Wednesday, September 17, 2008
Racing Has Problems? Compared to What?
Saratoga Springs, NY, September 16, 2008--Compared to Wall Street, racing’s financial difficulties pale. I wonder now if Phil Gramm, famed financial adviser, still believes that Americans are whiners, that the economy is on sound footing, and that the ultimate political strategy is the one that wins, truth be damned?
(OK, so that last part was mine, but you get the idea. So send in the clowns, the pigs, and get me someone from the Revlon company on the line, stat).
Actually, despite the bad economic news contained in a chart provided by NTRA and Equibase reprinted here last week (see HRI archives), racing isn‘t doing nearly as badly as many other American businesses, including its major competition for the wagering dollar.
As another aside, following the lead of Churchill Downs Inc., Equibase unfortunately no longer will provide quarterly handle summaries beyond daily handle figures noted at the bottom of result charts. And this is despite requests from media outlets that they continue doing so for the sake of reportage. So much for transparency.
To the point, it’s ironic that the Video Lottery Terminal form of casino wagering that has injected fiscal life into struggling racetracks is, along with traditional forms of casino wagering, also suffering the effects of a failing American economy. Sobering that not even gambling, long considered as being recession proof, no longer is.
Las Vegas visitation has flattened or has been declining for months, with projections indicating that the slide will continue at least in the near term. Air travel to Las Vegas is on the wane not only domestically but from foreign sources as well, especially the Asian market, and that‘s been a much bigger problem.
Despite the progress on display during the recent Olympics from Beijing, Asian economies have slowed down. Between the deceleration of Asian economies and competition from glitzier Macao-based casinos, many of which were built and owned by household American gaming-industry giants, the whales have been lured into staying closer to home, afforded more and more perks.
Macao-based casinos have made serious incursions into Hong Kong’s horseplaying market, too, a longtime staple of the Asian betting community, where handle on a single program can reach an unthinkable nine figures in Hong Kong dollars.
But compared to racing’s slide here and elsewhere, casino receipts for high-roller gaming have fallen at an alarming rate. According to the Post story, table revenue in Las Vegas is down nearly 19 percent, while the exclusive baccarat action is down more than 26 percent. Nowhere is racing’s losses as dramatic.
Casino business in Atlantic City isn’t much better. Since travel to AC commonly is done by auto, steep gas prices have taken a toll. For slots players, the cost of a full tank is tantamount to pulling a lever for an entire afternoon. Staycation for slots players means having to stay and play joker poker at the local tavern. Be still my heart.
Atlantic City receipts are down a comparably acceptable 5.2 percent through August, which includes both table games and slots. What’s troublesome is that the downturn reflects not only high rollers but mom and pop slots players, too. If this trend doesn’t abate soon, Atlantic City gaming receipts will be down for a second straight year.
Along with gas prices, competition hasn’t helped. Connecticut casinos have been cutting into Atlantic City visitation for years, but competition from Pennsylvania and Delaware, especially the former, has been devastating to not only New Jersey and Maryland racetracks but to shore-based casinos as well. And it doesn’t figure to improve when a 100 percent smoking ban begins October 15.
Parenthetically, Maryland has been playing politics with slots for almost as long as Albany has been delaying construction of a racino at Aqueduct. For the last seven years over-burdened New York taxpayers have not gotten any relief from VLT revenues. What’s the definition of criminal negligence, anyway?
And now the Pimlico barn area is closed, and their racing dates have been cut drastically except for the traditional spring Preakness meet. Even if a slots referendum passes this November, it’s doubtful whether Pimlico, which this year marked the 70th anniversary of the celebrated Seabiscuit-War Admiral match race, ever will race year-round again. http://www.washingtonpost.com/wpdyn/content/article/2008/09/13/AR2008091302213.html?hpid=sec-metro.
But as we all learned upon awakening Monday morning, horse racing and gaming are only the tips of an economic iceberg whose bottom cannot be seen below the murky waterline.
Written by John Pricci
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