Committee Will Examine Gural Slots Proposal

The track operator believes some slots money could be used for marketing and testing.

The United States Trotting Association has formed a committee to examine a proposal to use a small percentage of gaming revenue to support marketing and enhanced equine drug testing, but it stopped short of endorsing the plan.

Jeff Gural, who owns two New York racetrack casinos in partnership and leases Meadowlands in New Jersey, floated the idea after a poll of USTA members in Delaware, Pennsylvania, and New York indicated support for it. The issue was addressed March 19 during the USTA board of directors meeting in Columbus, Ohio.

Gural suggested about 5% of harness racing purse revenue from slot machines--$15.8 million based on 2011 purses—be used to market the sport and improve drug-testing for illegal substances. Jason Settlemoir, vice president of racing and simulcasting for Gural at Tioga Downs and Vernon Downs in upstate New York, presented the plan to the USTA board.

“The idea is to get the ball rolling,” Settlemoir said. “The question I pose to you is this: Are we spending that (slots) money correctly? It’s a small price to pay for the sustainability of our future.”

Settlemoir cited figures indicating harness racing purses went from $325 million in 2004 to $431 million in 2010. Meanwhile, pari-mutuel handle on harness racing dropped from $2.316 billion in 2004 to $1.684 billion in 2010.

“That’s a 28% drop in handle,” Settlemoir said. “That’s what is supposed to be driving our business.”

As for purses boosted by artificial means, he said: “It’s giving us a false sense of security.”

The issue has come up repeatedly in the Thoroughbred industry as well. Though it hasn’t recommended some purse funds be allocated to marketing and drug testing, The Jockey Club is investing more than $10 million on a Thoroughbred awareness campaign based on 2011 recommendations from McKinsey and Company.

USTA directors didn’t dispute the need for marketing and improved drug testing but they did question the methodology.

Joe Faraldo, president of the Standardbred Owners Association of New York, said a better “partnership” would be horsemen putting up 25% and racetrack operators 75%. He said horsemen at Yonkers Raceway and Empire City Casino already contributed money for drug testing, but it was used to pay down debt instead.

“It’s not a partnership to put your hands in the pocket of the horsemen’s purse account,” Faraldo said.

Faraldo noted purses at seven harness tracks in New York totaled $100 million, while operators pocketed $300 million from their racetrack-based video lottery terminal casinos.

Sam Beegle, president of the Pennsylvania Harness Horsemen’s Association, said the slots law of 2004 mandates that most of the horsemen’s money go toward purses. He said horsemen have used their share of funds for things such as drug testing, support for county fairs, and a weekly harness racing program on cable television.

The PHHA also was instrumental in contributing purse money that helped bring the Breeders Crown year-end championship stakes to Mohegan Sun at Pocono Downs.

Still, Beegle said, the PHHA “would give serious consideration to participating in new projects and opportunities as they arise.”

USTA president Phil Langley said he would appoint a committee to study how much harness racing currently spends on marketing and drug testing, but called it “crazy” to believe any  marketing plan would increase handle and other business metrics more than 20%. “Fight like hell to keep slots,” he told the directors.

Settlemoir, at 34 one of the youngest members of the USTA board, said it’s time to take action and move the industry forward. “We need to work together as a team in a unified effort for the betterment of this industry,” he said.

Harness Tracks of America indicated it would assist the USTA in examining the proposal and current spending levels in the industry.