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Gaming Revenue for Racing, But No Racetracks?

The Massachusetts racing and breeding industry is an unusual situation.

Horse racing and breeding will receive a share of gaming revenue from the casinos that will be built in Massachusetts, but during an Oct. 16 forum on the industry, stakeholders asked a telling question: What good is the money if there aren't any racetracks?

The day-long forum held by the Massachusetts Gaming Commission revealed an unsettled picture in a state with struggling Thoroughbred and Standardbred industries. Greyhound racing was voted out of existence several years ago via public referendum after a strong anti-dog racing campaign.

The gaming commission heard from racetrack executives and representatives of horsemen's and breeders' organizations. The commission wanted, among other things, suggestions on how gaming revenue should be paid to various purse accounts, but it got a story of an industry in a holding pattern until key decisions such as the award of casino licenses are made.

Under the state gaming law, the racing and breeding industry will receive 9% of the gaming revenue from the lone slot machine parlor, and 2.5% of 25% in gross gaming revenue from full-scale casinos. It also will get 5% of up-front gaming license fees.

Suffolk Downs, the only remaining Thoroughbred track in the state, has applied for a destination casino license in the Boston area, but so have other companies. Suffolk Downs plans to apply for 2014 racing dates, but clearly its future as a racetrack depends on whether it wins the casino license.

"There is uncertainty," said Chip Tuttle, chief operating officer at Suffolk Downs. "I'm in the market for answers like everyone else. We're an applicant for a casino license. We plan to race. And we don't see much of an alternative given what's in front of us."

In response to questions from the commission, Tuttle said Suffolk Downs hasn't been profitable since 2005 or 2006. He said the track has lost at least $10 million a year over the last five or six years.

"Some of it was racing losses, and some of it (money spent on the casino bid)," Tuttle said. "They're very much related."

In response to a question about losses tied to horse racing, Tuttle said: "I would be afraid to give you an accurate estimate, but I can say it is substantial."

Anthony Spadea, president of the New England Horsemen's Benevolent and Protective Association, said it's difficult to get horsemen who don't remain in Massachusetts year-round to commit to sending decent-sized stables to Suffolk Downs given the uncertainty.

"Suffolk has been more than fair talking about the problem, but it's not their problem if horsemen can't race because they couldn't get a casino license," Spadea said. "I don't know what to tell people who are going to spend a substantial amount of money (to come here)."

Tuttle said Suffolk Downs plans to recruit horses for its planned 2014 meet. He noted the local horse population was about 1,200 in 2008 but dropped to under 700 this year.

George Brown, chairman of the Massachusetts Thoroughbred Breeders Association, said there has to be an incentive for people to invest in farms, stallions, and broodmares. He said it doesn't help that the industry will "end up losing another breeding season in 2014" because of the uncertainty.

"There is so much indecision out there," Brown said. "We don't know if there will be a place to race when these horses are old enough to race."

As for the Standardbred industry, the only track, Plainridge Race Course, is in the running for the lone slots parlor in the statebecause of a dramatic turn of events.

The track's previous ownership team was ruled ineligible for a slots license because of one official's financial misdeeds. But in stepped Penn National Gaming Inc., which lost its bid for a slots parlor in another Massachusetts community and seized the opportunity to align itself with Plainridge.

PNGI is one of several applicants for the slots license. One of the others is Raynham-Taunton Greyhound Park, which no longer has live dog racing but has remained open as a simulcast facility. Owner George Carney has offered to convert the Brockton Fairgrounds, once part of the popular Massachusetts Thoroughbred fair circuit, to a harness track, but has no intention to offer racing at Raynham-Taunton.