Exploring the alternatives

The implementation of alternative wagering would likely speed up the construction process at Pinnacle Race Course. Caught In Traffic is led out of the paddock with Federico Mata aboard.

The implementation of alternative wagering would likely speed up the construction process at Pinnacle Race Course. Caught In Traffic is led out of the paddock with Federico Mata aboard.

The proverbial toothpaste is out of the tube.

The number of states seeing their purses skyrocket from slot machines and other casino gaming is growing with each passing year. 

Just as many racetracks, if not more, are going online for new sources of handle, offering advance deposit wagering for those of us who like to play the races but fear natural sunlight.

With so much competition for the gambling dollar from casinos, lotteries, neighborhood poker games and elsewhere, it appears the days of racing being able to thrive on its own product alone are becoming numbered.

Even Kentucky, the Thoroughbred capital of the world, is working toward legislation to implement slots into the state’s racetracks. 

The implementation of alternative wagering is also widening the gap between functional racing facilities and ones that struggle to keep the lights on.

Michigan, for example, has no alternative wagering options outside of simulcast and is suffering because of it. 

In 2004, a ballot proposal, largely funded by the state’s Native American tribes and three casinos in Detroit, was convincingly approved forcing the state’s racetracks to jump through a ridiculous and costly number of hoops to even get a chance to install slots or table games. In the same proposal, the tribes and Detroit casinos included a clause making themselves immune to the restrictions and free to expand their gaming operations in any manner they wish. To put the final nail in the coffin, the proposal was retroactive, killing a Video Lottery Terminal bill that was making its way through State Congress when the proposal was written.

The proposal was marketed as a way to empower the people of Michigan, allowing them to control where new gaming could and could not go. As any good Snake Oil salesman will attest, the first step in manipulating the masses is giving them a false sense of empowerment. Despite what a federal judge said earlier this year, a fast one of epic proportions was pulled on the people of Michigan in 2004.

Online wagering on Michigan tracks is also prohibited to its populace. Michigan residents are allowed to set up accounts and send their money to tracks across the globe, but can not wager on the ones in their own state. A person who lives on the other side of the Ohio border just a few miles from Pinnacle Race Course can fire up their Xpressbet account and play the races in his or her underwear. Meanwhile, the Michigan racing fan living in the state’s upper peninsula, a good eight-to-ten-hour drive from New Boston, is out of luck. There is something backward about outlawing something to the group that could benefit from it the most.

Through all of this, the number of tribal casinos in Michigan has swelled to 17, with at least two more in development. This does not include The Great Lakes Downs property recently purchased by the Little River Tribe of Ottawa Indians in 2008, which currently sits in administrative purgatory while the Tribe attempts to get a gaming license on non-tribal land.

The Michigan Lottery has also expanded quite freely, and since its inception in 1972 has ballooned to over 20 different drawings, Club Keno, Pull Tabs and countless instant ticket games; all of which are allowed to expand their presence into gas stations, bars, restaurants and elsewhere. The Michigan racing industry is literally being regulated by its competition.

Racing in the state of Michigan can not be expected to survive it is not allowed the same rights of expansion as other gaming outlets in the state and other racetracks in neighboring states. 

Because of the state’s unwillingness to provide its racing industry with the tools it needs to compete on a level playing field, Michigan’s horsemen are leaving in droves. With Pennsylvania’s Presque Isle Downs and two recently slots-enriched tracks in Indiana so nearby, many horsemen are sending their mares to foal in those states to take advantage of their generous breeder’s incentive programs. Others are simply pulling up the stakes and moving their entire operations to states with alternative wagering.

It is sad to see them go, but when a $7,500 claimer can run for double the purse elsewhere, one can hardly blame Michigan’s horsemen for going where the money is. If Kentucky approves slots, it will only give them another place to race for lots more money than they could here. The effects the massive loss of horsemen in this state could have is staggering.

I will now step down from my soapbox and allow you to step up onto yours for the next poll question: Which form of alternative wagering is most important to racing’s long-term health?

Though I use Michigan as an example, the question applies to the sport as a whole.

Slots make the purses nice and big, but is it just a bubble that will eventually burst? Account wagering allows players to wager from anywhere, but could it someday render live handle obsolete? Is there something out there no one has considered?

Personally, I think Michigan could use whatever it can get.

Advertisements

8 Comments

Filed under Commentary, Pinnacle Race Course, Politics, Polls

8 responses to “Exploring the alternatives

  1. Pingback: Exploring the alternatives « The Michigan-Bred Claimer

  2. Andrew

    Joe,

    Great post, subject and question! In my opinion, there’s no form of alternative wagering that will benefit racing long-term. I view alternative gaming revenue as a short-term savior, but long-term guillotine. Racetracks certainly need it now, but you can only patch the hole for so long. I would like to see a racetrack incorporate technology, entertainment, architectural design and new wagering opportunities that are so cutting edge they scare away some of the hardcore players. For too many reasons, I doubt this is possible in Michigan and many other states as well.

    Most people have no interest in racing and until we fix that the discussion will continue until the smaller tracks are no more. Poker is cool, casinos are cool, sports are cool and to some people even the damn lottery can be cool ($300+ Million jackpots, shiny tickets). Aside from one race in May that is beginning to focus more on the red-carpet than the racetrack, horse racing isn’t. But I think that will change one day with some of the whales like Del Mar, Saratoga, etc. The more I think about all this, I feel that a massive contraction would benefit the sport, although it would really hurt a lot of hard workers. If it happens anywhere first, my guess would be Dubai and Dubai doesn’t need slots.

  3. Andrew

    Oops.. Didn’t notice that ADW was an option. I think ADW will benefit racing long-term much more than the others.

  4. mibredclaimer

    Andrew,
    To answer the shorter question first, I agree with you on ADW being the best long-term solution.

    As a new racetrack, Pinnacle has the chance to make the changes and innovations you speak of. The problem is, change like that tends to require money. That’s where the short-term fix of slots or other alternative revenues come in. I guess it’s kind of a catch-22.

    I don’t know, maybe the racetracks would have more success if they made their tickets shiny too.

    I’m not sure how Dubai could contract to run any less than it does. They already run a pretty short meet, and with Sheikh Mohammed pouring an obscene amount of money into his Meydan City project, I don’t think he could cut things back if he wanted to.

  5. Andrew

    Joe,

    This idea has been mentioned elsewhere, but if people could buy a ticket that fed into a Pinnacle pool at their local gas station, they would. People don’t want to take the time to drive to the track or open an ADW and maintain a funded account. They don’t want to handicap or even think. But just because they don’t want to associate themselves with horse racing doesn’t mean they don’t want to play. They just want it now or not at all. If MI horse racing could somehow work with the lottery, or independently, to sell tickets statewide at lottery locations, we would have a whole new game. I’m not sure if this is possible and if it is, it almost certainly won’t happen.

    Also, when I mentioned a contraction I actually meant a reduction in the number of racetracks, without reference to Dubai. Less tracks = fewer options = bigger handle, attendance, field size, etc.

    Just my thoughts… Keep covering the issue!

  6. mibredclaimer

    This is a very interesting idea, but I think two things would keep it from happening, at least in Michigan.

    1) Unless it was completely lottery-sponsored and the state got every penny (which would eliminate the point of doing it in the first place), I think Proposal One would get you. Unless the state stepped up and overrode it, putting together a petition for every corner gas station in the state would likely cost way more than the effort is worth.

    2) The reason people play the lottery is because they want to make insane amounts of money with as little effort as possible. It doesn’t take an advanced degree in racing form-ology to rattle off a few numbers (or better yet, play an easy pick) to a gas station clerk or scratch off a ticket and hope to get three like amounts. Unless people just pick random numbers and hope for the best, I don’t know if they are going to be willing to toil over a confusing program and place a bet on a horse that might only pay five or six bucks to win when they can win millions just by filling out a ScanTron sheet.

    You can get away with it at the races because that’s what you’re there to do, but if they were placed next to each other, I think human nature would likely steer most toward the lottery instead. I could be wrong on this. In fact, I hope I am.

    Still, it’s an avenue I never considered, and the industry needs that kind of thinking to keep itself viable in the future.

    You say it’s been mentioned elsewhere. Would you happen to have a link to any articles? I would be interested in reading more about this idea.

  7. Andrew

    Let me clarify my first comment, I noticed it was somewhat ambiguous. What I meant to say was I think Dubai will be first with innovation: http://www.meydan.ae/racecourse/gallery.asp

    I honestly think the lottery thing could work. But you have to consider the details… I don’t think straight bets would work at all, for the reasons you mentioned. I also don’t think any kind of handicapping data whatsoever would be of use for the average player or lottery location. The problem with racing is exactly that- most people don’t want to read a program, but with slots, scratchers, etc. they just want to play. The only viable option would have to be an exotic or multi-race wager such as a Pick 3, Pick 4 or Pick 6. Very similar to the actual lottery Daily 3 and Daily 4- but instead of numbers popping up, horses pop up.

    In theory, the payout would be much larger than typical racetrack pools because you would have people playing statewide at thousands of locations. Initially I think there would have to be only one wager per week. People could buy tickets and feed the pool all week. It could be pari-mutuel or not. The focus races would have to be designed to fit the “lottery” wager. There would have to be a predetermined field size, rules would have to be in place to address scratched runners, among many other issues. Would it be one track that offers this wager, or multiple tracks? Many things to consider. Past performance information would be available for those who take it seriously.. they can handicap and then proceed to buy the ticket. But for the average person, they could simply check three boxes and run the slip through, or do an easy pick. I’m sure there would be a lot of legal hoops to jump through, but the difference between racing and casinos is the live product. This would be very different from OTB. The racetrack(s) and entire industry would have to work with the state, it would take a lot of elbow grease.

    I think if you honestly look into it you’ll agree. Daily 3 payouts are tiny, so people don’t need a million dollar promise to play. Lots of pros and cons, but it would help the state and the industry. Instead of subsidizing racing, the state would profit.. this wouldn’t directly compete with casino gaming.. too many angles here to discuss. Why would the state be willing to introduce this wager when they would receive a lower % of the $? For one this would get rid of the need to subsidize racing and transform the industry into a self-supporting one, while still being taxed. Like I said, I think it could work either with the lottery or independently. Maybe only start with a select few locations, but market the hell out of it at those locations.

    The Maryland Lottery has a game called “Racetrax” which is basically a virtual racing lottery game. Bars actually televise these virtual races and allow straight bets. Very different from my idea, but interesting: http://www.mdlottery.com/h2p_racetrax.html

    Apparently Mass. considered something similar to Racetrax: http://www.lotterypost.com/news/111184

    A similar strategy has worked wonders for Greyhound racing in Europe: http://www.timesonline.co.uk/tol/news/world/ireland/article4597125.ece

    If done right, I think it could work and benefit both racing and the state. I personally know many people, old and young, who would love the idea. They don’t care for racing much, but would play if it was this easy.

  8. ROX

    New York is now talking about putting slot machines in gas stations and resturaunts to help pay for college tuition. That will affect racing, as slots at the “racinos” have upped the purses here. There is no good end.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s