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Sunday, January 4, 2015

Oh, the Irony of It All

You read stories about casinos removing slot machines in favor of adding 'new amenities' every once in a while. There are questions as to the long term viability of Dover Downs due to the decline in revenue from alternative gaming which is threatening the fiscal viability of the racino.  Casinos were (and may continue to) closing in Atlantic City left and right.  You may be wondering "What's going on?".

Then again, you may be chuckling to yourself; after all the irony isn't lost on you.

Casino gambling is falling into the same bad habits horse racing had.

Don't get me wrong, casino gambling is more popular than horse racing and trust me, if one is going to disappear, it will be horse racing because racing's savior has turned into an anchor.

Before casino gambling busted out of Nevada, if you opened a racetrack (and didn't totally screw things up by doing things like opening a track outside of Las Vegas, or trying to open a track in Arizona in what then was the sticks), you had a license to print money.  People came to the track and just started betting, there was no real need to do anything to pull customers in, the lure of gambling did it for you.  Then after a while, tracks started to open up near others, cannibalizing each other and you had battles between Brandywine and Liberty Bell when they raced the same dates, situations such as Liberty Bell closing once Garden State Park re-opened.  The Meadowlands (with the help of NYCOTB), devastated attendance and wagering at Roosevelt and Yonkers Raceways.  In the meanwhile, casinos came to Atlantic City and more people were lured away and when racinos opened up, they had people stop going into the track section of the facility like dogs facing an electric fence.  Did tracks learn?  No, for simulcasting allowed them to steal customers away from other tracks as gamblers would forgo the local product for the perceived better product.  The industry continues to this day to have problems attracting new customers and their year-long meets and lack of coordination in scheduling leads to continued cannibalizing; stealing from Peter to pay Paul you could say.

What's going on with the casinos and racinos?  First casinos busted out of Las Vegas and ended up in Atlantic City.  Then a racetrack in West Virginia developed a concept called a racino; a track with a casino attached.  Their success was noticed and before long, every track and horseman group salivated (and salivates) at the prospect of developing a racino.   In the meanwhile more and more states started to see the vision of easy money and they welcomed casinos into their states.  Pretty soon, casinos and racinos are opening up left and right trying to gain business.  About this time casinos figure they don't need to do much to develop a customer; it was 'Open it and they will come", the problem being casino gaming has become a commodity.  So yes, if you open it, they will come, but they are coming from someone else's casino, not from developing new customers.  That's fine and dandy when you are the one opening up, but then someone else will open down the road and then you find yourself losing customers to the new casino.  There's just too many casinos around.  Sounds familiar doesn't it?

Of course, casinos are the more lucrative prospect when compared to horse racing because the sport has been further down the path than the gaming industry so you know darn well they hold sway politically in the legislatures, more so than racing interests do.  First the casinos attempt to cut their tax rate and if that doesn't stop the bleeding if they get their way, they will have their lobbyists head into the statehouses with something called 'decoupling'.  "Why should casinos be dragged down supporting horse racing?", the argument will be made and in many states where fiscal budgets depend on revenue from the casinos, their argument will be persuasive.  You can imagine what will happen to racing when the slot revenue stops flowing.

Racing needs to think again how it plans to survive in the long run for racing has made a losing bet with the racino concept, but then who would have expected the casino industry to make many of the same mistakes racing did?

Oh the irony of it all.

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