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Monday, October 10, 2011

A Familiar Story Plays Out in Ohio

With slots coming to racetracks in Ohio, the 1,000 pound guerilla came to the negotiating table last Friday;   how to allocate the horsemen their share of the slot revenue.  The proposed rules would give 33% of the gross slot revenue to the Ohio Lottery Commission with the rest of the funds to be divided between the horsemen and the tracks.  As you can imagine, the tracks and horsemen had much different ideas on how this revenue should be split.  With the meeting failing it appears Governor Kasich is prepared to impose his own plan based on how the other racios split the revenue.  His proposal calls for 56% of the slot revenue going to the tracks with 11% going to purses.

Now, an 11% dedication to purses sounds fantastic, but the trouble comes into play when the tracks invest in their "operations".   An annual increase of $50 million in investment would reduce what track owners pay horsemen to 10.25%; an annual investment of $250 million would get them to 9.5%, and $290 million per annum would lower the horsemen's share to 9%.  Needless to say horsemen are not thrilled with this and who can blame them, especialy when odds are the investment would be spent primarily  on the slot side of the business; likely leaving the racing side on the short end as done at most other tracks.

A purse incresae of 9-11% is nothing to sneeze at but the horsemen will be complaining and they certainly have the right to do so.  It is definitely unfair that casino operators will be spending the vast amount of capital investment and taking from the horsemen to pay for it, but in a way the racing industry has no one to blame but themselves for the years of neglect by the horsemen and track operators.  When complaining about the track operators, it is important to realize the individuals operating the tracks are not the track operators who helped run the business into the ground, but casino operators who have bought these failing racetracks from their original operators. 

Just the same, before Governor Kasich imposes his own decision, a certain percentage of the additional investment in their operations should be required on the horse end of the business; after all isn't this one of the reasons, slots are coming to the racetracks?

Updated Takeout Maps - Cangamble has updated his maps showing the takeout rates for harness and thoroughbred tracks in North America.  There is a separate map for each type of racing. I find it necessary to enlgarge the map of the breed of racing you are interested in to get the takeout rates.  It is a helpful guide to have access to.  Of course, for high-volume players playing through an ADW, your rebate amount will also factor into your decision as to which track(s) to play.


T.J. Burkett said...

This is an exciting time for Ohio racing, if certain safeguards are put in place ahead of time.
If I were horsemen, I would compromise on percentages by clearly defining what operations improvements I would allow to give up that corresponding purse percentage: conversion to HD presentation; new SAM machines every three years; new simulcast TVs every three years; regular facilities maintenance; regular barn maintenance and upgrades, etc. Horsemen should assume responsibility of the racing side of the facility. There is no better time than now when the money is new.

Pacingguy said...

T.J., absoultely. Tracks shouldn't be allowed to shirk from their responsibilities, but horsemen shouldn't be able to wash their hands and say just give me the money. Rebuilding this business is a two way street.