DECOUPLING HORSE RACING FROM GAMING

My view has always been that most states with racinos, and perhaps all, will sooner or later eliminate subsidies to horse-racing purses and breeding funds. While a strong factual argument can be made in a number of states that racinos are essential to significant equine agricultural and agribusiness enterprises, which would be eviscerated by decoupling casino business from horse racing, a more persuasive emotional case can be made on the opposite side.

Even though the United States is purportedly a free-market economy, one can easily find plenty of examples of government subsidies and crony capitalism (rather than entrepreneurial capitalism). For example, agricultural price supports, Ethanol, electric cars, and wind and solar energy development. Nonetheless, horse racing subsidies are more vulnerable for a couple of reasons.

First, though erroneous, the image often associated with horse racing is of wealthy folks pursuing a hobby when, in fact, horse racing is a cottage industry in which the preponderance of participants are not close to being affluent and many live hand to mouth.

Second, state governments are perennially strapped for cash and hedonistic activities like gambling are easy marks. Emotion will win out over logic almost every time in the forum of public opinion. Education and Medicaid should not be deprived, elected officials say, to support rich farmers.

The future of a horse racing industry without the largesse of gaming subsidies is not a pretty picture. For some time now, it has been evident that horse racing’s growing dependence on gaming can’t last and the former will sink or swim with pari-mutuel wagering.

Yet the vast majority of racetracks have refused to experiment and innovate with pari-mutuel wagering in order to make it competitive. Why? One plausible explanation is that racinos have a vested interest in decoupling gaming from horse racing and the fastest way to do so is to make the pari-mutuel product as unappealing as possible.

This is why I’ve repeatedly said that the bloodstock side of the horse-racing enterprise should launch or purchase an advance deposit wagering company, possibly via a coop, to do the necessary experimentation. But the window of opportunity is closing fast, as Florida and West Virginia have already taken preliminary steps to decouple horse racing from gaming, or to allow racetracks to eliminate horse racing and maintain gaming. Eventually, they are likely to succeed.

Copyright © 2016 Horse Racing Business

Comments

  1. Just like Florida and other states use taxpayer dollars to lure business relocations (with the goal of creating jobs), purses infused with casino money help each state stay competitive in the horse racing industry. Thus, unless all states quit bolstering their purses simultaneously, there’s no way decoupling can reasonably happen without killing jobs and businesses. And until the horse racing industry stands up to the Big Casino lobby and clarifies that it’s not a welfare case (as Big Casinos want to paint us), we’ll keep getting accused of taking “subsidies” even though we take no taxpayer funds (but contribute substantially to our respective economies), as if states using taxpayer dollars for corporate welfare are somehow above that. Time for horsemen to stand up and refuse to accept the negative labels being pinned on us while the rest of corporate America is on the taxpayer dole. We forget that the role of government in gambling is to ensure a positive economic impact and revenue for the state, not to ensure an optimal environment for casino profit.

  2. miamiguy says:

    I hear you FL Horsemen and agree with your economic argument for continuing with gaming revenues to racing. But it ain’t gonna happen for much longer. What elected officials covet they usually get. We barely dodged the fatal bullet this year. When Frank Stronach goes it is all over I fear.

  3. Bill Shanklin says:

    I have repeatedly published articles on this website and elsewhere about the agribusinesses, jobs, and tax revenues derived from horse racing in Kentucky, California, Pennsylvania, Texas, etc. A factual argument along these lines is the only way to counter decoupling but it is a hard sell for the reasons cited above. Elected officials often don’t understand or ignore the ramifications of decoupling on a host of small businesses and individuals. A way of life is at risk.

  4. Ulf Lindstrom says:

    Bill,
    Harness racing (trotting only) in Europe suffers too, from “social decoupling.” The urban-rural gap is now so wide there is no cross-over, physical or mental, between people (let alone elected legislators) who still remember the ’60s when attendance at the tracks was almost 10,000 persons on race days. That’s when horses co-existed in the community as BOTH companion and race horses. Worse, those who now keep companion horses too often fail to realize that without trotters and runners their pastime would be much more expensive since we – the small-time breeders/owners of race horses – are the ones who foot the bill for the infrastructure of the equine industry by upholding the vet clinics, tack shops, fodder producers, pharmaceutical and transport dealerships across the land. Only one political avenue remains to travel in the service of the horse industry: get the girls of the affluent urban middle-class mounted as t-bred and RUS jockeys. Politicians, national and local, don’t want to appear stingy with opportunities for girls and young women to excel at sports and become role models. In Scandinavia, having subsidized indoor hockey rinks and soccer fields for a century, local politicians who question a hand-out to the local riding school are branded dinosaurs in all political parties.

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