'Sport of kings' - Nevada race books business getting smaller

Aug 7, 2012 3:07 AM

Everything about the “sport of kings” and the Nevada race book business is getting smaller.

There are fewer bettors wagering less than ever, which reduces what’s available for all parties associated with the current system.

“The sport of kings has become the sport of jacks,” jokes South Point Casino owner Michael Gaughan in a stab at some dark humor.

Gaughan shared a bit of his thinking in a recent conversation with GamingToday as negotiations continue to find a solution for the disagreement that appeared for several days to threaten the loss of live television links between the tracks and Nevada books.

The issues will get a thorough airing Aug. 24, before the Nevada Gaming Commission, which scheduled the “talkathon” in an attempt to head off the threatened shut down.

Gaughan’s son John owns Las Vegas Disseminating Co., the exclusive provider of TV signals linking the tracks and local books. He has recently been balking at the details of a proposed new contract negotiated by the Nevada Pari-Mutuel Association, a creation of the state that was intended to help establish a level playing field, giving all Nevada books equal access to whatever is being offered.

It’s playing a significant role in what’s happening now as John Gaughan asks for a bigger piece of the pie than a proposed new contract offers. Business is down and expenses are up, is the way the situation was described by several sources familiar with the big picture of race book operations.

Whether it has been a good idea to stick a level of bureaucracy between separate layers of private enterprise – tracks and race books – is an issue that will probably get much attention as the dissemination business moves forward in a fast-changing world that has major new players with a big interest in the issues.

John Gaughan was not available for comment and the elder Gaughan insisted he does not want to get in the way of his son’s negotiating. However, as a long time operator in the race and sports book business it was clear he has opinions – no surprise to his friends or competitors in the business – some of which he did not mind sharing.

The biggest mistake that’s been made during recent years, he believes, was the action of the state about 10 years ago when it forced the books to stop offering rebates, which were an incentive to bettors with the deepest pockets – particularly those from California where such perks are not available.

State officials objected to the rebates, according to several sources, because they resulted in less taxable revenue being reported.

“But what happened,” Michael Gaughan said, “is that the biggest bettors just went to the islands” (off-shore casinos) where they are still said to be getting the rebates that provide a significant marketing incentive.

So much for a level playing field.

Michael Gaughan put emphasis on a point that was echoed by other operators who were willing to offer thoughts only if they were not identified by name or affiliation.

“The business is getting smaller,” he said, “and there is no new business. That’s what is happening in racing everywhere...If I want more business I have to take it away from one of the other books. The same thing goes for them. There are no new players.”

That’s why tracks just about everywhere have been lobbying on behalf of efforts to install slot machines, a strategy that only seems to keep the racing business on some sort of life support system in most locations.

Michael Gaughan let that thought hang there for a moment before saying it again. “John’s expenses keep going up.”

It’s a situation that does not create a picture of big profits on either side of the issue, but as another source familiar with current negotiations aimed at averting a shutdown said, “I think we’re about halfway there (to a new contract.). The business is not going to go dark.”