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Saturday, March 8, 2014

The 'W' Word

After my last post, some individuals agreed with the basis of my comments but objected to the term 'welfare' when referring to purse supplements.  As a result, it may be as good a times as any to discuss the use of the term 'welfare' payments when it comes to purse subsidies.

I would not call the payments under the old SARP program welfare payments because it was a case of Ontario planning to introduce slots anyway.  In Ontario, the supplements paid was compensation for slots crowding  into the racing market.   You could argue those payments were impact fees.  One may still question if there should be a limit to how much racing should get in supplements, but clearly the payments were compensation, not welfare.  Of course, that has now changed.

However, in many states, the horsemen were cheerleaders for slots.  It was not a question of the slots crowding out racing; it was racing looking for slots to come in in order to increase their purses.  One could argue horsemen had already given up on their product and were looking into anything to increase their purses.  The lobbying began and states legalized slots with a certain percentage of revenue designated for horse racing in order to keep the industry afloat.  You may want to call it an entitlement program, I called those payments welfare.  Looking back, it would be more appropriate to call those payments economic stimulation aid; an attempt to stimulate the racing industry...

As I mentioned yesterday, I have no problem with purse enhancements being given to racing in an effort to keep the industry relevant.  However, once the industry has been stabilized, there should not be a blank check to how much racing should be given to support their industry. There needs to be a limit.

To illustrate my point, I am going to use a fictional track called Harness Downs.  Harness Downs is in the state of New York.  At one point, the Opens were going for $15,000.  Thanks to the initial legislation, the open at Harness Downs was raised to $35,000.  That should be enough to keep the industry going strong.

Let's say the tracks in New York got casinos and the casino end of the track business was doing very well.  Based on the new revenue projections, Harness Downs can now have an open racing for $70,000.  In the meanwhile, the racing handle has not increased .  Should Harness Downs be racing for $70,000 purses while the handle remains unchanged?

The point is racino states have already subsidized racing and supporting industries by elevating purses.  The state through initial legislation had stabilized racing.  The question is at a certain point, if racing and the industry wants to move forward, should it be by improving the business or by getting checks for additional funds without doing anything to improve the business?.  There comes a time where the industry needs to be held responsible for its further growth.

Hence, I see no problem with laws which caps slot revenue at a certain level.  I do think in the case of New York there is a problem with marketing the sport so it would be appropriate for the legislature to address flaws with the original legislation; in this case to get the marketing of racing to take place.

So yes, perhaps I was too harsh when I called the original slot payments welfare.  However, if one is seeking additional funding to continue to do the same old failed things in order to race for more money,that is welfare plain and simple and I will make no apologies for calling it like I see it.

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