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Thursday, October 27, 2011

Has Racing's Time to Innovate Run Out?

This may be the wrong week to bring this topic up, but is it is possible that horse racing's time is finally running out?  The stagnation of racing when it comes to innovation finally catching up to the industry?  It may very well be.

We already know how Governor Quinn of Illinois is refusing to allow slots at the racetrack and has now come out against the idea of impact fees to compensate racing for the lack of slots.  Now in Florida, it appears a legislator has declared war against pari-mutuel racing; not only horse racing but dog racing and jai-lai.  Senator Dennis James has proposed legislation which will allow three destination resort licenses in the Miami-Dade-Broward county market which would be allowed full casinos without the benefit of offering any type of parimutuel racing.  If this legislation was approved, these casinos will pop up in the very counties that have Gulfstream Park, Calder Racecourse, Pompano Park, and Hialeah Park.  What does James think this legislation would do to racing?  The legislation would replace the Division of Pari-mutuel Wagering with a Department of Gaming Control.

As bad as this bill would be for racing with what is listed above, it gets worse.  Racetracks would not be allowed to become full casinos, being limited to slot machines; the only restriction on these casino resorts?  The inability to offer sports wagering and pari-mutuel wagering.  In an apparent attempt to wipe out pari-mutuel facilities, these resorts would be taxed at 10% while the racetracks would continue to be taxed at a 35% take rate.  Were this bill to be passed, how long do you think racetracks would survive before they were forced out of business?

Fortunately, the chances of this bill passing in 2012 is no more than 50-50.  Opposition from other counties who want to get into the casino business may derail this bill and racing is not yet ready to roll over yet so expect their lobbyists to fight this legislation.  However, based on what we are starting to see in some racing states, the Governors and/or legislatures appear to become willing to pass legislation which will be harmful to pari-mutuel racing.  Hence, we must begin to wonder if time is starting to run out on racing.  If racing is unwilling to innovate now, they may very well be signing their own death warrants.

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