Sometimes it appears to be another case of which came first the chicken or the egg.
Magna Entertainment Inc. (MIEC) has been on a buying binge in order to establish the country’s largest simulcasting system, providing the most content to its bet-at-home XpressBet company. Chief competitor in this area has been Churchill Downs Inc. (CHDN) whose telephone and internet wagering system utilizes TVG, a subsidiary of Gemstar.
So far Magna has assimilated a dozen racing signals into their system while TVG has exclusive rights to the Churchill Downs tracks, as well as several others.
But, lurking in the background of these many acquisitions is the question of receiving legislative approval to install lucrative slot machines at these tracks. Although Frank Stronach, the visionary behind the Magna moves, has said that slots aren’t necessarily beneficial for the racing industry, Mike Jeannot, vice president of Magna Entertainment Pennsylvania Racing at The Meadows in Pennsylvania, was quoted recently as declaring: "This track needs slots to survive."
Pennsylvania tracks have seen many of their regular customers driving south to West Virginia to play the slot machines at the thoroughbred and greyhound tracks. In fact, since slots were introduced at the West Virginia tracks, business at The Meadows has dropped between 22% and 33%.
The other three Pennsylvania tracks are also feeling the pinch.
Supporters of the so-called "racinos" see hope in the coming election. Since the thought of having slots at racetracks surfaced in the state legislature, sitting governors ”” Gov. Tom Ridge and his successor Gov. Mark Schweiker ”” have strongly opposed any expansion of gambling. Now, the two leading candidates for the state’s top job ”” Democrat Ed Rendell and Republican Mike Fisher ”” have indicated strong support for slots.
And Pennsylvania won’t be alone. With New York state expanding gambling by approving Indian casinos and slots at some of its racetracks, the debate is expected to be revived in Kentucky, Ohio, Maryland, Massachusetts and New Hampshire.