Racing Can Learn from Casinos, Panelists Say

Racing can learn much from its partners from the casino business, a panel of analysts told a couple hundred participants Dec. 5 in the 33rd Symposium of Racing & Gaming in Tucson, Ariz.

The discussion, "How Casinos Would Run Racing: Leveraging the Casino Experience to Grow the Racing Industry," was just one of several think groups conducted in the kick-off session of the annual three-day gathering of industry leaders held this year at the Westin-La Paloma Resort.

Beyond the traditional battle cries of making the game simpler for new fans, panelists also added that racing can also learn from hard analysis of data such as is routinely scrutinized by casinos.

Mark Midland, vice president of racing operations for Harrah's Louisiana Downs, a racino located in Bossier City, La., said the allure of slots is simple: It's simple.

"Slots are easy to play and easy for people to figure out," said Midland, formerly an executive with Churchill Downs, among other past endeavors. "And they are self-marketing. Every player and machine has the potential to be a big winner.

On the other hand, he continued, racing "is not easy to play, it's not easy to understand, and it's not easy to sell. We need to make it fun and easy for the person that comes in that first time; figure out ways to court them."

Midland also said that slots create repeat customers with a "jackpot" promise. He noted that when a big payoff is won by a slots player, a new jackpot is advertised in flashing lights almost immediately.

"Pick-6 carryovers are not a consistent marketing tool," Midland said. "When a Pick-6 is won, the pool goes back to zero."

Among Midland's suggestions was to create a hold-back percentage from all wagering, noting that a quarter-percent slice of the weekly U.S. handle of $300 million could create $750,000 a week for jackpots.

In an interview after the panel discussion, Midland said that Harrah's Louisiana Downs was willing to lead by example, and had already submitted a proposed jackpot betting system involving a special exacta wager to the Louisiana Racing Commission for inclusion in its spring meet.

Midland said he couldn't discuss the particulars of the proposal, but was excited about its prospects.

"You don't have to sell jackpots," he said.

Also on the panel was Edward Tracy, CEO of TrackPower, a partnership which has redeveloped Tioga Downs in Nichols, N.Y., as a combination gaming facility and harness track. Bemoaning a structure that claims up to 70% in tax rates, Tracy implored the listeners to work hard on legislative action.

"Why is horse racing so special to get into that you have to pay 70% taxation when Nevada is 10%?" he said. "It all goes back to enabling legislation. It's a huge and intrinsic challenge to unite the industry to lobby. Bring gaming people to the table, they are your partners. It's the casino business, they are your partners."

In the question-and-answer session that followed, Midland was quizzed about the rumored buyout bid of Harrah's.

Midland smiled and paused before he said, "It's hard to speculate. The board is considering all offers."

But fellow panelist Thomas Gallagher of the Greylock Group, and formerly of the Caesar's gaming group now owned by Harrah's, piped up and said, "I think that transaction will go forward. I don't have any inside information, but having gone through the battle to keep Caesar's private, I can see it happening."

Gallagher added that if Harrah's is converted from a publicly-traded entity to a private company, changes would be coming.

"It takes a lot of money to feed that beast," he said of the need for intense capitalization. "I suspect that you will see an increase of selling off of underperforming properties."

The symposium is sponsored by the University of Arizona Race Track Industry Program.