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The Conscience of Thoroughbred Racing

DeSANTIS AND GOP-CONTROLLED LEGISLATURE’S MESSAGE TO HORSE RACING: DROP DEAD

HALLANDALE BEACH, FL. May 23, 2021 – One day after it was reported that Florida Gov. Ron DeSantis signed major gambling legislation in a compact with the Seminole Tribe of Florida, we noted a local television ad that appeared in prime time on a major network.

Ostensibly, the spot was to promote the Seminoles’ Hard Rock Hotel and Casino and inform Floridians of their expansion plans that would enrich the state when three more casino hotels are constructed on the reservation’s Hollywood property, 15 clicks northwest of Gulfstream Park.

The Florida tourism industry is hoping that Vegas Strip-Light will strike at the heart of Atlantic City visitors on this side of the country.

The spot was not a hard-sell, one with a PSA-like vibe, when it became apparent halfway through there would be an homage with appropriate bowing and scraping, thanking the Governor for his vision with a photo-opportunity signing the compact that subsequently would gain legislative approval.

DeSantis was signing a 30-year compact that gave the Seminoles control over future sports betting plus granting permission to offer craps and roulette at all its casino locations.

Together with the decoupling of casinos from existing parimutuel operations, the deal stroke a significant blow to the fortunes of both Florida Thoroughbred tracks, Gulfstream Park and Tampa Bay Downs.

As a result of cost savings from the secession of operations of their parimutuel rivals and the granting of sports betting exclusivity to the tribe, the state’s Thoroughbred tracks will face added competition from rivals free of high operational costs that now can go toward on advertising and promotion.

Before Florida legislators would approve DeSantis’ bill–which still need approval from the U.S. Interior Department–it needed to clear another hurdle; that the Seminoles would not object to rival casinos constructed outside a 15-mile radius from their Hollywood property.

By comparison, the Seminole Hard Rock Casino in Tampa has a buffer zone of 100 miles.

Two locations were at the heart of this. One called for a casino at the legendary Fontainebleau Resort in Miami Beach owned by developer Jeffrey Soffer, who also operates the Big Easy Casino, the former Hollywood dog track little more than a mile up the road from Gulfstream.

With dog racing outlawed in 2020, Soffer already was operating a decoupled gaming enterprise.

The other property considered as a possible future casino site is the Doral Golf Resort, which lays barely outside the 15-mile zone. That property, owned by the former POTUS, had been losing significant amounts of money, even in the pre-pandemic years.  

In another coincidence, and shortly before expanded gambling negotiations began making local headlines, Eric Trump emailed the Washington Post:

“Many people consider Trump Doral to be unmatched from a gaming perspective. At 700 acres, properties just don’t exist of that size and quality in South Florida, let alone in the heart of Miami.”

The possibility of a Doral Casino has roots deep in the heart of Florida politics. In a hotly contested gubernatorial campaign in 2018, DeSantis emerged a narrow winner after receiving a huge endorsement from the 45th President.

Weeks ago, according to South Florida Sun-Sentinel reports, the former guy endorsed State Senate Leader Wilton Simpson for agriculture commissioner before Simpson announced that he was a candidate for that position. Simpson was a major booster of expanded gaming.

There are remaining hurdles to clear. Bi-partisan opposition from legislators to legal sports betting, as well as the ability to move existing casino operations to more favorable locations, is a matter of law to be decided by voters via referendum as provided by the state’s constitution.

Opposition to the expansion of gambling in the state also is coming from various religious groups and the conservative Florida Family Policy Council. And there are the objections of the Disney Company who have economic concerns associated with competition for visiting tourists.

The Seminoles are expected to win legal challenges to their sports wagering exclusivity, arguing that the servers needed to conduct online sports betting exist inside the reservation–that right guaranteed by Amendment 3 of the Federal Indian Gaming Regulatory Act of 2018.

Other wagering venues, including tracks and jai alai frontons, will be allowed to offer sports betting providing they share revenue with the Seminoles on a 60-40 basis.

Presently, Gulfstream Park is in no position to absorb shortfall from outside revenue. The contract it has with Churchill Downs Inc, owners of Calder which no longer needs to host jai alai matches due to decoupling, expires July 31. The Calder revenue has accounted for approximately $9-million annually for purses.

That money has helped make year-round racing possible. What this will mean to future of year-round racing is unknown.

Gulfstream diverts $6 million from its on-track slots revenue to purses which brings to mind another inequity: The Seminoles’ tax rate on slots is 12.5%; Gulfstream’s rate is 35%.  

Not only does decoupling hurt Gulfstream with respect to year-round racing but makes it increasingly difficult to compete with other winter venues for quality horse flesh that otherwise could winter in New Orleans or Hot Springs.

Slot machines and card rooms help racing, obviously, but are no match for craps tables and roulette wheels amid glitzy surroundings.

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12 Responses

  1. JP,
    Who exactly benefits from year-round racing in any state where it is conducted? Weren’t racing’s finest moments when horses migrated South and West for the winter and returned after the snow melted? There was less turf racing then, but each grass course still needed some time to refresh.

    The breed has neither improved nor seen its number increase with more racing dates. Is it the smaller foal crop size or their soundness issues that has more negatively impacted field size?

    Will Gulfstream need to go back to handling large crowds to survive? Is there now more incentive to acquire Hialeah?

    1. This is, of course, a deep and complex topic, better discussed over a drink and/or a meal, but I’ll bite.

      What we are seeing today is, in my view, the result of decades of fundamentally poor management of the Thoroughbred industry. Reflecting broader society, dollars, and especially Big dollars, began to be emphasized, and at the predictable expense of the stability of the foundation of the game. Decisions made by major stakeholders became increasingly short-sighted, and their long-term ramifications were largely ignored.

      Breeding to race, resulting in sounder, more robust racehorses, was marginalized, while breeding to sell became the dominant approach. Excellent horsemanship was too often replaced by the use of therapeutic drugs, in efforts to keep increasingly unsound horses active. Good, hard working horsemen had a fair shot to make a decent living, and, with a bit of luck, compete with the most fashionable trainers. But as values of bloodstock began to increase sharply, certain trainers used their business skills to build more powerful stables through strength of numbers (and dollars), and the insidious, modern, “super-trainer” phenomenon was born.

      With regards to racetracks, bettors’ interests were largely ignored, eventually igniting an exodus of players, including countless “whales”, who refused to continue to accept usurious takeout rates and rampant cheating. The product degraded further due partly to the increasingly fragility of horses, premature retirement of high-class runners, dubious choice to emphasize lottery-type wagers, and concentration of good horses into the hands of a small number of trainers (which, among other things, has had a profoundly negative impact on field size).

      As property values of racetracks soared, companies like CDI had no problem “maximizing shareholder value”, and at the direct expense of the industry (RIP Hollywood Park, Calder, and likely Arlington). Then, of course, we had the proverbial deals with the Devil – allowing casinos to step in and subsidize the industry. That was, in essence, a white flag, as the industry was tacitly admitting that it was unable to stand on its own two feet. Expecting the subsidies to solve racing’s problems was the height of naïveté, and short-sightedness, as we are now seeing today.

      On a recent comment thread, John mentioned that many who have been in the game for decades consider the ’70s to have been the Golden Era of racing. I agree wholeheartedly. I made my first forays to South Florida when I was in high school in the ’70s, and saw Forego win the Widener, and many other top horses compete at Gulfstream and Hialeah. While Keeneland, Saratoga, and Del Mar still have their charms, it is almost impossible to convey just how special winter racing in South Florida was 40+ years ago.

      My father lived in NYC at the time, and so I would also visit Belmont and Aqueduct when I travelled there. The cards typically featured a variety of races that is virtually unheard of today, including 3x and 4x allowance races, run over distances from 6-12f. There were high-priced claiming races ($50-75k) as well, and they were, at times, equivalent in quality to smaller stakes races run today.

      I still root for the game to succeed, but even with HISA being an important step forward, I frankly don’t expect to ever again experience the sort of passion that I felt for it several decades ago. It’s a damn shame.

      1. Nice summarized contribution which included most that had to be mentioned except..How do so many little tracks stay in business,is it all because of simulcasting money ? Where and how are most of the( cheap claiming) equines stabled in such second rate tracks live,survive,and the owners/ trainers are they continuing their business on a week to week basis,barely making it with such pitiful purses? Who can claim such unprofitable horses… and where,how many just ‘ vanish away’ ! I’m sure that the Berners,Morans left because of knowing some cruel answers to these questions!..Meanwhile, the atrocious,once bankrupt Suffolk Downs OTB,the losing legal bookies,have purchased the Islandia,N.Y. casino off the LIE,495 which means that either they,politicians and patronage dependents have learned a new trade or the sellers knew that it was time to get out and get friendly with the Shinnecock proposed gambling empire just like it happened in nearby Connecticut. If racinos,casinos are the answer for so many retirees with nothing to do with their money and time, those one arm bandits will be the addicting drug that will ruin too many of them..and.I Thought that being older meant being WISER..,especially with pocket,I mean credit card,money! Cannot figure it out And don’t plan to. Let me take a long walk with my dog.🐾🐕 and then,later in the week, I’ll make a few bets at the nearby saloon which offers simulcasting races and betting terminals..
        🎲🎰..

        1. Ps: Forgot to mention that after New Jersey’s success with legalized sports betting which has been very profitable in that state,others cannot wait for their local politicians,and their connections to copy that successful endeavor with different propositions besides sports,British style, which means betting on gossip,elections and other initiatives,props not yet available in Las Vegas. Later on,will be very likely that legalized betting will be available anywhere where we’re playing lotto and buying Scratch tickets,yes,from stores that sell cards,liquor,beer,,and maybe even prescriptions… ” Wanna Bet” ? Greedier than ever..😵😵

          1. A sad and not unfair categorization of modern day life, Skip. Actually, Paul became ill and passed away but still loving the game. When he knew the end was nigh, he insisted on no formality at his death and put aside money that so all his friends could remember him with a party at a Saratoga watering hole. Half Italian and half Irish, the Irish side won out at the end. Still think of him and miss him. I have his Eclipse Award winning piece in a Word doc that lives on my desktop. As for Mark, he simply could no longer fight the good food with respect to the illicit use of medication and the plight of Thoroughbreds when their racing careers were over. #No mas

        2. Cocktails never a bad idea and I agree with you. I hesitated to even put this on record but felt required to do so, living here and all. Could write a column a day on this issue but my hair would ignite. I suppose what angers me the most is that an industry that has done more than its share for tourism for nearly a century could be treated as if they didn’t matter. Maybe Potus Wannabe will rue the day he ignored the breeders of northern and central Florida and the tourism from which SoFla benefits.
          You make excellent points about shorter term solutions; this industry has never taken a strong view because it has at least 38 different ways of doing things. Racetracks need to cooperate with each other, not compete.
          Your second graph re: ignoring the bettors is spot on re almost every example. Too much emphasis on life-changing scores promoted by ADWs everywhere and not enough of the basics; winning straight bets at a fair rate of takeout. #LiquidityPreservesPlayers
          Not sure politically that tracks pushing back on casinos at racetracks is/was realistic. But clearly, language in the arrangements should have no out-clause since without the grandfathering of racetracks, casinos would not have been allowed to exist, in all probability requiring voter approval of gambling expansion in each particular state. Yes, the parimutuel product should be good enough to sustain itself. Mistakes were made; they are fixable but no one wants to take the haircut.
          Paragraph four? Especially Hialeah in the day. I worked as paddock host for two years just as the decline was starting. Sat in a near empty clubhouse between segments. Sad, but still magnificent. White flight killed Hialeah.
          Passion, in almost every stage of life, is missing as the world changes and new trends take center stage, often not for the better.
          Yes, it is a damn shame that we can never go back to the glory days, but I’m optimistic enough that with some creativity and a central authority for the first time, as imperfect as it will be, is a reason to hope. NX3s and NX4s? They don’t fill, period, not enough horses. And didn’t Belmont feature one 12F race per day, with those great Saturday starter handicaps?

      2. Tinky,
        While I agree that racing’s missteps generally mirror those of society at large, I would characterize the level of larceny and greed it attracts as a reflection of “disorganized crime.” LOL

        I’ve long believed that less racing would produce a better racing product that generated more cumulative handle provided the playing fields were as level for both horseplayers and horsemen as they had been prior to simulcasting.

        Some say simulcasting has eliminated the need for seasons, but Saratoga’s success stems from the anticipation racing generates among upper-NY-state residents in its absence. The passion for that pilgrimage is preserved across successive family generations.

        1. Hi Indulto,

          Yes, there are distinctions to be made, and in some respects, especially when compared with Wall Street and TBTF banks, the racing industry is the functional equivalent of the Keystone Cops.

          No doubt the game would be far healthier is the playing field were level, and if quality was emphasized over quantity. And I agree that boutique meets have long been the most attractive, and pivotal in terms of building a deep-rooted fan base.

    2. I,
      On Hialeah, my sources tell me they are being completely unreasonable in negotiations. All I can say for sure is that GP has tried to make a deal, perhaps similar to the lease agreement it had with Calder/CDI.

      Small foal crops and too much racing. Too much horse investment into the 1%-type market. Circuits run year round to, among things other than that state’s coffers, try to keep people employed and earning some kind of living.

      I have never supported winter racing in NY but understand why. Lesser stock eat as much and require the same care and medical supervision as the equine stars. When the super outfits return from winter quarters, NY’s “winter stock” just can’t compete.

      Personally, I think there’s too much racing everywhere. Considering economics, probably makes more sense to race fewer days with more races per card but fewer than there is now. Especially since today’s Thoroughbreds require more time between starts.

  2. There seems to be one easy solution to all of this: let Trump Organization run the casinos; that way they’ll be out of business within a couple of years’

  3. Tinky nails it on every aspect of racing’s problems. The “deal with the devil” will ultimately end in most states as politicians increasingly view casino subsidies to horse racing as money being shoveled into a dying industry. More tracks need to close, so be it. 25,000 thoroughbred races per year in North America is plenty to balance supply with demand.

    Sports betting is the natural new home for horseplayers. After the rise of lotteries in the 1970s and the rise of casinos in the 1990s, the SCOTUS ruling on sports betting in 2018 may be the final nail in racing’s coffin.

    1. Dan, I’m afraid you’re onto something as a new trend is about to take hold, and Tinky did nail most of it.

      Racing needs to act before sports betting becomes legal everywhere. In sports betting, props notwithstanding, it’s your side against the other side; simple. People will bet on sports yet will turn their nose up at deserving even money favorites.

      Teach these people how to fish; it’s infinitely more interesting for people who enjoy thinking/handicapping with their gambling. Slots people are not racing’s audience but if the industry can profit from them, why not?

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