Horses aside, slots still needed to survive long term

Sep 4, 2012 3:09 AM

There are few genuinely happy campers among those affected by the new contract governing the supply of race information to Nevada race books.

The pact is a reflection of the trickle down effects associated with hard times in the racetrack industry where the need for products that will bring more people to U.S. tracks has never been more apparent.

For instance, a senior executive at New Jersey’s Meadowlands track was recently telling state legislators it “cannot survive long term without the addition of casino gambling.”

Casino companies such as Caesars Entertainment, Boyd Gaming and Penn, to name a few, have been busy buying pari-mutuel facilities that may get the right to operate slots.

Control Board Chairman Mark Lipparelli says there may be further discussions about adjustments to the Nevada agreement later this year as regulators monitor the implementation of the contract negotiated by the Nevada Pari-Mutuel Association’s rate committee on behalf of books and Las Vegas Dissemination Co., the current sole supplier of live race video and other wagering information to more than 80 Nevada wagering parlors.

The core issue continues to be a simple one. South Point Casino owner Michael Gaughan, whose son John owns the dissemination company, says there are more books than ever fighting for a slice of a shrinking revenue pie that is about a third of what it was five or six years ago.

Gaughan also notes that the Nevada picture is no more or less than a reflection of the declining health of thoroughbred racing.

 “There is no new business and the tracks that don’t have slots or other forms of gambling are not in good shape,” he said.

It remains difficult to say how much of an appetite there is for promoting local change, some officials taking the view that anything that keeps books from going dark is to be cheered.

Jay Rood, the vice president of race and sports at MGM Resorts International said, “It is definitely a good thing that they (the rate committee and LVDC) came to a compromise following their recent meetings. The agreement kept books from going dark, enabling our guests to continue enjoying the full spectrum of race and sports experiences.”

A “compromise” is by definition something short of the most satisfying answer. The roughly seven-hour recent meeting before the Gaming Commission seemed to exhaust everyone. Most of the news media had left before the final vote was taken.

What are the possibilities for changes that might make a difference? Michael Gaughan likes the notion of books again being given the right to offer rebates to customers whose action reaches certain levels. Gaughan says he is not going to push for this by himself, noting that some books – Palace Station being an example – seem to frown at the idea of rebates.

By the time contract negotiations were completed last week LVRDC and the committee were about $127,000 a part. According to one insider that amounted to a little more than $4 a day per book.

Lipparelli thinks one key to a changed environment might involve another supplier being willing to step up and compete, but he questions whether the economic incentive is sufficient to encourage competition.

“Revenuers are not what they used to be,” he says.

Others wonder about the logic of continuing to keep a “bureaucratic body” between local books and the tracks.

I wonder what the race book business will look like in seven years as tracks across the U.S. push for the right to increase their list of gaming options.

Contact Phil Hevener at [email protected]