Thursday, March 15, 2012

It's A Numbers Game...Or Is It?

The OLG's fiscal year runs from March to March, with that being said, if Windsor, Hiawatha, and Fort Erie close on April 30, 2012, there's an estimated revenue loss of $100 million for the year; an estimated $4.5 million loss to the three municipalities involved, and no where to go for the estimated 2,059,846 million patrons that frequented these three casinos during the year. 

It's pretty clear why these three casinos were targeted first; with Hiawatha Horse Park in direct competition with the Point Edward Casino, which is approximately 11 minutes away;  Windsor Raceway Casino, well, that's a no-brainer, it's taking money away from Ceasars, which is about 16 minutes away; And Fort Erie was only standing on two legs to begin with since they were eyeing at closing that establishment two years ago.  With it being in direct competition with the Niagara Consolidated casinos, seemed like a logical choice.

Fort Erie, which was established in 1897, is regarded as one of North America's most picturesque racetracks, and is filled with racing traditions...but apparently it's "getting in the way" of the almighty dollar!  If people have no qualms about bulldozing over Windfield Farms, because of highest and best use issues, then why would people care about ANYTHING horse related and ANYTHING to better it?  E.P. Taylor is probably rolling over in his grave right now!

Similar Issues Across The Border?

An excerpt from the Daily Chronicle states:  "Back in October of 2011, former Illinois Gov. Jim Edgar has been lobbying in favor of expanding gambling at Illinois' struggling horse tracks by adding slot machines under a bill passed by the Legislature in the spring. Edgar and others argue the machines could help save Illinois’ horse-racing industry, which many believe is on its last legs after the amount of money wagered last year plunging to a 35-year low.

'The [horse racing] industry is going to rise or fall on this,' said Edgar, who recently was among a delegation of horsemen that visited Springfield to lobby on the bill’s behalf. 'If it doesn’t happen, you could see horse racing pretty much disappear in Illinois.'

The measure certainly has the potential to bring more revenue to the tracks. But whether it would save them is less certain, and opponents aren’t sympathetic to the decline of the state’s oldest form of legalized gambling – already propped up, for now, with subsidies from Chicago-area riverboat casinos.

'If that sport is past its time, and people don’t want to go anymore, they should just let it die,' said Doug Dobmeyer, spokesman for the Task Force to Oppose Gambling in Chicago. 'Horse tracks are for horse racing, not mechanisms to get more people to gamble.'

Other states have found 'racinos' draw more people, even if they didn’t translate to actual increases in wagering on horses. Indiana’s two racinos, each allowed to have 2,000 slot machines, have seen their adjusted gross receipts surge from a combined $392 million in the 2009 fiscal year to $457 million last fiscal year. That’s despite seeing the amount of money wagered on horse racing drop from $190 million in 2005 to $139 million last year...."

In my opinion, the most idiotic quote in the above article comes from the spokesman for the Task Force to Oppose Gambling in Chicago; "If that sport is past its time, and people don't want to go anymore, they should just let it die"  Um, excuse me, horse racing in North America dates back to 1665, and as far as harness racing goes, what the hell does he think chariot races were back in the Greek Olympics in 648 BC?  Horse racing will continue, despite every negative obstacle that becomes lodged in its way.  The real focus should be on how the industry can become self sufficient, but at the same time, move forward with the times. 

Here's What The Racing Industry Will Lose

1.  Horse Numbers and Value
          a)  broodmare numbers and broodmare values decline
          b)  stallion numbers and stallion values decline
          c)  a decline in overall horse numbers
          d)  decline in value for yearlings
          e)  decline in overall horses for racing

[A survey by Equine Guelph and OHHA (using data from 1998-2002) was done to show the benefits of the Slots at Racetrack partnership; the average increase in value per horse was 114% for mares, 372% for stallions, 109% for yearlings, and 43% for horses racing]

2.  Employment
          a)  loss of workers; including both owners and employees
          b)  loss of full and part-time licensed grooms
          c)  loss of full and part-time licensed trainers

[From 1998-2002, there was a reported increase of 48% in workers (owners and employees), full and part-time licensed grooms increased 66% and 73% respectively, and full and part-time licensed trainers increased 27% and 59% respectively]

3.  Investment Values
          a)  investment values of land, facilities and equipment will decrease
          b)  on a per owner basis, land and facility investment values will decrease

[Reported investment values of land, facilities and equipment also increased from $14.7 million to $30.1 million, an increase of a 105% during this study]

4.  Racing-Related Revenue
          a)  purse revenue will decrease
          b)  the value of sales of horses

[Purse revenue had an increase in aggregate of 123%; the value of sale of horses also increased substantially to 239%.  Other racing-related revenue reported in the survey more than doubled from $1.24 million to $2.84 million.  Overall the aggregate value of racing-related revenue increased by 145%]

5.  Horse Purchases and Operating Expenses

          a)  a decrease in expanded business activity and operating expenses
          b)  a decline in horse purchases
          c)  employee compensation decreases

[From 1998-2002 an increase in annual horse purchases and operating expenses increased 137%, with the largest amount of expenditures going into horse purchases, employee compensation, training and boarding, vet supplies, and feed and hay for horses under the care of the operator]

6.  New Investment in Land, Facilities, and Equipment

          a)  the loss of incentive for horsemen to undertake long-term improvements/expansions

[Between 1998-2002, the survey showed that horse operators were now making substantial new investments in their business facilities, land, and equipment.  Annual investments for these items by the sample respondents increased 657%-$1.71 million in 1998 to $12.9 million in 2002.  This indicated that the presence of the slots revenue has provided substantial incentives for horse operators to undertake long-term improvements and expansions in their business]

7.  Share of Expenditures-Rural Areas and Small Communities

          a)  loss of money spent within the community
          b)  loss of municipal revenue

[The survey showed that slots revenue has had a very beneficial effect on rural and small communities where most of the horse operator's money is spent.  Respondents reported spending 73% of their expenditures in rural and small communities in 1998, increasing to 80% in 2002]

8.  Economic Size

          a)  Loss of value and size of horse operator businesses
          b)  Loss of size of the overall industry

[The operators responding to this question indicated that without slots revenue their businesses in 2002 would have been only 43.2% the size and 36.6% the value of their business in 1998 (at the start of the slots revenue), and that the overall industry would have been only 53.2% as large. The respondents also indicated that with continued slots revenue, their businesses in 5 years would likely be 89.7% the size and 101.4% the value of their 2002 business, compared to only 28.3% the size and 26.3% the value if the slots revenue were terminated today. Clearly, the presence of the slots revenue has had a substantial impact on the standardbred horse industry and is essential for its continued viability.]

The Overall Conclusion:
"Overall, the provision of slots revenue to standardbred horse operations has created many benefits for the horse industry, the overall agricultural sector, and the Ontario economy in general.  The horse industry in turn has been one of the few bright spots in the agricultural industry in recent years, as the overall agriculture sector has faced growing competition, low prices, and periodic problems with adverse weather and disease. Continued support through slots revenue for the horse component of the horse racing industry has the potential for maintaining the current viability of this industry for many years into the future."

"Stay safe, keep your hooves on the ground, and keep reaching for the wire!"

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