For want of a slot machine Kentucky’s horse industry will be lost. Or so the gamblers would have us believe. Yes, the horse industry is vital to Kentucky. Yes we should nurture it. But never must we let emotional fervor and exaggerated, unsubstantiated claims mis-direct us to a non-solution that will not only harm our long term welfare, but that will also destroy the thoroughbred industry itself.
First, let’s examine the claims of those who want to add slot machines (or VLT’s) to Kentucky’s tracks. Essentially they say that Kentucky’s horse industry is in crisis because Turfway, Ellis Park and now Churchill have had to cut racing days, an event caused not by a historic recession and economic downturn but by owners taking their horses to states that allow their tracks to have slots (racinos) which in turn enables them to offer higher purses.
Yet the fact is that tracks all over the country are cutting race dates, even in racino states. In 2008 the total number of races declined 2.2%, including West Virginia which had 256 fewer races, a 6% drop, and Louisiana with 143 less, a 4% drop. Kentucky held up quite well, only down 2%. Nationally, pari-mutuel handle dropped 7.3%.
This year tracks continue to cut dates, specifically citing the economic downturn as the reason. Historic Del Mar is going to 5 days a week, first time since 1947, and according to its president, Joe Harper, it has nothing to do with the absence of slots and everything to do with the economy: “There’s a pinch on everyone due to the economy, there’s a pinch on the number of racehorses available in the state.”
Kentucky’s world-leading breeding industry is not threatened in the least. In fact Kentucky increased its share of mares bred from 36% in 2006 to 41% in 2008. The next closest was Florida at 10%. All racino states except Pennsylvania (2%) and Indiana (1%) lost ground. Kentucky-breds earned more than $436 million, an increase of 1.5% from 2007 and Kentucky-breds increased their share of the total purse money earned in 2008 to 36%.
In any case higher purses do not guarantee increased attendance or wagering. Maryland subsidized higher purses from 1998 to 2000 by 25% yet live wagering actually decreased. And in both West Virginia and Delaware live wagering and attendance remained stagnant despite tripling purse sizes following the introduction of slot machines. Each state spent a staggering $100 million and got basically nothing in return.
These facts thoroughly contradict the frantic over-the-top claims of the casino interests trying so desperately to get their foot in our door. If our signature industry is truly threatened to the point of extinction then we should unite in developing a list of options properly addressed to the root causes of the problem, none of which will include slots.
The fact is that slots at the tracks will eventually kill the thoroughbred industry. Slots hook gamblers who will rush in droves for that option over horse racing. For this reason casino style gambling is a long term mortal threat to racing. Leading economic experts Dr. John Warren Kindt and Dr. Earl Grinols have for many years warned of this danger. And the Congressional National Gambling Impact Study Commission specifically directed states to refrain from putting slots at the tracks.
The racing industry must instead creatively improve and market its product to attract new customers, while also working with casino opponents to staunch its cancer-like spread. Tim Capps, a University of Louisville professor in the College of Business equine program said that racing has “has been very insider-ish…It has been run more for itself than it has for its fans. I think one thing racing has to do is make participation in our sport easier for the fan, because the fan has not come first in our industry for a long time.”
Richard Shapiro, the Chairman of the California Horse Racing Board agrees. “I really question whether we are a sport anymore. We have taken the entertainment away and pushed it just as gambling. We need to invent very simple wagers…and package racing better. If we do that and present it to the right people we have the opportunity to receive more revenues.”
In any case Kentucky would have to first amend its Constitution before any such expansion of gambling could occur as both the legislative history behind the lottery amendment and an opinion of then Attorney General Ben Chandler show.
Still, I understand the plight of Ellis Park. Indiana’s casinos have over the past 12 years caused a permanent 35% drop in their revenues and their slot-supported racing is another blow. Yet surely there are other ways to help Ellis than to dirty our state with a proven long term societal killer of casino style gambling.
And that is exactly what slots, VLT’S, and casinos are, a long term killer. History has proven that gains are short-lived. In just a few years the economic costs to pre-existing, traditional businesses and social costs will become unbearable and states will see gambling for what it is and ban it yet again. This is what happened in the late 1800’s when states around the nation, including Kentucky, put in their Constitutions prohibitions that would make it nearly impossible for future generations to repeat their mistake.
Kentucky need not follow. We are a pioneer state—we lead. Kentucky should lead in repelling the spread of casino-style gambling. We should lead in exposing the truth about the harm it causes. We should lead in showing how healthy and vibrant our community, our economy our foundation can be by focusing on time honored fundamentals—just as we have with Education reform.
Above all we must not fall for horse tales, old or new.
Richard Frank Dawahare 5/14/09
SOURCES:
These are my sources for the statistics and quotes: I got all the stats from Equibase on the Jockey Club's site: http://jockeyclub.com/factbook.asp under which are the figures for: 1) number of races -- http://jockeyclub.com/factbook.asp?section=6 2) Gross purses-- http://jockeyclub.com/factbook.asp?section=7 3) Pari-mutuel handle-- http://jockeyclub.com/factbook.asp?section=8 4) Distribution of Stallions and Mares bred-- http://jockeyclub.com/factbook.asp?section=3 5) Distribution of registered Foal Crop by state-- http://jockeyclub.com/factbook.asp?section=4 I GOT the information about Maryland, West Va. and Delaware performance after the introduction of slots from THIS researchpaper by Jeffrey Hooke, Chairman of the Maryland Tax Education Foundation -- http://www.marylandtaxeducation.org/horserace.pdf 6) The quotes I got from this article by Liz Mullen in Business First, Louisville--
http://www.bizjournals.com/louisville/stories/2008/05/05/story1.html?t=printable
7) The reference to the National Gambling Impact Study Commission directive against slots at the tracks
is here, at SECTION 3-12 http://govinfo.library.unt.edu/ngisc/reports/fullrpt.html
