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Casinos make $
for most tracks

Nov 2, 2004 1:02 AM

The blurring of lines between casinos and racetracks continues, and with good cause. Isle of Capri was the first, when it bought Pompano Park years ago, hoping for slots in Florida. MTR Gaming followed suit, picking up Scioto Downs in Columbus, Ohio, with the idea that slots might come to Ohio.

The Mohegans of Mohegan Sun fame in Connecticut joined the club recently, buying The Downs at Pocono in Pennsylvania’s lush northeastern resort area, with slots already legalized and on the way.

And last week Argosy Gaming stepped in and is buying Raceway Park in Toledo, Ohio, betting along with MTR that slots will come in some future day when Robert Taft no longer is governor. The CEO of Argosy, Richard Glasier, called the purchase "a little bit of an insurance policy."

Penn National Gaming is a racing operation, but it makes much of its money off slots in West Virginia, and it picked up little Bangor Raceway in Maine this year after slots were legalized there.

And before the mess at Vernon Downs in central New York is over, some enterprising casino company may wind up taking over there, if they can figure out how to handle the mountain of debt accumulated in recent years, or if New York relaxes its unrealistic slots policies.

These acquisitions are not based on pure hope or whimsy. They are backed by some very solid facts elsewhere, primarily in Ontario. The Ontario government and racetracks in Ontario became partners in slots five years ago, with the goal of promoting live horse racing, benefiting the agricultural sector, and raising money for the province.

A study conducted by the faculty at the University of Guelph’s Department of Agricultural Economics tells how that enlightened program worked out. Harness racing is big business in Ontario, with 16 tracks and 17,500 races spread over 1,470 racing dates. All of the tracks now have slots. Purses in the province total about $190 million a year. Of that total, $100 million comes from slots revenues.

Basing its figures on operations in 1998, the year before slots were introduced at the tracks, and in 2002, the last full year of reporting, the Guelph faculty concluded that economic benefits in the harness racing sector alone included:

”¡ Between $58 million and $62 million in new employment income.

”¡ Between 7,300 and 8,100 new jobs.

”¡ Between 21,000 and 23,000 direct, indirect and induced new jobs.

”¡ An increase between $170 million and $183 million in total employment compensation.

”¡ An increase between $375 million and $400 million in direct purchases.

”¡ An increase between $859 million and $942 million in direct and indirect impact on Ontario’s economy.

”¡ Between $66 million and $71 million in new tax revenue.

Finally, racing, breeding, training and horse sales increased by $238 million (or 143 percent) since slots arrived five years ago.

The number of harness horses in Ontario increased by 30 percent during that time, and their value increased 203 percent by over $600 million. Horse purchases and operating costs increased by over 106 percent.

Much of the positive impact was felt in rural Ontario, where horse breeding is a major industry. All those dollar numbers are in Canadian bucks, but they translate big on either side of the border. With all this growth, Woodbine Entertainment, the major track in Ontario, built racing’s state-of-the-art racino. It is big and beautiful, themed and artistic. It is, in short, the future of racing, whether owned by racing interests or gaming interests.

There had been much talk in recent months about New Jersey’s biggest tracks, The Meadowlands and Monmouth Park, being leased or sold, and casinos were interested. The new governor, taking over the middle of this month, is Richard Codey, a racetracker of long standing. He does not plan to lease or sell either track right now, but he does plan to find middle ground between the tracks and the casinos in Atlantic City.

To stop the tracks from getting slots, those casinos entered into an agreement earlier this year under which they are supplementing purses at the tracks for three years. With Codey at the helm, expect a new relationship in the expanding interlocking universe of casinos and racing.