took about two years to put together.
"When the $72 million figure came out, it scared the crap out of everybody," Beattie said. "It took that to get everybody to come together."
Indiana had a horse industry coalition--even the racetracks were members--until about three years ago. After the group won legislation for racetrack slots, lawmakers started looking at racing's 15% cut of slots revenue at Hoosier Park Racing & Casino and Indiana Downs, said Mike Brown, executive director of the Indiana HBPA.
"Keeping people focused on the prize is difficult," Brown said. "When the wrong people say the wrong thing at the statehouse it can completely undercut the process."
Because of $250 million license fees they had to pay for slots, both tracks ran into financial trouble. Hoosier Park is out of bankruptcy, but Indiana Downs remains in bankruptcy.
Ohio HBPA member Bob Reeves said the forum was held to educate horsemen on the value of including alternative gaming language in contracts with racetracks. He said it is one thing to get slots or VLTs, and another thing to ensure the revenue is safe.
"Horsemen have been good at negotiating, but after they make the deals, they don't always go back and verify," Reeves said. "Once we get that money, how do we protect it?"
Justin Cassity, executive director of the Oklahoma HBPA, said gaming machines have saved Oklahoma racing. Two tracks--Remington Park and Will Rogers Downs--are owned by Indian tribes, which basically control gaming in the state.
"The horsemen must be their own paymaster," Cassity said. "I believe this to be true with gaming and pari-mutuel revenue. They money must be held in trust."
Cassity said working with Indian casino operators has been challenging, but progress is being made in Oklahoma because horsemen have pushed the pari-mutuel product.
"The horsemen must continue to look at (gaming revenue) as a supplement," Cassity said. "Our main source of revenue is pari-mutuel wagering. If you can't continue to work on the pari-mutuel side and improve it drastically, your racing will continue to decline. This will cause the track operator to continuing questioning the need for live racing."
Cassity said all-sources pari-mutuel handle at Will Rogers Downs is up 442% the past four years, mainly from export of its signal, but even ontrack handle is up 23%. At Remington, all-sources handle is up 142% the past four years, he said.
Cassity said that during this year's Will Rogers Downs meet, there were 11 days total handle topped $1 million. The Oklahoma HBPA has pushed the signal in the simulcast market and gets some live coverage on TVG.
"It's all about pushing the product, pushing the signal, and making live racing viable," Cassity said.
After years of ups and downs Prairie Meadows, which has a full-scale casino, appears to have settled into a groove. The county-owned facility has been debt-free, but success over the years didn't eliminate financial battles and suggestions that racing dates should be reduced.
Iowa HBPA president Leroy Gessman said it took him four to five years to understand how the state legislature works. The horsemen's group hired a lobbyist, created a political action committee, and reached out to lawmakers.
Having a good relationship with the racetrack helps--Gessman said management "feels we're an asset to the facility"--but it doesn't mean there aren't other issues. Many of the previous disagreements stemmed from competing agendas among the Thoroughbred, Quarter Horse, and Standardbred sectors in Iowa.
"It took a spirit of cooperation among the racetrack and the three breeds (to make progress)," said Doug Vail, vice president of the Iowa HBPA. "It's hard to put your arms around people you call enemies, but sometimes you have to do that."
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