Thursday, July 2, 2009

Don't Shoot the Messenger

Today in the TDN Arthur Hancock wrote an op-ed piece in which he states an opinion that is contrary to many of those in Kentucky, and the industry in general, while taking a stand against slots. On this issue I am am full agreement with him.

In my opinion the introduction of slots is the beginning of the end for racing. I understand that the initial boost of money received by racing in those jurisdictions where slots are introduced is welcome and seems an end to the penurious existence in which they exist. However, the mere fact that they are receiving an allowance from another industry should make it obvious that they are becoming expendable.

Racing requires hundreds of acres of land - often urban - and,for all intents and purposes, removes that land from the tax grid. Racino's/casino's, whatever you choose to call them, have the benefits of needing much less real estate to be productive, have a guaranteed return on ratio of money wagered and require much less in outlays for insurance, maintenance and salaries, to name just some of the monetary benefits. The lure of tax dollars for states and municipalities (and greedy politicians) is great. When presented with these scenario's what do you think will happen?

Many will scoff at these suppositions and liken me to Chicken Little proclaiming that the sky is falling. Well, in racing it is. And if the fans of racing don't organize we may be attending the funeral before our own time's are up. I can go on an name the tracks we have already lost over the years but instead I will just remind you that in the last year we have lost Bay Meadows, we are watching Hollywood Park only because of the real estate bubble burst and that all of Magna's properties are in jeopardy. Just in case yo don't know which tracks they are let me name a few of the most prominent: Santa Anita, Gulfstream, Laurel and Pimlico (both already reeling), Lone Star.

Here's a quote from today's Saratogian:

For the past several years, the city had derived as much as $3.8 million in state aid from the facility as compensation for hosting video lottery terminals at Saratoga Gaming and Raceway.This year, the city was expecting to receive about half that amount, but the state decided to change the formula entirely, redistributing the money away from Saratoga Springs, while every other host community continues to receive the aid."The new formula discriminates against one community alone," Ivins said. He pointed out that the city had previously lobbied for the money, and that state representatives had voted against the budget, but it had passed anyway.

In NY,as everyone knows by now, NYRA has received a new 25 year lease to manage racing at Aqueduct, Belmont and Saratoga. In return NYRA agreed to cede undisputed ownership of the land on which those tracks are built, to the state. At that moment, again in my opinion, we should have heard the bell toll. It is my feeling that neither NYRA nor the State had claim to those properties. I believe the families of the Vanderbilt's and Belmont's own them, but that is beside the point. Why was that an issue to the state? Perhaps politicians can see into the future better than we are able. Perhaps they see a future without racing. A future with Casino's, simulcast outlets, housing developments and malls on all those acres?... all very taxable, all very profitable. And, of course, for those holding positions at NYRA it is another guaranteed 25 years of employment/benefits/retirement in exchange for something they have absolutely no personal stake in protecting. Do you think even one NYRA exec or employee was concerned for racing? It's not being paranoid if they're really after you!

It's a wonder that NYRA was allowed to "sell" off all that property around Aqueduct recently if they didn't own it, isn't it? If Aqueduct exists ten years from now I will be the most surprised person in NY.

Saratoga Springs has recently been informed that video table games will be up and running in the racino within a year. Can anyone read the writing on the wall?

I may not have the same perspective as Arthur Hancock as to how, or why, slots are bad for racing, but I know that in the long run, they are. If there is a future for racing it has to be racing. It is a great sport / business and can exist and be profitable on it's own... given the chance. Those vampires that are living off of it are selling it down the road because they see even more dollar signs with easier pickings elsewhere. I see CDI in this group. Remember that the takeout was created many, many years before there were ADW's and interstate simulcast sharing of that revenue. Originally the tracks/ horsemen divided the entire takeout. As the system is now set up horsemen/tracks receive just a fraction of the takeout from their "own" track. And they are told that what they receive is enough.

Racing is in real danger, both from the remora and the "apparent" solution of racino's. I wish I had a solution to offer but I don't. The best I can offer is to suggest that the majority of the takeout be legislated by law to be returned to racing to fund what it was originally intended: the sport. Make the distribution of takeouts uniform throughout the country so every locality has the same ability to profit or fail from the product they produce. In 1978 Congress created the Interstate Horseracing Act to protect horsemen and racetracks from being ripped off. That legislation needs to be revisited before it is too late for the sport.

Fri. Addendum: I apologize for an incomplete piece last evening. In the NY metro area we were having severe T-storms (again) and the power had already gone out twice so I just posted what I had lest I lose something in transmission. In any case what I really wanted to say after the quote from the Saratogian is that I am not a proponent of government being the care-taker and decision-maker for and about racing, for exactly the reason illustrated. Government is as greedy as any other player. And once they have what they want (more money) and no longer need to deal with you they can change the rules. And they do, as Saratoga Springs is now realizing. I am certain that the $3.8 million SS had received is a pittance compared to the money the race fans bring to the town and entire area in just six weeks; not to mention the vibrancy that makes the town a destination as well. When SS becomes just a day trip to the casino what will all the secondary and tertiary business' do to survive? The scope of racing's good far exceeds just the racetracks.


Anonymous said...

I agree.

hoist the flag said...

I agree entirely with your take on slots. Rather than subsidize racing, it is just a matter of time until folks realize that slots can stand on their own, and benefit the stockholders of the slots companies and the states that tax them, without all the losses racked up by racing. To survive, racing needs to stand on its own. In this regard, I think the success of Churchill's Friday night racing is encouraging. We need more innovations like that.

Two other points--the last thing anyone who loves racing should want is for Congress to revisit the Interstate Horseracing Act. Once Congress begins to tamper with the statute, all sorts of language might be inserted by those who have no love for the game.
As to your surmise about NY wanting to obtain the rights to the property on which the NYRA tracks are located, the real reason is simple: NYRA, through its claims on the land, had a stranglehold on the franchise. While the state threatened to give the franchise to someone other than NYRA last time around, NYRA appropriately rejoindered that someone else can have the "franchise," but they better get themselves some new tracks since the Big A, Belmont and Saratoga and the land on which they sit belonged to NYRA. The transfer of the property to the state once and for all puts an end to that nonsense.

George said...

Good points on all aspects "hoist." As to the land I agree that the state wanted it for the undisputed ability to control the racing and contracts to run the meets at NY's three premier tracks. Yet, this just underscores my point about how no one at NYRA really gave a damn about the racing. It was their leverage, their 'ace in the hole,' and they just gave it up for an extension. Obviously NYS was concerned that they weren't the rightful owners and insisted upon the legal transfer. That speaks volumes by itslef. I'm more concerned now that the state has possesion. At least NYRA's raison d'etre is racing, without it they don't exist so they had more a vested interest in the sport. However, because the property in realty was not truly anyone's at NYRA it was all too easy for them to trade it away for a secure future for their working career's. It's a pity, really. I would still contend that with the disbanding of NYRA the track properties would likely revert to the original owners at the time of NYRA's formation. I think, though I would have to do a lttle research to be sure, that those were the Vanderbilt's and Belmont's. Thanks for the comments.

Punter said...

i love racing and I agree with what "hoist" said. this is easy for NYRA as they don't really care what happens to racing.