Racinos attract slots players but don't make them racing fans

Mar 11, 2008 6:00 PM

Burnt Offerings by Stan Bergstein | Each year, North American horse racing executives – harness and thoroughbred – meet jointly to discuss problems and solutions. Next February they meet again at Bellagio, with racing writers and five or six other groups joining them in a four-day Congress.

They met last month in St. Petersburg, Florida, and as usual some high level speakers led the discussion. One panel, in particular, produced provocative thoughts.

On the dais were Chuck Atwood, vice chairman of Harrahs Entertainment; Jeff Gural, principal owner of Tioga Downs and Vernon Downs in New York state; Charles Hayward, president and CEO of the New York Racing Association that recently retained operation of Belmont Park, Aqueduct and Saratoga Raceway for another 25 years; Chris McErlean, the youthful former head of racing at both The Meadowlands and Monmouth Park in New Jersey, now an executive with Penn National Gaming; and Bill Oberle, chairman pro tem of the House in Delaware, and a prime mover of the slots bill in that state that converted its three tracks into major racinos.

Racing commentator Dave Johnson moderated the panel, whose subject was "Keeping the ‘Race’ in Racinos: Are They Simply Purse Builders, or Can They Offer Meaningful Opportunities to Broaden Its Patronage?"

 Johnson, who later that night hosted a fascinating awards dinner conversation with Brian Cashman, general manager of the New York Yankees, and Brian’s father harness racing Hall of Famer John Cashman, opened the racino panel by asking the panelists whether racinos would put thousands of patrons back in grandstands.

Charlie Hayward, the first to speak, said they had a limited ability to do so, but noted that "patronage" now took in two disparate groups: the horse player, who studies performance, and the slots player, who does exactly the opposite. Hayward, whose Aqueduct was promised a casino seven years ago with 4,500 machines but still can’t break ground, noted that slots at a racino there could increase purses at Aqueduct by $30 million a year, a 25% increase in present purses that run about $350 thousand a day at Aqueduct, $550 thousand a day at Belmont, and $800 thousand a day at Saratoga.

Hayward noted that while the state legislature at Albany fiddled around the New York Racing Association lost MGM as a racino operator, the Vegas giant bowing out after delay and worrying about what Albany had in mind in splits. When the law finally appeared, MGM’s withdrawal looked like a smart move. Hayward concluded there was an opportunity to increase patronage though better racing, if the opportunity ever materialized.

Jeff Gural, who built a compact little model beauty of a race track in Tioga Downs near Binghamton, New York, said there was too much racing and it had lost its appeal through oversaturation. Gural contrasted facilities, his gleaming new Tioga which was built for 3,000 and is packed with that number, and his Vernon Downs built half a century ago for 8,000 and desolate now with the one or two thousand it draws.

Chuck Atwood of Harrahs said there is no evidence yet of crossover of customers from one activity to the other, but he characterized what he called "network benefits," where racinos could produce enhanced benefits in other ways, such as modernized facilities, which could lead to greater play.

Bill Oberle of Delaware, the kind of legislator racing executives dream about – he owns half a racehorse, "unfortunately, the half that eats and needs all the vet work," and has for years. When he drafted the Delaware slots law he envisioned it forcing people who wanted to gamble on slots to go to racetracks to do it, and in that regard the three Delaware tracks – and their horsemen – benefited immensely. Oberle said the lack of crossover does not necessarily bother him, but the hugely elevated quality of Delaware racing delights him.

Chris McErlean, youngest of the group, thinks mandatory long racing dates are self-defeating, and that racing needs to race less and more selectively. "It’s not realistic," he said, "that somebody’s going to come out on a Tuesday night to Penn National. That’s not going to happen. But if we run the business as well as we can, put out a good product, I think people will respond to that." Asked if he was optimistic, McErlean replied, "I’m young. I better be."

Underscoring the panel discussion was the action a few days later in New Jersey, where tracks were forbidden from asking for slots for three years… for a price. Under heavy pressure from Gov. Jon Corzine, Atlantic City’s casinos agreed to supplement purses at New Jersey’s three tracks, and its horse breeding industry, by $30 million a year.

But no racinos!