Horse Racing's Savior? Increased Gambling

The Business of Sport

By EVAN WEINER
May 12, 2008

Before the proliferation of television in American homes back in the late 1940s and early '50s, the American sports landscape was dominated by three sports: baseball, boxing, and horse racing. Decades later, baseball still holds a dominant position in the sports spectrum, but boxing and horse racing have fallen in stature. Still, the Kentucky Derby has retained its status as one of the biggest events in sports: This year's Derby drew big television numbers, with overnights coming in with a 9.5 rating.

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Stefan Zaklin / 2003 Getty Images

BALTIMORE, MD - FEBRUARY 26: The state flag of Maryland flies in front at Pimlico Racetrack February 26, 2003 in Baltimore, Maryland. Governor Robert Ehrlich has proposed a plan to install slot machines at some horse racetracks in Maryland, including Pimlico, the home of the Preakness Stakes. Ehrlich explained his plan to the Maryland Senate Budget and Taxation Committee today in Annapolis. (Photo by Stefan Zaklin

While the Derby is perhaps the best-known horse race, the second race of the triple crown, the Preakness in Maryland, happens to be the seat of racing's real problems. The Preakness's future at the Magna Entertainment Corp.-owned Pimlico Race Course is at best hazy, because Maryland just cannot raise enough money to keep the race owners interested in bringing their horses to the state.

In November, Maryland voters will be asked whether they want 15,000 slot machines placed at five racetracks throughout the state. Those slots would provide about $100 million of revenue to be used for racing purses and breeder rewards, with 80% of that revenue going to the thoroughbred industry and the other 20% to standardbred interests. If voters say no in November, the Preakness may shift to another track.

"If you have a choice of racing in Maryland or other places, you are going to go where the purses are, even though you love racing in Maryland," the president and chief operating officer of Yonkers Raceway and Empire City Gaming, Tim Rooney, said. "You to have to go where you are going to pay the bills."

Maryland horse racing cannot compete with West Virginia, Delaware, and Pennsylvania, because those states have pumped hundreds of millions of dollars into the horse racing industry from revenues generated through slot machines or, more specifically, video lottery terminals, or VLTs.

From New York's purview, if the state had said no to allowing slot machines or VLTs, Yonkers Raceway would now be a shopping center. Other New York tracks, such as Tioga Downs in Nichols, would be closed.

"We are racetrack people who have a casino," Rooney said. "If it wasn't for the video gaming machines this would be a shopping center. Without them, we wouldn't be here and harness racing wouldn't be here. All of them [Monticello, Tioga, Batavia Downs], Buffalo Raceway, and upstate thoroughbreds at Finger Lakes, they are all improving quite a bit."

But the New York horse racing industry, particularly the thoroughbred operators, are looking to get more help from the state, just like Maryland's industry. Although it's unlikely that Long Island's Belmont Stakes, the third jewel of the triple crown, will be moved at any time in the near future, the New York Racing Association is still looking to Albany legislators to give them the same gambling legislation that saved the harness industry: They would like to be able to put slots at Belmont and Aqueduct.

NYRA and New York racing got a big boost last Monday when the state Racing and Wagering Board gave them the green light to allow bets to be taken from phones (including cell phones), the Internet, and other electronic means.

"Everybody is strongly involved in trying to get Aqueduct's gaming operation up and running," Rooney said. "I think they are going to be successful. I think in two years that will come online. It is going to mean a tremendous amount to the New York Racing Association."

Even Kentucky considered putting video gaming machines at racetracks such as Churchill Downs, the home of the Kentucky Derby, to help raise revenues and put more money into state horse racing. But Governor Steve Beshear's proposal to help ease the state's budget problems with revenue from casino gambling at racetracks failed during the state's 2008 legislative session. It is possible that Kentucky will revisit the casino plan in 2010.

Gambling once was the competition. But Rooney and others in the industry have no problems with going in that direction.

"I think you are never going to see the days where Yonkers Raceway did 3 million people during the course of the year. You are never going to see that type of attendance unless there is some dramatic change on things," Rooney said. "The days of bringing harness racing, or even thoroughbred racing, back to the days when you couldn't get into these racetracks — I don't think you are going to see that. There is just too much competition [from other sports]."

Many tracks that were vibrant in the 1940s and '50s are long gone. "They (the Meadowlands) will survive," Rooney said. "They haven't slid attendance-wise like we [Yonkers] have. But if you look at their attendance compared to what it was when they opened up in 1976, it is nowhere close.

"You try to do different things, but the vast majority of people who come into those machines aren't interested in the racing," Rooney added.

On May 17, Pimlico will be packed for the running of the Preakness, and on June 7, the scene will be re-created at Belmont. But go to Belmont a few days after the major race, and the stands will be empty. Horse racing isn't what it was 40 or 50 years ago. The feature events, such as the Triple Crown, the Breeders' Cup, and the various races leading up to the Kentucky Derby are doing well. But the horse racing industry is becoming more and more dependent on exactly what almost put it out of business: other forms of gambling.

evanjweiner@yahoo.com