Wednesday, March 14, 2012

Careful What You Wish For

Marriages of convenience aren’t exactly the happiest, nor do they always last forever. Any decent divorce lawyer can tell you that when the relationship stops being so accommodating for one of the parties, the lace on the valentine yellows and frays pretty quickly.

And so it seems that the love affair between certain jurisdictions with expanded gambling and the racing industry has hit a rocky patch. Just like in a marriage, when things go south, the fight over money intensifies.

Many states which were facing great big budget shortfalls decided to, for lack of a better term, marry for money. They climbed into bed with the racetracks, which were having a not-so-little revenue problem of their own.

The states enabled the tracks to get a much needed makeover into racinos, and then the casino side of the operation funneled all that fresh money- and lots of it- into the state coffers.

Everyone was happy and the bottom line on both sides got healthier. Purses got bigger and the quality of racing got better. Now it seems that some jurisdictions think the racing industry is getting too much of the good thing.

Now they want to change the relationship.

As of late, there have been plenty of stories in the news about certain states, with Pennsylvania and Indiana among them, wishing to pull back on the amount of the take from slot machines and other forms of gaming at the racinos that is returned to the horse racing industry.

In the Province of Ontario, Canada, the word is that the government wants to end payments generated by the slots-at-racetracks program as early as one year from now. That revenue sharing program, which returns 20% of the profits to be shared by the tracks and the Thoroughbred, standardbred and Quarter Horse horsemen while the government retains 80%, has been in place since 1998.

Since then, the Canadian horse racing industry has seen an increase of an average of $345 million per year and much of that money has fueled purses and other operating expenses. Without that money, it is feared that most of the province’s 17 tracks would no longer be able to support live racing and it is reported that about 60,000 people employed by the tracks, owners, breeders and ancillary industries would be thrown out of work.

Now the Ontario Lottery Gaming Corporation reportedly wants the government and its agencies to keep all of the money. In Pennsylvania, which passed a bill authorizing slots at tracks in 2004 that resulted in the construction of fan-friendly new Thoroughbred and harness racing tracks where purses have shot through the roof, there are similar problems.

Today, Wednesday, March 14, more than 10,000 Thoroughbred and standardbred owners, breeders, farm owners and others who make their living in the industry are scheduled to attend a news conference at the state capitol rotunda to make their voices heard. They stand in opposition to a proposal to redirect $72 million annually from the Pennsylvania Race Horse Development Fund to other state programs. That money is reportedly in addition to $49 million annually already being diverted.

At issue here and elsewhere is the very heart and future of the industry.

When the states and the racinos entered into the blessed state of holy business venture, it was a win-win. Owners and breeders invested in the industry, purses went up, green space was preserved for farms, breeding programs flourished, outfits hired workers, tracks were able to revitalize, and racing was back on the right track.

Moreover, tens of thousands of jobs were preserved and tens of thousands more were created. And the states which had the racinos, complete with those slot machines and/or table games that generated all of that new cash, enjoyed a significant competitive edge over the states that didn’t.

If a horseman could get a hell of a lot more money for winning a race in a state with slots revenue, why would he or she ever want to base an operation in a state that didn’t offer much bigger purses plus breeders’ awards?

The bottom line is that it’s the casino side of the racino operation which continues to fuel state coffers with hundreds of millions of dollars annually. For these jurisdictions, now that they’ve gotten what they wanted, they’re trying to kick the racing industry out of bed.

That’s not fair. And it’s not right.

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