The Associated Press recently ran a story on racino subsidies (our previous posts on the subject) for the racing industry, explaining how these subsidies translate to corporate welfare for an inexorably declining industry. (This decline has two root causes: competition – the younger generations prefer full-service casinos; changing sensibilities – more and more people find the whipping and killing of sentient beings for gambling repugnant.) The article begins thus:

Horse track operators and breeders are concerned the good times might be trotting to a close as some states move to rein in a lucrative subsidy that’s helped prop up their long suffering-industry. Twenty states divert a slice of casino and slots parlors revenue to help boost horse racing prize money…but facing budget deficits and out-of-state casino competition, some lawmakers are reassessing.

…Such subsidies are a critical lifeline for racing, which has seen steady declines across a number of industry metrics, including the number of races and racing horse births and overall betting activity… Few tracks even keep attendance numbers anymore because the numbers of spectators has dropped off so dramatically… Nevertheless, there was over $1.1 billion in prize money available in 2014, thanks in large part to the racing subsidies, which generated over $400 million toward purses that year…

The reassessing:

In New Jersey in 2011, Gov. Chris Christie ended a direct, $30 million subsidy to the racing industry from the Atlantic City casinos. Lawmakers in West Virginia have also pared back the percentage of slot machine revenues diverted to the industry in recent years, leaving owners and breeders there anxious. The debate has played out in Iowa, Indiana, Delaware and elsewhere too.

In Pennsylvania last year, state Rep. Todd Stephens proposed redirecting $250 million from the state’s horse racing fund to public schools, noting that a Saudi prince and other wealthy foreign horse owners were among the beneficiaries of the inflated prize money.

“It’s not government’s job to pick winners and losers,” Stephens said this week. “I generally oppose crony capitalism and corporate welfare-types of programs.”

Amen.

This is America, where, at least in theory, businesses are left to sink or swim based on their merits – their goods and services. If that, one of our founding economic principles, is applied here, the bulk of American racing would go the way of the horse-and-buggy industry. So, for those looking to help (besides, of course, sharing the daily carnage reported on this site), please, if you reside in a racino state, contact your legislators; let them know that proceeds from state-promoted gambling should be flowing to education, health care, and other noble causes – not to an archaic, mostly no-longer-viable industry. Racing can be toppled. And sooner than you think.

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The Paulick Report (11/7) says that Oaklawn Park has received a record number of stall applications for the upcoming meet (Jan 9th). The reason: a record amount of available purse money ($23 million). On the surface, all seems rosy in Arkansas. But…

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Oaklawn is a racino track; in a January 2013 DRF article, Oaklawn’s GM conceded that at that time revenue from gaming – reel/table games – accounted for close to 50% of total purse money. And that was up from 40% the year before. A “critical component,” he called it. Chances are it’s even higher now.

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So you see, the Paulick press release is grossly misleading: With nary a mention of the corporate welfare (welfare because the money flowing from gaming to horsemen is unearned and state-mandated), the implication is that Oaklawn racing – as measured by bets and attendance – is thriving. It is not. Distract and deceive, the racing way.

“The only reason it’s [Aqueduct Racetrack] in business is because of the casino.” (horseplayer “Harry the Horse,” Gothamist)

Writer Max Rivlin-Nadler sets the scene on Aqueduct’s Opening Day (Oct 29th):

“Aqueduct, with its wooden seats, tobacco-stained walls, and cavernous feel, remains as a vestige of a seedier time in New York City, before such cathedrals to vice were done in by changing tastes and corrupt management; $14 million in recent capital improvements have given Aqueduct a new scoreboard and a beautiful mural, but still, opening day didn’t really have much of a celebratory air about it.

‘This place has depreciated a lot,’ Angelo [another horseplayer] told me. ‘Used to be men in suits—now look at us.’ The crowd was as outerborough as it gets. Sweat suits, crumpled hats, and an air of desperation that tends to hover around people who bet on horses.

At noon, racing season at Aqueduct officially began with an electronic rendition of the Star-Spangled Banner. On the third floor of the race track, an elderly man stood up and faced a monitor that was displaying the flag, the only soul in a vast concourse that had a maximum capacity of 768.” (full article and pics here)

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With a few exceptions (Saratoga, Keeneland, etc.), Aqueduct is 21st Century American horseracing – eschewed by the young, sustained by racino cash. So you see, we are most certainly not fighting a losing battle. When state legislatures tire of propping an archaic industry – and they will – much of it will go. Guaranteed.

What happens when the corporate welfare you’ve been receiving for some 20 years is no longer enough? We may be finding out in West Virginia where that state’s two Thoroughbred tracks, citing a lack of adequate purse money, are dropping end-of-year race-dates – 21 combined between Mountaineer and Charles Town. In a rich explanation relayed by Blood-Horse, officials say the insufficient purse money is a result of “legislative grabs” of the tracks’ Video Lottery Terminal revenue.

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Just to be clear, VLT revenue that’s funneled into purses is a subsidy from the state; subsidies, by definition, are gifts. So if the state is grabbing, it’s only grabbing back what should never have been the horse people’s in the first place. Here’s hoping that West Virginia continues to grab until Mountaineer Casino, Racetrack and Resort and Hollywood Casino at Charles Town Races drop the racing parts of their names.

It is such a crucial point that it bears repeating again and again and again: Without the corporate welfare euphemistically referred to as racino gaming, much of horseracing in the United States – including practically all of harness racing – would have vanished by now. One needs to look no further than Suffolk Downs, which after not receiving the Boston casino license, is done – shuttered, hopefully, for good.

In Illinois, a similar life and death struggle is playing out. A recent Craine’s Chicago Business article starts thus: “Chicago’s horse-racing circuit may be heading into its final furlong. Once hosts to one of the most popular sports in America, the area’s two thoroughbred tracks, Arlington International Racecourse and Hawthorne Race Course, today face a bleak future showcasing a niche product with a dwindling fan base.” Says Arlington’s chairman, [Illinois racing] “is just about ready to collapse.”

The article goes on to note that horse-betting in Illinois is down 42% over the past decade (and 33% nationally); the Illinois Board has already cut 15% of the tracks’ 2015 dates. The reason: Horseracing can no longer compete with 21st Century gambling – casinos and lotteries. Besides, they’ve already been subsidized – to no avail:

“Both tracks have been propped up for the past three years by an impact fee that redistributed nearly $75 million from Illinois casinos to be used on purses and track improvements. But that money has been exhausted, leaving the tracks to fund purses with only what people are betting.” Imagine that.

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Finally: “…the tracks are struggling to compete with venues in Florida, Louisiana, New York, Ohio and other states that allow ‘racinos’ – tracks that include casino gambling, which allows them to bolster purse sizes and attract better horses. That keeps them far healthier than Illinois tracks, even though slots make up most of their business, essentially turning them into casinos that happen to offer live racing. Complicating Arlington’s situation: Churchill Downs [Arlington’s parent company] gradually has been getting out of the horse-racing business and focusing on its more lucrative casino properties.”

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“Essentially turning them into casinos that happen to offer live racing.” Exactly. As for Churchill Downs wanting out of the racing business, what more needs to be said? Illinois politicians, don’t fall for the pity party, let racing go the way of every other obsolete industry in our nation’s history. Enough. Let it fail. Let it fail.