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Sunday, February 19, 2012

The Error of Slots Legislation

It is clear now that the biggest problem slot legislation for racetracks has is the virtual lack of accounting where the money goes to.  Now we are speaking in general terms here, but for the most part racetracks get money for operating the slot machines which goes to the bottom line; horsemen get money for their purse account; breeders get money for their breeders awards.  While racino legislation is always intended to support the horse racing industry and the state, the problem is it is left to  everyone to spend the money the way they see fit; which for the track is their bottom line; horsemen to purses; breeders to their pockets instead of where it needs to be spent.

What is wrong here?  While racino legislation is intended to support the industry, it is basically a welfare program with little, if any, accountability.  This makes the tracks care less about horse racing as they put their money where they make money; the slots.  Horsemen are just interested in better purses and breeders are looking for their awards.  All this does is perpetuate a flawed product with no requirement of improvement.

Any future legislation for slot machines must require a certain percentage of each stakeholders share to go towards marketing programs for horse racing (not slots) on a local, regional, or a national level; capital investments on the racing side of the business (meaning improved tote equipment); and customer retention (rebates, lowered takeouts, etc.).  This would allow the parties to contribute to local and national marketing initiatives to make horse racing more popular, capital investments meaning capital to form their own or join in a cooperative ADW, and improve outdated tote equipment and the development of new wagering options as well as provide funds for seeding mutuel pools and offering rebates.

In any states considering a racino, these requirements should be drafted into the initial legislation.  For those states where existing laws are in place, horsemen need to go to legislators and seek amendments to existing slot legislation to fix the flaws in their programs, though admittedly it will be tough to get breeders and racino operators to go along with such changes.  However, the one advantage horsemen have is they would have the ability to show legislators they are serious about fixing their products and tracks can be reminded this is why they supposedly were given slots, to support their primary product which is supposed to be harness racing.  Such a dedication to specific allocations may buy the industry time before the states come back to further cut their subsidies; it buys the industry time.

Time which is running out.

This is the way subsidies are supposed to work.  Money given to fix the problems of a particular industry, not just for stuffing the money into everyone's pockets.  No one is suggesting money can't be used to boost purses and cover operating expenses, but unless something is done to improve the product, you are destined to failure as the support you are receiving is artificial and will someday be withdrawn at which point you are worse off than you were originally.


Anonymous said...

The gaming law in Pennsylvania requires racinos to promote and enhance horse racing, plus document evidence of such efforts. Does the state get these reports? Anyone ever seen them?

Pacingguy said...

I assume the racing commission sees it.

As for promoting it, Pocono Downs and Chester do promote racing through PA Harnessweek and there has been some web activity on behalf of all of horse racing in the state. Pocono Downs does advertise their OTWs.

To be fair, Pocono Downs has upgraded he racing facilities; that may be enhancement.