Saturday, March 19, 2011

Reprint from the Daily Racing Form

Florida bill presents reality check
By Steven Crist

If a bill that cleared a Florida state senate subcommittee last Thursday is approved by the legislature, greyhound tracks in the Sunshine State would no longer be required to conduct any live racing in order to continue operating slot machines and card rooms. It is a chilling proposal, and one that may well be coming to Thoroughbred racing sooner than you think.

The state of the greyhound industry is a sort of exaggerated, worst-case scenario of the Thoroughbred game, marked by declining attendance and handle, purse stagnation, a shortage of owners, sharp reductions in breeding stock and racing dates, and negative publicity generated by animal-rights activists. Card-room and slot-machine revenue have kept the greyhound industry on life support as its live-racing handle has dwindled to embarrassingly low numbers that can’t begin to pay the overhead at most of Florida’s 13 remaining greyhound tracks.

This is not so different from what is happening in Thoroughbred racing, where in 2011, subsidies from “alternative gaming" will for the first time contribute more to race purses than handle commissions. At some racino tracks, live racing has become a mandated nuisance, a price to be paid for running a lucrative casino. The owners of some of these facilities, gaming companies with no particular affection for or loyalty to racing, might well slash or eliminate their racing dates if they were not required by law to run.

The Florida proposal, which would take effect July 1, would allow the greyhound operators to discontinue live racing immediately. Statutes would be amended so that current language requiring “performances” would be changed to “pari-mutuel wagering activities.” You wouldn’t have to put on races any more in order to run a poker room or slots, just take bets on someone else’s races.

The strongest opponents to the Florida proposal are the sport’s owners and trainers, who say that the elimination of minor-league racing will give them fewer racing opportunities in a business where purses nationally, even with subsidies, have fallen 69 percent in a decade. The bill is opposed by the Florida Greyhound Association, which says it will cost 3,000 Florida families their jobs. The state senate’s Regulated Industries Committee’s analysis of the bill says that Florida would lose $3 million to $5 million a year in revenue from the loss of live racing.

On one hand, this may simply seem like allowing market forces to prevail, because poker and slots are more popular than live racing. Still, it seems like a betrayal of the initial concept of casino gaming at tracks as a way to support an industry worth preserving, and it also can be argued that the racing side of these operations were never given a fair chance.

It was always fanciful to think that poker rooms and slot machines were going to create significant numbers of new horseplayers (or dogplayers), but there are also few examples of sincere efforts to use gaming subsidies for the long-term good of the sport. Virtually all of the subsidy money has gone directly to purses, with little spent on marketing, facility improvements, takeout reductions, or anything that might have made racing more visible and attractive. If you continue putting on the same unappealing product, and do your best to hide it behind the slot machines, the outcome is inevitable.

An interesting twist to the Florida situation, with clear parallels to Thoroughbred racing, is that ending the requirement for live racing is supported even by some of the tracks that are doing well and have no plans to drop racing.

“We think there could be a better product,” said Brian Ballard, a lobbyist for the relatively upscale Palm Beach Kennel Club, in an interview with the Palm Beach Post, “by giving folks who don’t want to be in this business a way out. It’s better for us,” he said, adding that fewer races statewide would improve the quality of Palm Beach’s racing and enhance the value of its simulcast signal.

It’s easy to imagine similar discussions regarding Thoroughbred racing in the near future. It is unclear whether some of the racing being conducted in minor venues on an almost wholly subsidized basis is benefiting anyone but the local participants while contributing to a glut of low-quality racing and a shortage of horses nationwide. There is growing and justified concern that these subsidies will diminish or disappear in the current economic climate, but that could happen sooner than anyone expected if the Florida proposal allowing track operators to uncouple live racing from casino licenses gains traction nationwide.

One thing is clear: Whether the impetus comes from cash-strapped state legislatures or track operators looking to improve profits per square foot, there is a day of reckoning ahead for subsidized racing of any kind.

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