Casino Official Says Simulcast Rates Must Be Reasonable

A top casino official from Las Vegas believes pari-mutuel wagering has its place in casinos, but he believes that position could be jeopardized if the rates charged for signals make simulcasts cost-prohibitive.

William McBeath, president and chief operating officer of The Mirage, was the keynote luncheon speaker Dec. 9 at the Racing & Gaming Summit that kicked off this year's University of Arizona Symposium on Racing in Tucson, Ariz. MGM Mirage is the company that signed a deal with the New York Racing Association to implement video lottery terminals at Aqueduct.

McBeath's comments come at a time when horsemen's groups, in particular the National Horsemen's Benevolent and Protective Association and Thoroughbred Owners of California, are studying rates paid for signals. Some believe wagering outlets that don't support live race meets should pay higher fees; Nevada only has limited fair racing.

At The Mirage, the race book, which occupies about 25,000 square feet, is the lowest revenue-producer of all the gaming options. The industry standard for simulcast signals is 3%, though it could be lower or higher depending on deals between tracks and horsemen's groups.

The Nevada Pari-Mutuel Association has been in high-profile conflicts with racing entities, including the California tracks, over rates paid for signals. In total, about $500 million a year is wagered on racing in Nevada casinos each year.

"If we had any less of that pie, we probably wouldn't be in the business of racing," McBeath said. "We like the partnership with the racetracks, but when you look at how much space we have to dedicate (for pari-mutuels) ... I don't mean to infer we're going to walk away from the tracks."

McBeath said the racing industry must realize it's getting bang for its buck even though that $500 million accounts for a small percentage of total handle in the United States. He said the combination of televised racing and other entertainment options at casinos is positive, and that having racing on televisions in casinos is a marketing and merchandising tool for the industry.

"It's a critical percentage (in terms) of contribution to the industry," McBeath said of pari-mutuel handle at race books in Nevada.

McBeath, who called himself a racing fan, likened the racing product to the casino industry of years ago. He said Las Vegas reinvented itself, and so must horse racing.

"It hasn't evolved," McBeath said of horse racing. "The growth hasn't been fueled by capital expansion, it has been fueled by innovative distribution channels (such as off-track betting, account wagering, and interactive wagering). But it's the same demographic."

McBeath said MGM Mirage is interested in the racino sector, but as for the NYRA situation, he would only say the company is monitoring it. NYRA has been under investigation by state and federal authorities, and it's believed an indictment is imminent. Still, the association is expected to maintain its franchise to operate Aqueduct, Belmont Park, and Saratoga.

"We were very bullish on it in the beginning," McBeath said of the Aqueduct VLT project, "but we weren't aware (at the time) NYRA was in the middle of a federal investigation."

McBeath said NYRA is "critical" to racing and the state of New York in general, and that with regulatory approval, MGM Mirage would continue with the VLT project. He called it a "very, very unique situation."

In other remarks, McBeath inadvertently gave another wake-up call to the racing industry, though he was speaking about how the casino industry had to look to avenues other than gaming, it's core product, to drive revenue and maintain public interest. He said the battle continues as younger people, who want fast action, seek new and exciting entertainment options.

"If we can't deliver that kind of innovative entertainment to them, we're done," he said.