Slot machines can’t be the main sources of revenue if Canada’s racetracks want to stay in business, says a horseracing industry analyst.

Canadian thoroughbred and standardbred racehorse owners, breeders, trainers and other industry insiders hope an increasing number of “racinos” - racetracks with casinos that have slots - will boost their sagging business hopes.

Richard Thalheimer, president of Lexington, Ky.-based Thalheimer Research Associates, says off-track casino and lotteries have caused 35 to 40 per cent declines in betting at racetracks across North America.

“The fundamentals for the long-term existence of the industry require that more money come from the horserace-wagering side,” says Thalheimer, a retired University of Louisville equine economics professor who now advises racetrack operators.

Thalheimer made the comments in the wake of Vancouver’s Hastings Park thoroughbred track opening a new 42,000-sq.-ft. racino that features 600 slots.

The Vancouver launch means all of Canada’s major racetracks now have hundreds of slot machines onsite or, in the case of Calgary’s Stampede Park, located nearby.

By allowing racinos, provinces and states have enabled racetrack operators to compete with off-track casinos and gain more revenues from simulcast wagering, says Thalheimer, who has studied the horseracing industry in the U.S. and Canada.

Under provincial and U.S. state regulations, a portion of casino revenues go toward horseracing prizes, or purses. As a result of more on-track slots, he adds, owners, breeders and trainers have benefitted from purse increases. At some U.S. tracks, purses have increased dramatically, to as much as $220,000 from $19,000 per day.

“It doesn’t turn back the decline in wagering, but it does infuse money in terms of purses into the industry, which buys the industry time to change the product so that more people are interested,” says Thalheimer, whose firm advises racetrack operators.

“That (purse increase) is the key to saving the horseracing industry … If (breeders, owners and trainers) were just subject to casino competition outside the racetracks, essentially, in almost all locations here (in the U.S.) and there (in Canada) they would be gone today.”

But, he adds, racetrack operators must change their betting products to appeal to slot players, who typically are not interested in horseracing, although racetrackers like to play slots. On-track slots, he says, have also sparked a resurgence in breeding after sharp declines prompted many breeders to leave the sector.

After a four-year struggle that included an unsuccessful Supreme Court challenge from residents, Vancouver’s racino opened in mid-August. Hastings Park joins major tracks in Alberta, Ontario and Quebec that have housed slots for most of the past decade.

Howard Blank, vice-president of Richmond, B.C.-based Great Canadian Gaming Corp., which owns and operates Hastings Park, says the new casino will boost the province’s horseracing industry.

The slots have already prompted Hastings to increase its race purses.

“This (racino), we hope, will be a catalyst to bring back people back to us because, with the purses being larger, more races and more bigger (stakes) races will bring back more quality horses,” says Blank.

Blank says the addition of slots at Edmonton’s Northlands Park and Calgary’s Stampede Park led to an exodus of quality owners, trainers and horses from Hastings.

Now Great Canadian, which owns other racetracks and on-track and off-track casinos across North America, is hoping the slots will spark more investment in the industry, as well as betting at Hastings Park.

“In the old days, horseracing was it,” says Blank. “There was that, or perhaps bingo. Now, people have a number of options when they want to spend their entertainment dollar on gambling.”

Great Canadian, a publicly traded company, also owns and operates Fraser Downs in the Cloverdale area of Surrey, B.C., Sandown Park at Sydney, B.C., Flamboro Downs in Hamilton and Georgian Downs in Barrie, Ont., as well as casinos in B.C., Nova Scotia and Washington state.

Blank says slots have become an important staple of the horseracing sector because they have attracted a new market and given fans a chance to enjoy many amenities at a facility.

He points to Barrie’s Georgian Downs as an example of a track that has gained considerably from slots.

“It’s standing-room only on weekends, and that’s why we’re adding a number of components with our partners - including more (slot) machines,” says Blank.

He says slots appeal to racetrackers because they know revenues will directly affect the quality of horseracing and the facilities they enjoy visiting.

But slots could not save live harness racing, or sulkies, at Alberta’s major tracks in Edmonton and Calgary.

Northlands announced in June that it will only run thoroughbreds between 2009-2012. Calgary’s Stampede Park stopped running sulkies in 2006, forcing owners to send their horses to small-market tracks where betting handles are much lower.

Now breeders of Alberta standardbreds say they are struggling just to stay in business.

“Even though the racetracks have a casino, they’re just another casino,” says Charlie Maze, co-owner of Dreamway Farm near Sherwood Park. “I don’t think they’re drawing many new race fans. If anything, they’re taking true horse fans down to the casino and they’re spending their money there.”

The slots at Northlands, he adds, have failed to attract a younger market, and the operator has few incentives to promote live racing.

“If (Northlands) can run chickens around the racetrack and make money, they will do that,” says Maze. “They’re an entertainment facility.”

Of this year’s 178 standardbred yearlings to be auctioned at Alberta standardbred horse sale in October, he estimates only 40 to 50 will be sold for more than $10,000 apiece. The rest will fall under that benchmark As a result, he plans to split sales of his foals between Alberta, Ontario and Pennsylvania.

Meridian Farms of High River, near Calgary, the largest commercial breeding farm in Western Canada, is also reducing its operations in the west and sending six broodmares to its Eastern Canadian base in Prince Edward Island in order to take advantage of perks offered by the P.E.I. and New York state governments.

But Mona Hill, co-owner of Spruce Grove-based Barona Yearlings, says slots are keeping the Alberta standardbred industry alive.

“The slot machines have helped us survive,” she says.

But Hill, who plays the machines, says Northlands promote slots more than live racing.

“It’s upsetting,” she says, “because we’re local. Local people. Local horses. Local businesses.

“We’re supporting Alberta and they’re promoting a simulcast race coming from the U.S. somewhere. Promote our product. This is what gets the locals to come to the track … It’s all gone technical (with) video games and slot machines. But without them, we won’t survive right now.”

Meanwhile, a new $240-million track next to a huge new $1.5-billion shopping mall in Balzac, located between Calgary and Red Deer, will open next year, along with 625 slot machines.

If all goes according to plan, says Max Gibb, chairman of Calgary-based United Horsemen Association (UHA), the group building the new Balzac track, the new facility will stage 100 live harness racing dates next year and provide both thoroughbred and sulky races by 2010.

Gibb, who also owns Whoop-Up Downs in Lethbridge, says slots are critical to the growth of the horseracing industry. He notes they have made significant impacts at racetracks across the continent, especially at Toronto’s Woodbine, which offers the richest purses in Canada.

Like Ontario, he says, Alberta will see significant upgrades in breeding, farm development transportation, and all other facets of racing.
(Source: Business Edge)