Ohio Takes Stand on Racetrack Casino Plans

The racing commission sent a message to racetrack casino developers Jan. 10.

The Ohio State Racing Commission put racetrack casino developers on notice Jan. 10 when, at a hearing, members expressed strong displeasure with the racing aspects of the proposed Miami Valley Gaming and Racing facility being built by Churchill Downs Inc. and Delaware North Companies.

The relocation of Lebanon Raceway, a harness track, to the planned facility about seven miles west already was approved by the OSRC. But the regulatory body has a say in all facilities and amenities related to horse racing at the racetrack gaming facilities.

CDI and Delaware North plan to spend $105 million to build the facility, which will have a harness track and about 1,800 video lottery terminals. Via legislation it is the only one of three tracks to be relocated that was spared the $75 million relocation fee.

The other two, both owned by Penn National Gaming Inc., are Beulah Park near Columbus, and Raceway Park, a harness track in Toledo. The Ohio Horsemen's Benevolent and Protective Association, which has a vested interest in the relocation of the Beulah Park license to the new Hollywood Slots at Mahoning Valley Race Course near Youngstown, stood by harness horsemen at the Jan. 10 hearing and sent the message it wants full racing facilities and amenities at the new tracks.

"The HBPA finds the (Miami Valley) plan very distressing," Ohio HBPA executive director Dave Basler said. "During meetings with the administration of Gov. John Kasich and the racetracks, myself and (Ohio Harness Horsemen's Association president) Steve McCoy respectfully stated our position on backstretch infrastructure—that at a minimum it should be the same as the facility it replaces.

"It should not be less than what we already have. The HBPA believes the sale (of tracks) should not absolve the new owners of their duty to racing. VLT operators are keeping 55% of the revenue, about five to one versus the horsemen's share. It's one of the largest disparities in the nation.

"As (OSRC member) Willie Koester said, this doesn't pass the smell test."

The OSRC and horsemen cited the following concerns over the Miami Valley project: There will not be a barn area; the proposed ship-in barn doesn't have enough stalls to accommodate drug testing and the bathing of horses; and the grandstand area only has table seating for 700 patrons.

Also, OSRC members reiterated comments from a November meeting that the planned five-eighths-mile racing surface should be expanded to seven-eighths of a mile.

Speakers at the hearing suggested CDI and Delaware North bought the Lebanon Raceway licenses strictly to benefit from VLT revenue.

McCoy said the objective of racetrack VLTs is to not help the racing industry in Ohio to survive, but to thrive. He noted the $4.5 million additional cost to buy 20 acres and build a larger racing surface is "spitting in the ocean," or only 2.7% of the total project cost.

"Everything can't be done on the cheap," McCoy said. "What I see in this presentation is a real focus on cost-cutting. At some point they have to decide if they want to be a first-class track or not."

Ron Sultemeier, who oversees projects for Delaware North, and Shawn Bailey, director of business development for CDI, defended the Miami Valley project. They said the patron facilities would meet current demand at Lebanon Raceway, and agreed to meet with horsemen to discuss ways to improve the ship-in barn.

A full stable area can't be accommodated, they said.

"There is really no place to put a barn area," Bailey said. "We've done the best we can to maximize space."

"There are always cost considerations," Sultemeier said. "We created a nice facility, and we hold no apologies for what we designed."

OSRC chairman Robert Schmitz pushed the issue. He said Scioto Downs, a Columbus harness track that opened its VLT parlor June 1, 2012, has a clubhouse dining room that seats 500, and it often is full on Friday and Saturday nights during live racing.

The VLT casino at Scioto Downs is connected to the racetrack via a covered walkway. On racing nights the traffic between the two is brisk.

According to OSRC statistics, live handle at Scioto Downs after the VLT casino opened jumped 45%, an anomaly in the racing industry.

"We want to move forward, not backward," Schmitz told CDI and Delaware North officials. "If you get a crowd of 5,000, where are you going to put them? You cannot base the future on the past. That dog doesn't hop with me."

In a bit of a dig, Schmitz and other racing commissioners noted many of the 65 Ohio county fairs with harness racing, most of them with limited pari-mutuel wagering, can accommodate more than 700 people in their grandstands.

How much power the OSRC has in determining what racetrack casinos look like remains to be seen, but the commission, along with horsemen, already had impact on Pinnacle Entertainment's plans for River Downs. Pinnacle wanted to remove the one-mile dirt track and seven-furlong turf course and replace it with a seven-furlong dirt track, but the commission and horsemen balked.

Pinnacle is now moving the dirt track and turf course but will keep the same configurations.

"At the end of the day, you realize this is a joint decision of the Ohio Lottery Corporation and Ohio State Racing Commission," Schmitz told the Miami Valley partners. "The harness horse is bringing you to the dance."

The Mahoning Valley Race Course plan will be discussed at a future OSRC meeting. As of late 2012 the Ohio HBPA and developer PNGI were haggling over the number of stalls in the barn area.

The OSRC did approve regulations related to racetrack relocations Jan. 10. They will now be reviewed by another state agency and could be in place by February.