The customer matters.Wow, what a concept. The way it is supposed to work is the racing industry puts on a product which gamblers find attractive which results in horseplayers wagering money. The more money wagered means higher purses which makes existing owners and new owners wanting to buy more horses which increases the prices of yearlings, which results in a market for the breeders; not the current model where the racing industry basically is handed money (or given a percentage of the profits from slots) from the province/state to replace the need for the customer. Would anyone accept a NASCAR industry where the state gives NASCAR money to race for in front of empty grandstands and no television? No, they have to put on a product which the public wants in order for them to prosper.
After talking to horseplayers, the report calls for an investment in developing a customer base by “…putting on competitive races featuring larger fields, full cards (at least 10 race per day) and sizable pari-mutuel pools (deep enough to prevent a single last –minute bet from dramatically changing the odds)”. How do they suggest doing this? Establishing a race calendar with dates, times, and conditions to maximize uptake (otherwise, don’t compete against yourself); full fields; enhanced wagering opportunities ; reduced takeouts for some racing to ensure paybacks to horseplayers; consider the needs of the horseplayer when deciding on race dates, conditions and other issues.In the past, the schedule was set up to maximize racing dates for horsemen, which meant too many racing dates. When a track complained about the lack of interest in their product at a certain time of year in an effort to reduce date allocations, the ORC typically denied the request. Many gamblers complain that Ontario has some of the worst takeout rates around and the province has multiple tracks racing against each other at the same time. If the new policy is successful, there may be more interest in the product and develop a handle which can sustain racing.
How does this get accomplished? Basically the report calls for the creation of a Horse Racing Ontario provincial secretariat which will basically run the industry by assigning race dates and the like, not unlike Harness Racing Australia. This will allow for racing to be set up so competition within the Ontario brand is minimized. If there is one track racing, more money is wagered at the track which means deeper pools which attracts gamblers instead of divvying the available amount of money to be wagered into little pieces.The report calls for purse pooling which means purses levels will be set for each level of racing and any excess purse money generated at a race meeting will be put into a pot to help pay for the purses at a track which doesn’t produce the wagering revenue needed to support the purse levels designated for the track.
For the horsemen, things are understandably gloomy. Under these concepts with the goal that racing be sustained by gambling, race dates and purses get cut. How does this happen? I concentrate on standardbred racing.The committee eliminates purse subsidies for overnight racing. It eliminates any assistance for horsemen, with the subsidy going to the racetracks to cover the expense of operating the racetrack and race meet. So when you see the total amount of purse money being suggested, it looks at what would have been available from wagering in 2011 while the total amount in 2011 includes slot revenue. With the reduction of race dates, they figure purses can be 80% of the 2011 level.
· ‘A’ tracks (i.e., Woodbine/Mohawk) – Average race purse reduced 20% with only 140 days of racing (versus 243 days in 2011). Total purses of $37 million ($264,000 a day) down from $81 million in 2011.
· ‘B’ tracks (i.e. Signature tracks) – Average race purse reduced 20% with only 300 days (versus 700 days in 2011). Total purses of $22 million ($73,000 a day) down from $60 million in 2011.
· ‘C’ tracks (i.e. Grassroot tracks) – Average race purse reduced 20% with 140 days of racing (versus 308 days in 2011). Total purses of $4.2 million ($30,000 a day) down from $18 million in 2011. The grassroot tracks are the exception to the rule with regards to race dates and purse levels. If using the 80% rule, only $3.5 million days of racing would occur with 76 days of racing. The committee decided for the province to maximize the return on their investment it needed to increase the amount of purse money available and the number of days of racing at the grassroot level. No doubt, this is where purse pooling comes into play.
The committee does provide for additional sources of income for racing and the racetracks through several sources. One option is a horse racing lottery (such as the V75), the other is wagering on past races. The non-racing revenue would come from single game sports wagering. These are options that will not be available through non-racing outlets.Overall, the number of race days is reduced 54% while total purses are reduced 54% for the WEG circuit, 64% for the Signature tracks, and 77% for the Grassroot tracks. The Ontario Sires Stakes and other breeder awards will remain at their current levels.
So where would racing take place? The report talks about a core of six tracks which includes thoroughbred and quarter horse interests. It appears obvious that Woodbine and Mohawk are part of the core as is quarter horse track Ajax Downs. From who was consulted for this report, I would assume The Raceway at Western Fair District is a member of the core of six. As for thoroughbred track Fort Erie, things are a bit cloudy. They talk about a 30 day season for ‘B’ track thoroughbred racing, but being the report talks about previous conversations concerning moving the thoroughbred meet to Ajax Downs and the removal of the slots from Fort Erie so not to compete with the existing casinos in the Niagra area, I would speculate Fort Erie Racetrack is not part of the core of six. So, assuming it is Mohawk, Woodbine, Western Fair District, and Ajax Downs, it leaves two other tracks to be listed. However, the report did say if other tracks agreed with the principles outlined in the report and it made sense, this number could be expanded.The report goes into details of a three year transitional subsidy that is for the racetracks only, to cover the expense of putting on horse racing on a break even basis. By the end of the three years, it is assumed the tracks will be able to absorb this expense through the new sources of gaming income.
The report also states it is the breeders and owners who are responsible for race horses after their career is over and it calls for the development of a horse lifecycle plan to deal with developing second careers for horses and their welfare. You are encouraged to read the report yourself.Even though racing interests were consulted and agreed with the report findings, I am sure horsemen are not pleased. After all, when you go from the gravy train to living within your means, no one is happy. Racing is now faced with living within its means and if it wishes to race for higher purses, it must actually care about the customer once again and compete for them.
How do you compete for the gambler? You compete against the casino industry. It can be done by lowering the takeout and updating the game by speeding things up, offering variety such as monté, distance racing and second tiers. In other words, lose the constant reply of “This is the way things have always been done” and adopt the attitude of “Why not give it a try?”. This is what ever other business must do.Horsemen in other jurisdictions must not like this report either because it is only a matter of time until this report gets read in statehouses in the United States and when that happens, the gravy train may come to an end in the United States.
Update; The OHHA suggests the study merely delays the death of horse racing. Read it here.