Archives for July 2012

EFFECTS OF EXPANDED GAMING IN OHIO

The geographic area encompassing Northeastern Ohio, Northwestern Pennsylvania, and the slice of West Virginia near Pittsburgh, Pa. is about to undergo an enormous transformation pertaining to horse racing. This sea change is being brought about by the addition of video lottery terminals at seven Ohio racetracks and the opening of four full-scale Ohio casinos in the Buckeye State.

Rock Ohio Caesars owns the new Horseshoe Casino in downtown Cleveland and Thistledown racetrack in the suburb of North Randall (Rock Ohio Caesars also owns 90% of Turfway Park, not far from its forthcoming Horseshoe Casino in Cincinnati).

The gaming company has indicated that it will install slots at Thistledown’s existing site, but may ultimately decide to close the facility and build a racino south of Akron, about 50 miles away. The present Thistledown venue is only six miles from Northfield Park harness track, where a Hard Rock Casino will open.

Penn National Gaming Inc. wants to relocate its Beulah Park, near Columbus, Ohio, to the Youngstown area. The repositioning would place the racetrack less than 60 miles from both the current and proposed Thistledown sites.

PNGI will open the Hollywood Casino in Columbus later this year.

Two other Thoroughbred racetracks–Presque Isle Downs & Casino in Erie, Pa. and Mountaineer Casino Racetrack & Resort in Chester, W.V.–are each about 100 miles from the present Thistledown location. A PNGI racetrack close to Youngstown would be approximately 50 miles from Mountaineer Casino Racetrack & Resort and about 100 miles from Presque Isle.

If Ohio developments go as planned, it will be a particularly challenging environment for Mountaineer because it has long been a popular destination for Northeast Ohioans on daytrips and overnights at its hotel. These patrons now have easy access to gaming at the Horseshoe Casino in Cleveland and soon there will be VLTs at Thistledown and Northfield Park.

Likewise, Thistledown, Northfield Park, and the relocated Beulah Park will pose strong competition for Presque Isle.

Whether this massive expansion of casino gaming and Thoroughbred racing can and will be supported is problematic. The most probable outcome is that Mountaineer and Presque Isle, both owned by MTR Gaming Group, will see considerable attrition in their business as customers from the Buckeye state opt to stay nearer to home for both gaming and pari-mutuel wagering. Owners and trainers are apt to follow the money.

Copyright © 2012 Horse Racing Business

Originally published in the Blood-Horse. Used with permission.

QUESTIONS FOR THE NY TIMES AUTHORS

Two-time Eclipse Award winning writer Joe Drape and investigative journalist Walt Bogdanich of the New York Times published yet another unflattering article this week on American horse racing titled “Records Show Triple Crown Contender Had History of Ailments.” NBC-TV aired a segment on the article during the Wednesday edition of Nightly News with Brian Williams (with a graphic picture of  the injured Eight Belles after the 2008 Kentucky Derby). NBC is, of course, the network for the Triple Crown telecasts.

The Times’ article appears to have serious flaws in research methodology and reporting that the authors need to address and clarify. To illustrate, three quotes from the article are shown below, followed by my brief queries and comments.

“I’ll Have Another, the horse attempting to become the first Triple Crown winner in 34 years, had physical ailments well before he was withdrawn from the June 9 Belmont Stakes on the eve of the race, and he was being treated with painkillers and anti-inflammatory drugs…”

Don’t most racehorses (and human athletes) have physical ailments? Aren’t painkillers and anti-inflammatory drugs generally accepted veterinarian practices for osteoarthritis? Why didn’t the Times include a balance of veterinarian views on these questions?

According to three licensed racetrack veterinarians consulted by the Blood-Horse “I’ll Have Another’s Treatment [was] Routine Care.” Dr. Foster Northrop said: “What was done with him [I’ll Have Another] is actually less than is done with some horses.”

“…only two days before the Belmont, which I’ll Have Another needed to win to complete his Triple Crown quest, the colt was injected with two powerful painkillers as well as a synthetic joint fluid, the records show.”

Numerous reputable medical websites state that administering painkillers and joint fluid are two commonly used methods for treating osteoarthritis in humans. Moreover, these expert sources indicate that painkillers can be non-narcotic (e.g., Tylenol) or narcotic. Shouldn’t Mr. Drape and Mr. Bogdanich have provided specifics on just what “two powerful painkillers” were administered to I’ll Have Another?

The colt’s veterinary records–that the Blood-Horse put online–show that he was given phenylbutazone (a non-narcotic), Polyglycan (a fluid replacement), and Dexamethasone (a corticosteriod).  Where exactly were the “two powerful painkillers” listed in the vet report that the Times’ story said were used to treat I’ll Have Another’s osteoarthritis? (To see the vet record click here and then click again on the link provided in the article.)

“Twenty-four horses a week die at the nation’s racetracks, according to an analysis by The Times, and they break down or show signs of injury at the rate of 5.1 per 1,000 starts. This past winter, 30 horses died at Aqueduct racetrack in New York, a 100 percent increase in the fatality rate over the same period the previous year. Many of the horses had been injected repeatedly with pain medication in the days and weeks before their breakdowns, according to a review of veterinary records by The Times.”

Are the veterinary records of racehorses open for public review and inspection in most states? How did the Times gain access to the records “at the nation’s racetracks” and how many records did they review to warrant the generalization that “many of the horses had been injected repeatedly with pain medication in the days and weeks before their breakdowns…?” Lastly, why was the word “many” not quantified? Does “many” mean 20%, 30%, or 50%?

As with the previous articles by Mr. Drape and Mr. Bogdanich, the underlying research methodology is faulty and the analyses and reporting lack balance and sufficient explanation of key assertions, which leaves the impression—accurate or not–that the authors are conducting a vendetta against horse racing, for whatever reasons.

The influential New York Times has squandered a golden opportunity to present a series of reasoned and balanced articles that advance the cause of much-needed drug reform in American horse racing. Regretably, instead, the focus has been diverted from the message to the motives and competencies of the messengers.

Copyright © 2012 Horse Racing Business

FINDING CAPITAL FOR SMALLER RACING BUSINESSES

Small businesses and start-ups do not have the same access to capital markets as large companies and until now have been subject to most of the same federal regulatory rules and filings when soliciting investors.

A new federal law intended to address these barriers is germane to many of the enterprises in horse racing. The 2012 Jumpstart Our Business Startups Act (JOBS Act) legalized what is known as crowdfunding, or raising money on the Internet for launching and expanding small businesses. The JOBS Act also did away with onerous reporting requirements.

Nonprofit organizations and politicians pioneered the use of social media to solicit money from numerous small-dollar contributors. Small businesses can soon employ similar techniques to reach investors–and offer them an ownership position–on Internet portals like Kickstarter, Facebook, and YouTube.

A White House press release explained that “Subject to rulemaking by the U.S. Securities and Exchange Commission (SEC), startups and small businesses will be allowed to raise up to $1 million annually…through web-based platforms, democratizing access to capital.” Thus by late 2012 or early 2013, entrepreneurs will be able to make general solicitations online from sites approved by the SEC.

A company or individual seeking less than $100,000 in capital will have to stipulate that its financial statements are accurate; if the amount sought is between $100,000 and $500,000, a public accountant must review the statements; and solicitations over $500,000 but less than $1 million will require audited financial statements.

Within limits, both accredited investors (individuals with a net worth exceeding $1 million or earnings of $200,000 in the past two years) and non-accredited investors can participate. A person with a net worth or annual income exceeding $100,000 can invest up to 10% of his or her net income annually, with a $100,000 maximum investment. Anyone not meeting this threshold is limited to a $2,000 annual investment.

The JOBS Act is not without controversy, as some believe it fosters fraud. Another hazard is that novice investors may not realize that most new business ventures fail within a few years. (Racing partnerships are typically forthright in acknowledging that investors will most likely lose money.) In addition, should an investor wish to sell, the market for stock in small private companies is usually illiquid.

Once the JOBS Act is implemented, entrepreneurs and small businesses will be able to cast a wide net to find investors, absent red tape and hefty accounting and legal costs, though compliance with state securities laws will remain.

Copyright © 2012 Horse Racing Business

Originally published in the Blood-Horse. Used with permission.