Officials Discuss Benefits of Racetrack Gaming

by Kathleen Adams

If horse racing is to gain ground, racing interests and state lawmakers must find a way to integrate pari-mutuel wagering with electronic gaming devices, said Dr. Richard Thalheimer, professor of equine administration at the University of Louisville.

"In the 1980s, casinos and state lotteries really got started," Thalheimer said to participants Oct. 28 at the university's annual State of the Industry Forum for 2002. "Horse racing has lost considerable revenues to the competition. Consumers today have an alternative that they never had before and they're substituting pari-mutuel for these other forms of gaming."

Thalheimer said live handle now represents only 17% of racing revenues. He said that even when racetracks bring in slot machines, pari-mutuel handle doesn't go up overnight.

"Real handle goes down," he said. "People who play slots don't play the horses. But the handle doesn't decrease as much as it would without slots."

In order to increase handle, purses first need to increase, Thalheimer said. And one sure way to that is by introducing electronic gaming devices at racetracks, he said.

Panel members shared his opinion. They discussed what is ailing pari-mutuel wagering today, and offered suggestions on how to solve the problem.

Thomas Early, secretary/treasurer of the Louisiana Thoroughbred Breeders Association, said slot machines went online at Delta Downs earlier this year, and $1.6 million per month is generated for purses.

"Racino" is a term used to describe the marriage between racetracks and electronic gaming devices, but it's not a term Edson "Ted" Arneault, president and chief executive officer of Mountaineer Race Track & Gaming Resort, likes to use in reference to his facility.

Arneault said critics originally attacked the idea of bringing slot machines to Mountaineer, located in West Virginia.

"We were told we were going to ruin racing," Arneault said. "That hasn't happened. We're an entertainment company because that's what we have to be. That's what horse racing is faced with. If we don't define our course as that, then we're going to miss out on a big opportunity."

When slot machines arrived at the 18 racetracks scattered across Ontario, Canada, people came out of the woodwork to open up new tracks, said Jane Holmes, executive director of the Ontario Horse Racing Industry Association.

"Not because of the horses," Holmes said. "But because they wanted slot-machine revenue."

Holmes said the industry receives 20% of slot machine revenue. Responsible gaming programs get 2%, and purses 10%. She advised racing interests looking to integrate their pari-mutuel product with electronic gaming devices to speak with one voice and develop a consistent message.

"It's critical to go to the government stressing economic development and spin-offs," Holmes said. "In our case, there are over 28,000 horses in Ontario, and they generate over 45,000 jobs."

Aside from presenting a unified front, Holmes suggested the racing industry must nurture relationships with politicians and their staffs.

"We've made the government our partners," Holmes said. "Sell what they want and dovetail into that. Feed into the government's messages."

One person at the forum who listened closely to what Holmes said was Kentucky Rep. Robert Heleringer. It was Heleringer who drafted a bill that would have allowed video lottery terminals at Kentucky racetracks.

"The common thread here was the importance of a unified industry," Heleringer said. "Overall, my goal is to protect this way of life and this business. Otherwise, we're going to lose a couple of racetracks and hundreds of jobs. We're already losing horsemen."