Instant Racing (Kentucky)

[twindouble]

http://www.bloodhorse.com/horse-racing/articles/55970/thayer-makes-case-for-instant-racing-bill

Being racing traditionalist I get the feeling that industry is hell bent on destroying racing as we know it and they are taking advantage of this crises racing is in today (ala Stronach). Can someone explain to me how Instant Racing will draw new fans to the tracks. I assume these machines if approved will be installed on track. I would have no problem with games that are spin off’s of racing like any other sport to be played by kids and parents at home but to have them compete with the live track attendance I would think is self defeating. One could predict the cash cow will be the casinos and racing will be a drain on them. "Less in better" won't be the future of racing as we've known it, in my opinion.

Historically the only thing that survives time is tradition, everything else becomes a fossil in the history books. Am I wrong to think that way?

[twindouble]

Now that I think about it I recall predicting these machines would come about right here on PA but I was being somewhat facetious when I posted in response to another poster that thought the computer was the cure all to make money on the horses. Well, something along those lines but that was a while back. He was right in only one way, computers fueled the whales, rebates and batch wagering. Then to top it off they made the pari-mutual system vulnerable to the other thieves.

[startngate]

Don't make the assumption that the Instant Racing Machines are going to be put in place to bring new fans to the sport. They simply aren't.

The tracks and the politicians can claim what they want, but the machines are there for three reasons. To give the tracks another form of income, to supplement purses, and to raise tax revenue. Nothing more. Any spillover they get as far as fans go (while unlikely) will just be an added bonus.

The combination has worked wonders at Oaklawn. Whether it does so in Kentucky is another story.

[twindouble]

Don't make the assumption that the Instant Racing Machines are going to be put in place to bring new fans to the sport. They simply aren't.

The tracks and the politicians can claim what they want, but the machines are there for three reasons. To give the tracks another form of income, to supplement purses, and to raise tax revenue. Nothing more. Any spillover they get as far as fans go (while unlikely) will just be an added bonus.

The combination has worked wonders at Oaklawn. Whether it does so in Kentucky is another story.

Assuming you right I thought most here were concerned about drawing new fans (young people) to the game, in your opinion that's "unlikely" to happen. Your saying the state will benefit, the horsemen, the track but the players like usual get nothing. Correct? Also your saying that having slots and instant racing machines subsidizing racing is the only way tracks can survive, in other words take a profitable business to keep an unprofitable business operating. That runs counter to sound business practices and the unfettered greed that exists nowadays. To me that don't bode well for racing's future, especially taking two competing forms of gambling and putting them side by side on track land that can be developed for other uses that can make money once the track closes.

[startngate]

Assuming you right I thought most here were concerned about drawing new fans (young people) to the game, in your opinion that's "unlikely" to happen. Your saying the state will benefit, the horsemen, the track but the players like usual get nothing. Correct? Sort of. I certainly know that a lot of people who might otherwise never have the desire to step foot on a racetrack will be walking though the doors. However I also know the crossover from slots players to racing handicappers is minimal at best. Tracks can hope for it, and try to encourage it, but its not going to happen in a meaningful way.

The players may get improved facilities as part of any re-model a track has to do to install the machines. It doesn't happen everywhere, but it does on occassion. The player also (in theory) will get a better racing product to wager on ... fuller fields and larger pools to bet into. Again, it doesn't happen all the time, but in theory it should. You will also see some racetracks able to continue to operate when they would have otherwise closed ... others can debate whether or not that's really a 'benefit' to the player. Having said that, when eventually all the tracks have some form of alternative gaming, then things will level off again.
Also your saying that having slots and instant racing machines subsidizing racing is the only way tracks can survive, in other words take a profitable business to keep an unprofitable business operating. That runs counter to sound business practices and the unfettered greed that exists nowadays. Businesses use successful enterprises to prop up unprofitable divisions, or unprofitable products all the time, so I don't exactly know where you are going with this. In retail, it's called a loss-leader. Some casinos have a few slots that pay 100%. Do you think Penn National just bought Beulah because it thinks it's going to make money on the place as a racetrack? No, it was bought to protect Penn's casino interests in Columbus. Bottom line ... it's done in business all the time.

Don't get me wrong, in an ideal world I'm sure the casino operators would love nothing more than to shut down racing if they could. Look at all the issues Prairie Meadows has had, and the fact that Harrah's just offered the State of Iowa a bunch of money to stop running dogs at Bluff's Run .... but they will continue to operate a money losing enterprise to keep the slots going though because the profits far exceed the losses the racing enterprise generates.
To me that don't bode well for racing's future, especially taking two competing forms of gambling and putting them side by side on track land that can be developed for other uses that can make money once the track closes.Well, you could look at it from the other perspective. Is it good for racing to have all of those tracks that could sell off their land for other purposes shut down and go away? Is racing better off because Bay Meadows has closed, and Hollywood will be following soon? Pretty much all of the Ohio tracks are going to die once the casinos open unless they also get slots (and even then it might not help). What happens to the industry in KY if Turfway and Ellis both close? Live racing meets support a lot of ancilliary businesses besides just the racetrack.

Despite the fact that I would personally like to see some reduction in race dates, I don't want to see a bunch of racetracks close permanently to do it. If it takes some form of slots, or alternative gaming at the tracks to keep them in business, then so be it. Having said that, I am with the players who think that takeout reduction at alternative gaming supported tracks is in order, and treating the pari-mutuel players as well as the slot players are treated should also be done.

[twindouble]

Sort of. I certainly know that a lot of people who might otherwise never have the desire to step foot on a racetrack will be walking though the doors. However I also know the crossover from slots players to racing handicappers is minimal at best. Tracks can hope for it, and try to encourage it, but its not going to happen in a meaningful way.

The players may get improved facilities as part of any re-model a track has to do to install the machines. It doesn't happen everywhere, but it does on occassion. The player also (in theory) will get a better racing product to wager on ... fuller fields and larger pools to bet into. Again, it doesn't happen all the time, but in theory it should. You will also see some racetracks able to continue to operate when they would have otherwise closed ... others can debate whether or not that's really a 'benefit' to the player. Having said that, when eventually all the tracks have some form of alternative gaming, then things will level off again.
Businesses use successful enterprises to prop up unprofitable divisions, or unprofitable products all the time, so I don't exactly know where you are going with this. In retail, it's called a loss-leader. Some casinos have a few slots that pay 100%. Do you think Penn National just bought Beulah because it thinks it's going to make money on the place as a racetrack? No, it was bought to protect Penn's casino interests in Columbus. Bottom line ... it's done in business all the time.

Don't get me wrong, in an ideal world I'm sure the casino operators would love nothing more than to shut down racing if they could. Look at all the issues Prairie Meadows has had, and the fact that Harrah's just offered the State of Iowa a bunch of money to stop running dogs at Bluff's Run .... but they will continue to operate a money losing enterprise to keep the slots going though because the profits far exceed the losses the racing enterprise generates.
Well, you could look at it from the other perspective. Is it good for racing to have all of those tracks that could sell off their land for other purposes shut down and go away? Is racing better off because Bay Meadows has closed, and Hollywood will be following soon? Pretty much all of the Ohio tracks are going to die once the casinos open unless they also get slots (and even then it might not help). What happens to the industry in KY if Turfway and Ellis both close? Live racing meets support a lot of ancilliary businesses besides just the racetrack.

Despite the fact that I would personally like to see some reduction in race dates, I don't want to see a bunch of racetracks close permanently to do it. If it takes some form of slots, or alternative gaming at the tracks to keep them in business, then so be it. Having said that, I am with the players who think that takeout reduction at alternative gaming supported tracks is in order, and treating the pari-mutuel players as well as the slot players are treated should also be done.

Loss leaders are uses in retail but they are a very small percentage of the overall sales on other products. I've use them many times in my own business over the years and still ran a reasonably profitable business. Who in their right mind would buy into a profitable business and at the same time tie up with a losing one that would only drag it down? The casino operations cannot take the track as a loss, whereas corporations can maintain a losing subsidiary and have it improve their bottom line. There's no comparison in my opinion.

It's good to hear you wouldn't like to see many tracks close and your support for lower takeout but no mention of rebates.

[senortout]

Here's a link to give you some idea of the mentality involved.....http://www.oaklawn.com/Gaming/Instant_Racing

senortout

[startngate]

Who in their right mind would buy into a profitable business and at the same time tie up with a losing one that would only drag it down? The casino operations cannot take the track as a loss, whereas corporations can maintain a losing subsidiary and have it improve their bottom line. There's no comparison in my opinion. Actually, the casino companies that get involved are buying a mildly profitable (at best) to a losing business (in most cases) and adding a highly profitable business to the mix to improve the bottom line. I don't see any of them adding racetracks to a casino they already own, or buying racetracks for any other reason than the possibility of having alternative gaming or to protect their profitable (casino) business. That's exactly what you describe ... maintaining a losing subsidiary (racing) because it improves their bottom line (they can't do alternative gaming unless they continue to race).
It's good to hear you wouldn't like to see many tracks close and your support for lower takeout but no mention of rebates.I have no problems with rebates as they are just another tool to lower takeout. Personally, if given the choice, I would prefer the lower takeout approach as it would benefit all players the most. Unfortunately, the tracks and horsemen won't want to deal with the short-term losses in revenue, so rebates will continue for those players fortunate enough to know how to obtain them.

[twindouble]

Actually, the casino companies that get involved are buying a mildly profitable (at best) to a losing business (in most cases) and adding a highly profitable business to the mix to improve the bottom line. I don't see any of them adding racetracks to a casino they already own, or buying racetracks for any other reason than the possibility of having alternative gaming or to protect their profitable (casino) business. That's exactly what you describe ... maintaining a losing subsidiary (racing) because it improves their bottom line (they can't do alternative gaming unless they continue to race).
I have no problems with rebates as they are just another tool to lower takeout. Personally, if given the choice, I would prefer the lower takeout approach as it would benefit all players the most. Unfortunately, the tracks and horsemen won't want to deal with the short-term losses in revenue, so rebates will continue for those players fortunate enough to know how to obtain them.

Are you telling me if the track loses thirty million the casino part of the operation can take that loss? My understanding is they are taxed as seperate businesses.

So you believe in the minnow to whale arguement? To me that's not reality.

[boomman]

Sort of. I certainly know that a lot of people who might otherwise never have the desire to step foot on a racetrack will be walking though the doors. However I also know the crossover from slots players to racing handicappers is minimal at best. Tracks can hope for it, and try to encourage it, but its not going to happen in a meaningful way.

The players may get improved facilities as part of any re-model a track has to do to install the machines. It doesn't happen everywhere, but it does on occassion. The player also (in theory) will get a better racing product to wager on ... fuller fields and larger pools to bet into. Again, it doesn't happen all the time, but in theory it should. You will also see some racetracks able to continue to operate when they would have otherwise closed ... others can debate whether or not that's really a 'benefit' to the player. Having said that, when eventually all the tracks have some form of alternative gaming, then things will level off again.
Businesses use successful enterprises to prop up unprofitable divisions, or unprofitable products all the time, so I don't exactly know where you are going with this. In retail, it's called a loss-leader. Some casinos have a few slots that pay 100%. Do you think Penn National just bought Beulah because it thinks it's going to make money on the place as a racetrack? No, it was bought to protect Penn's casino interests in Columbus. Bottom line ... it's done in business all the time.

Don't get me wrong, in an ideal world I'm sure the casino operators would love nothing more than to shut down racing if they could. Look at all the issues Prairie Meadows has had, and the fact that Harrah's just offered the State of Iowa a bunch of money to stop running dogs at Bluff's Run .... but they will continue to operate a money losing enterprise to keep the slots going though because the profits far exceed the losses the racing enterprise generates.
Well, you could look at it from the other perspective. Is it good for racing to have all of those tracks that could sell off their land for other purposes shut down and go away? Is racing better off because Bay Meadows has closed, and Hollywood will be following soon? Pretty much all of the Ohio tracks are going to die once the casinos open unless they also get slots (and even then it might not help). What happens to the industry in KY if Turfway and Ellis both close? Live racing meets support a lot of ancilliary businesses besides just the racetrack.

Despite the fact that I would personally like to see some reduction in race dates, I don't want to see a bunch of racetracks close permanently to do it. If it takes some form of slots, or alternative gaming at the tracks to keep them in business, then so be it. Having said that, I am with the players who think that takeout reduction at alternative gaming supported tracks is in order, and treating the pari-mutuel players as well as the slot players are treated should also be done.

This is one of the sharpest posts I have ever seen on PA:ThmbUp: I had an opportunity a couple of years ago to look long and hard at The Oaklawn Park Instant Racing product, and what it has done for Oaklawn has been very impressive to say the least. The machines are parimutuel and there is even some beginning handicapping involved. Although I agree there's not much if any crossover between slot and horseplayers, it does appear that there is at least some crossover between instant racing and live racing especially in the introduction of new fans to Oaklawn's meet, which even though it has small town demographics, enjoys one of the highest on track attendance numbers year in and year out. Couple that with consistent instant racing handle of over $200 million a year (and only about a 9% takeout on that handle which works very well for this product) and you have a formula for success demonstrated by the good folks at Oaklawn that I am amazed has taken other states as long as it has to even seriously look at it. Indian gaming compacts aside, many state's pari-mutuel laws are already favorable towards its enactment..........:ThmbUp:

Boomer

[GlenninOhio]

This is one of the sharpest posts I have ever seen on PA:ThmbUp: I had an opportunity a couple of years ago to look long and hard at The Oaklawn Park Instant Racing product, and what it has done for Oaklawn has been very impressive to say the least. The machines are parimutuel and there is even some beginning handicapping involved. Although I agree there's not much if any crossover between slot and horseplayers, it does appear that there is at least some crossover between instant racing and live racing especially in the introduction of new fans to Oaklawn's meet, which even though it has small town demographics, enjoys one of the highest on track attendance numbers year in and year out. Couple that with consistent instant racing handle of over $200 million a year (and only about a 9% takeout on that handle which works very well for this product) and you have a formula for success demonstrated by the good folks at Oaklawn that I am amazed has taken other states as long as it has to even seriously look at it. Indian gaming compacts aside, many state's pari-mutuel laws are already favorable towards its enactment..........:ThmbUp:

Boomer

And one could argue that the entire "Rachel vs. Zenyatta" extravaganza at Oaklawn, had it occurred, was made possible by Instant Racing.

As a side note, I just took a quick look at the Indiana Downs condition book, and their pots at the allowance level are very competitive with Churchill's (fully competitive for horses not Kentucky bred). The ID meet overlaps Churchill's 100%.

Take a look at Churchill's pots from 10-15 years ago and there has been no purse growth, and now they have serious competition. At the very least, if Instant Racing took hold at the Kentucky tracks it could stave off potentially serious reductions in Churchill field sizes due to competition from Indiana and Pennsylvania (Presque Isle).

[startngate]

Are you telling me if the track loses thirty million the casino part of the operation can take that loss? My understanding is they are taxed as seperate businesses.

So you believe in the minnow to whale arguement? To me that's not reality.Depends on the location. If taking the $30 million loss on racing is necessary to gain a $100 million profit on slots, then yes I suspect any casino company would take that. Of course they will do everything they can to reduce the loss on the racing side, but a $70 million overall profit is still $70 million.

However the reality is more like a $1-2 million loss on the racing side in most cases, which could be easily absorbed by the casino. At smaller tracks like Beulah, the loss is probably much less, and I'm sure there are a few tracks that are hovering around break-even as well that will see slots at some point.

On both sides of the business gaming taxes are being paid, and depending on the game may be taxed differently. Profit is still profit though, and as long as there is enough of a total positive ROI, the casino companies will continue to invest in racetracks ... but only if alternative gaming is an available option.

[Bruddah]

This is one of the sharpest posts I have ever seen on PA:ThmbUp: I had an opportunity a couple of years ago to look long and hard at The Oaklawn Park Instant Racing product, and what it has done for Oaklawn has been very impressive to say the least. The machines are parimutuel and there is even some beginning handicapping involved. Although I agree there's not much if any crossover between slot and horseplayers, it does appear that there is at least some crossover between instant racing and live racing especially in the introduction of new fans to Oaklawn's meet, which even though it has small town demographics, enjoys one of the highest on track attendance numbers year in and year out. Couple that with consistent instant racing handle of over $200 million a year (and only about a 9% takeout on that handle which works very well for this product) and you have a formula for success demonstrated by the good folks at Oaklawn that I am amazed has taken other states as long as it has to even seriously look at it. Indian gaming compacts aside, many state's pari-mutuel laws are already favorable towards its enactment..........:ThmbUp:

Boomer

Finally someone who understands and sees the big picture.

When the state of Ark. would not allow casino gambling, the Oaklawn Administration developed Instant Racing within existing State laws. They found a way to thrive when the Industry as a whole was on a down hill slide. Instant Racing has grown every year since it's inception in (2003?).

Oaklawn is a 105 year old family business. The Cella family has supported Thoroughbred racing for all of those years and Instant racing was developed to support that enterprise. True, it has grown well beyond it's original purpose. Just another case of Free Enterprise doing what government can't/ won't.

Free Enterprise and ingenuity being rewarded with profits made this country great. Additionally, this country has been very generous (overly generous) with the other countries on this earth. Not until the present Administration in Washington has Free Enterprise been considered distasteful. (JMHO)

[twindouble]

I couldn't respond this afternoon, had some handicapping to do.

So what being said here is casinos and tracks are one the same and they share in the profits or losses. Correct? Everyone agrees that with the exception a few tracks most operate at a loss at this point. Look I'm all for saving racing but I don't want it to turn into something it's not and I especially don't want to see all the money go to the top. Players should get something out of these changes and you all know where I stand on rebates so don't throw the minnow to whale argument at me. I can compromise on some things as long as the traditions of racing are maintained and the cultural threads aren't broken.

[toussaud]

I'll take it a step father..

oaklawn is my home track.. instant racing is GREAT.


I don't know why tracks were not pushing for this from the jump street, becuase it's not like the instant racing owners are going to be pushing to shut down live racing. But casnio owners will be sure as hell to try to shut down live racing.

[Pick6]

Several business models have losing revenue centers. However, those businesses are only keeping that loser because it boosts earnings in the profitable revenue centers more than it would without the loser. Otherwise, why keep a loser?

Besides, just plowing money into purses does not do much to improve the product for bettors. It helps the trainers, obviously. If it resulted in facility improvements, larger, more competitive fields, reduced hold, and the other necessary components of improving the product then I'm all for it.

[Bruddah]

Anyone who understands basic business should understand what tracks with Instant Racing are accomplishing.

If I own a restaurant and we specialize in serving breakfast, but we just aren't producing enough revenue to be profitable, may add a lunch menu. The costs don't expand proportionately, yet revenues more than double and we become profitable. Should we close the restaurant because our initial focus/ expertise (breakfast) didn't generate enough revenue?

The answer seems to be to continue finding successful additions to the menu. Business models which aren't fluid and continue to change to their environments are soon out of business.

[Pick6]

I agree completely. Just don't be surprised if the revised business model for racinos does not have a place for horse racing.

[Bruddah]

I agree completely. Just don't be surprised if the revised business model for racinos does not have a place for horse racing.

You are correct. However, with Instant racing, the focus of the menu remains Pari Mutual and not changed to casino gambling. No gurantee that the administration continues to focus on thoroughbreds, but a strong factor to focus on Pari Mutual, which requires Thoughbred participation by all states presently with horse racing. Sort of a catch 22.

I don't know whether the board at CDN is really commited longterm to Thoroughbred racing. I do know that the Cella family is and that's sort of comforting for the future of Oaklawn.