David Willmot shared his opinions on the state of the Thoroughbred industry with the Kentucky Thoroughbred Farm Managers' Club Wednesday evening. Willmot's comments ran the gamut from slot machines to the relationship between purses and handle, and included his experiences as president and CEO of Woodbine Entertainment Group, an organization that accounts for 70% of the handle in the province of Ontario.
"I believe we're back in a cycle now where the cost of yearlings is beginning to run ahead of purses," he said. "For 99% of the horses and their owners, there has to be a correlation between value and earning power."
Even though handle is rising, purses are falling, resulting in less potential payoff for owners. Willmot attributes this juxtaposition in part to the increasing number of wagering opportunities that exist both inside and outside the pari-mutuel industry. In Willmot's opinion, rebaters are the number threat within racing.
"Many rebaters are sending (representatives) to racetracks to identify big bettors to then move them over to rebate shops," he said. "So with a former racetrack customer, with an 18-20% takeout (which goes to the track), half of that goes to purses. When you transfer an 18% customer to a 3% customer, it leaves a gap. It is removing money from the purse account. That should be of significant concern to the breeding industry in Central Kentucky, because it affects sale prices."
(Depending on the signal, host fees paid by a high-volume betting shop can range from 3% to 6%.)
Woodbine is an example of one of the first racetracks to profit from the addition of slot machines on the grounds. Willmot said although he certainly didn't want to be seen as the 'poster boy for slot machines,' he acknowledged the opportunities slots created at his track and for his province's government.
"The income from slots has allowed us to upgrade our facilities," he said. "We've gone toward an entertainment feel instead of a gaming feel. Slots give us the money to build for the future."
Considering his audience and recent failed efforts to bring expanded gaming to Kentucky, Willmot said the political climate in the state is something "about which I know nothing but I have plenty to say." He said the proposal to open four casinos on non-racetrack property within the state's borders "astounded him."
"You don't want to start with four non-racetrack casinos because then it will be six, then eight, then 10," he said. "The key is for the racing industry to say to the government, 'what can we do for you?' Crying poor doesn't play well. The real message that has to be communicated is 'we can help you achieve your budgetary goals safely...in a socially responsible way where gaming has been conducted for years.'" Willmot mentioned another aspect of the deal-making that has helped Woodbine, which is a non-profit operation. "It is very important that at the point when the deal is cut that the for-profit tracks are required to reinvest in racing."