BY EVAN WEINER
THE BUSINESS AND POLITICS OF SPORTS
The eve of the running of the annual June Belmont in Elmont, New York is a good time to review the "racino" industry. For those who have never heard of the time “racino” you better get used to it. A "racino" is a horse racing facility whether it is for thoroughbreds or harness or standard bred horses, which depends on a casino loaded with slot machines to survive.
For the most part, standard bred racing in the northeast United States would be gone by now without the “machines” and the thoroughbred industry would be on life support. Around 1950, baseball, boxing and horse racing were the crown jewels of American sports. Horse racing has diminished in popularity because of the abundance of state sponsored gambling through lotteries at local stores and in New York, keno in restaurants.
The horse racing business is now surviving in many areas, except New Jersey, through proceeds from on site slot machines and table games (in some states) at racetracks. New Jersey is not keeping pace with neighboring states like New York, Pennsylvania and Delaware and has no "racinos", preferring to keep operations going in Atlantic City.
New Jersey residents can go to Yonkers and bet the slots or into eastern Pennsylvania. Sometime this fall, they will be able to go to Aqueduct in Queens and deposit money into “machines” which may help bolster thoroughbred racing at Belmont, Aqueduct and in Saratoga.
“Too much in terms of gaming?” asked Charles Hayward, the President and Chief Operating Officer of the New York Racing Association, in response to a question about gaming and slot machine saturation on the east coast. “No, I think there is a fair amount of density in casinos throughout Pennsylvania, Delaware, West Virginia. The Aqueduct facility will be the first casino within New York City.
“We think the projects we have between $300-350 win per machine are very conservative. When we had our partner MGM, this goes back a few years; they said the biggest problem we were going to have would be managing the crowds on weekends when people would be lined up behind all of the 4,500 machines.
“There is no question there has been more saturation. Pennsylvania, which is much closer to that market you are speaking of (New Jersey), I don’t know how many slot machines and now they have gone to full blown table games but that had to increase the number dramatically and it has had a big impact on Atlantic City. But I think the Aqueduct "racino" is geographically situation to do well and I think more importantly Genting (Malaysia’s Genting Group-a casino operator) is a world-class operation. They are going to put more money into this, making the amenities better. It is not a destination resort by any stretch of the imagination but it will be a place people will want to go.”
The Aqueduct "racino" should be in business sometime after Labor Day.
The slot machines at Aqueduct figures to give a big push to help revive an ailing business – thoroughbred racing in New York.
“The money comes in in a bunch of different tranches,” said Hayward. “One is purses and that is probably an increase of somewhere around $30 million just to give you a frame of reference. Purses last year were about $103 million and it will be about the same this year. So that is about a 30 percent increase. We can tap X money, which again depending upon win per machine will be between $20-25 million. We get operating expense monies, so we can do more marketing customer service things and then there is a breeder award.
“So all in all, the racing industry and NYRA gets about 16 percent of the net win from the VLT (video lottery terminal or slot machine) so that is going to be significant. We have undertaken some studies for Cap Ex (Capital Expenditure) improvements at all three of the tracks (Aqueduct, Belmont and Saratoga) and we can start working on that once we got the money.”
Video Lottery Terminals are saved a lot of tracks thorough New York and in Delaware. The horse racing industry is dependent upon the slot machines.
Hayward is hoping that people will return to horse racing as owners. Since the economic meltdown of September 2008, a lot of horsemen and horsewomen have left the industry.
Hayward is monitoring what is going on in New Jersey in the struggle between bolstering Atlantic City and saving the horse racing industry but doesn’t have much to say about the New Jersey legislative battle to help both industries.
“I wish Morris Bailey (who now runs Monmouth Race Track) a lot of luck on the thoroughbred side, I had the good fortune of meeting the gentleman at the Preakness (in Baltimore). I think he knows what he is getting himself into,” said Hayward. “Look, it is important for racing to have various circuits, it is important for us for Monmouth to be a strong track. Obviously, the Meadowlands was a premier harness track for many, many years and Jeff Gural (who has a lease at the Meadowlands) is a very talented guy. He has brought back some harness racing here in state (upstate New York). I don’t know what is going to happen but it looks to me that the current administration (Governor Chris Christie) is certainly protecting Atlantic City. Under that scenario, it would seem unlikely that they would do anything (installing slot machines) at the Meadowlands
“But as you know, those things can change very quickly.”
Don’t look for slot machines at Belmont race track anytime soon. There has been mention that as part of the New York Islanders quest to gain a new arena for the hockey team in Nassau County that land which could be used for a Shinnecock Indian Casino in Uniondale (as suggested by former New York Senator Al D’Amato) should be shifted to Belmont but Hayward isn’t interested in the idea.
“We have not been involved,” he said. “Our position and our board’s position, you know the state (New York) has an option. If they put VLT’s here, they have an option on 10 acres of land at the end of building here (at Belmont). But, our view is let’s get the VLT’s going at Aqueduct; it is only nine miles away. I think to bring another entity in the market until we establish what is going on and until Genting gets some return on their $380 million investment would be inappropriate. You know, Nassau County, you can understand given their financial situation why they would want more economic development but we have not been involved in any conversations about gaming at Belmont nor will he be or putting an arena here. We have about 400 acres so we got some room but we would like to do some expansion. We need to build a few new barns. This is a beautiful old building we have; it’s an old building that doesn’t have a lot of air conditioning or heat so we have some challenges.”
The horse racing industry seems to be surviving thanks to the slot machines in various states. NYRA has been on the ropes for a long time but like a number of other horse tracks, its future depends on slot machines and eventually table games.
Evan Weiner, the winner of the United States Sports Academy's 2010 Ronald Reagan Media Award, is an author, radio-TV commentator and speaker on "The Politics of Sports Business." His book, "The Business and Politics of Sports, Second Edition" is available at bickley.com, Barnes and Noble or amazonkindle.