The Alternative Scene: Part One – Slot Machines/Racinos

Racetracks like Indiana Downs have seen significant increases in purse structure since adding new forms of alternative wagering.

Racetracks like Indiana Downs have seen significant increases in purse structure since adding new forms of alternative wagering like slot machines, but can the good times last?

In a poll that went about three and a half months longer than planned, the readers of this blog voted convincingly that slot machines are the most important form of alternative wagering for the long-term health of the racing industry. 

The voting was neck-and-neck between slots and advance deposit wagering in the poll’s early goings. As time wore on, slots pulled away to an insurmountable lead. 

Let’s have a look at the results…

Which form of alternative wagering is most important to racing’s long-term health?

Slot Machines – 58% (123 votes)
Advance Deposit Wagering – 22% (46 votes)
We don’t need no stinking alternative wagering – 8% (18 votes)
Instant Racing – 6% (13 votes)
Card Rooms – 3% (6 votes)
Other – 3% (7 votes)

Total votes: 213

“Other” answers (some of the answers could be placed in one of the categories above, but because they were placed in “other,” I am keeping them here):
– “table games, that’s what they want, only slots is not the answer”
– “telephone/Internet wagering”
– “All of the above”
– “exchange betting”
– “Simulacast”
– “Racino”
– “nothing we’re dooooooooomed”

There is no question slots have had an impact on the racing industry, and will continue to do so. Just look at the career path of Kentucky Derby winner Mine That Bird. 

The classic winner started his career at Woodbine, enjoying slots-enriched purses on his way to nabbing the Sovereign Award as Canada’s top juvenile. His earnings in Canada alone were enough to secure him an invitation to the big dance at Churchill Downs, which removed the pressure from taking the road to Louisville going through New Mexico.

Mine That Bird worked his way through the Derby preps at Sunland Park, which would have been a laughable strategy only ten years ago, and is unorthodox at best today. With the help of alternative wagering (mainly casino-style gaming) in 2009, the Sunland Derby offered a purse of $900,000, among the biggest prizes offered to three-year-olds in the country.

The race was not graded, and Mine That Bird finished off the board, but his eventual win in the Kentucky Derby put New Mexico in a position to become a legitimate path on the Derby trail. The little Birdstone gelding that could’s success has spearheaded the campaign to get the Sunland Derby designated a graded stakes race, officially making it more than a cash-grab race for Derby wannabes.

Simply put, without casino-style gaming, Mine That Bird is clunking around the California allowance ranks, Calvin Borel doesn’t tearfully celebrate his biggest upset on national television, Sunland Park still runs cheap Quarter Horses, West Side Bernie wins the Kentucky Derby and nobody goes home happy.

The story doesn’t end there. Just recently, the connections of Mine That Bird spurned the Haskell Invitational, and a rematch with Preakness winner Rachel Alexandra, to challenge the West Virginia Derby at Mountaineer. If Mountaineer were still in the slums of the racing hierarchy, as it was before the implementation of slots, a trip through the hills of West Virginia wouldn’t have even crossed the minds of team Mine That Bird (even if the gamble did blow up in their faces, leaving with a third-place finish).

Alternative wagering, slots in particular, does not only give gamblers more options at the racetrack. It also leads to horsemen having the option to try their charges in spots previously considered no-man’s land for horses with any class. Mountaineer landed a Kentucky Derby winner. Charles Town landed Commentator for the Charles Town Classic. Last year, Hoosier Park enticed Pyro, once considered one of his crop’s heavyweights, to enter the Indiana Derby. There is a $1 million race in the middle of Pennsylvania for crying out loud.

Even if for a brief moment, racinos can draw the big horses to come to your local track and thrust it into the national spotlight. If a few curious onlookers become serious followers of the sport, the track will be ahead for the day – and all thanks to a room full of retirees mindlessly hitting the “spin again” button.

However, the honeymoon between racing and slots may soon be coming to an end.

Many racino tracks are still struggling to find an identity for themselves, especially when the quality of racing has yet to catch up with the caliber of purses being offered.

Despite becoming a beacon for horsemen from non-racino states (just take a look at all the Michigan-based connections racing at Presque Isle Downs), Pennsylvania still faces issues with keeping the balance between the racetrack and the casino. Further complicating the situation is the radical discrepancy between the money the live handle kicks into the purse structure versus the purse money generated by the slots (as high as 20-to-1 at Presque Isle). According to the article linked to in this paragraph, Pennsylvania racing’s heavy reliance on the slot machine dollar paired with its difficulty generating its own funds could be seen as a sign of blood in the water by other groups looking to profit from gambling monies.

Though it has been confirmed at Prairie Meadows, an Iowa racino, that live racing actually boosts the slots revenue, the track plans to restructure its schedule for next year, with plans to jettison standardbred racing and ask for fewer Thoroughbred dates. While purses have steadily risen, live handle has steadily dipped despite being one of the first racetracks to adopt casino-style gaming.

The racetracks of today are the lab rats in the study of the miracle cure known as slot machines. Tracks with slots get the medicine – tracks without get the placebo. Early returns appear positive, but the side effects are still being discovered. Little is known about the long-term effects slot machines will have on the racing industry because they have only been around for the short-term. Proponents say slots will bring racing to an even playing field with competitors and will encourage the breeding of better competitors, while others worry the bottom line will eventually drive the “Rac” in “Racino” to become a full-blown “Cas”.

The answer is likely somewhere in the middle, but as it stands right now, there is only one way to find out.

A poll running this long deserves a post just as lengthy. To help preserve your eyes and attention spans, I am splitting it up into two separate entries. The next post, examining some of the poll’s runner-ups, will be up whenever I get around to writing it. Keep your eyes peeled.

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14 Comments

Filed under Commentary, Polls

14 responses to “The Alternative Scene: Part One – Slot Machines/Racinos

  1. ragman

    Del Mar a no slots track in California. Purse for Zenyatta’s race Sunday, $300k. Winner’s share $180,000. Handle on that race $1,922,711. Total handle for the card $16,399,439. Attendance 20,335.
    Your boy Matt Hook should have his brain examined. As the odds-on Itsaffirmed retreats to 4th in Yesterdays 7th race and before the winner passes the finish line Matt is making funnies about the Ambassador bridge just being down the road. The bettor who probably dumped over $10k into the show pool on Itsaff.. must have thought that was pretty funny.
    B like a what? Don’t be a Sapia.

  2. old time race fan

    I thought that it was a good article summarizing the future possibilites. California; New York and Kentucky will always have the classics and BC’s. The question is do the smaller locales just die off and provide simulcasting only? Or can they be fixed with slots or some other form of “subsidy” to the live product.
    Not long ago there was only the local track or Las Vegas to spend your gambling dollar. Boy how things have changed!

  3. BJChicago

    Even though MTB didn’t win the WV Derby, he still picked up a $75k check (direct from the pockets of Chester’s finest slot players) for that third place finish , still not chump change.

  4. mibredclaimer

    Ragman,
    Clearly, there will always be a few tracks that will continue to thrive without slots. The tradition, purse structure and prestige of racing there outweigh the need for supplement. For everyone else, it seems the one-armed bandits are the way to make up the difference.

    As for Hook’s call, I wasn’t there, so I’m going to hold comment.

    Old Time Race Fan,
    Thank you very much! Like I said to Ragman, I see racinos as a way for smaller tracks to make up for the tradition of more established tracks. People will always go to Saratoga and Keeneland, if only because that’s just what you do when the show’s in town. When you don’t have that on your side, you have to find other ways to make money.

    Whether or not slots are the great equalizer remains to be seen. Definitely with you on the sudden expansion of gaming though.

    BJChicago,
    $75k definitely isn’t bad for a day’s work, but with that field, I doubt MTB’s connections had a fading third on their minds when they loaded up the trailer.

    • From what I have seen from the harness tracks which get slot money is the tracks love it but racing becomes secondary, a cost of doing business. The horsemen love it because it provides them with a lot of purse money. At a track like Chester, 95% of the purse money comes from slot revenue. However, with the exception of a track like Tioga Downs, no one is doing anything to benefit the horseplayer. I believe most of the horsemen figure racing is doomed and they want to grab what they can before the states decide they need the money and cut racing out of it.

      Slots will extend the life of a racetrack but if no one is willing to attempt to improve the product it will be a short time on life support.

  5. Rox

    Pacing Guy, you’ve said it. The State takes a bigger cut when the need arises. And, unfortunately, the smaller breeders or those who haven’t really upgraded thier stock, become obsolete, as bigger operations are willing to send thier lesser stock to smaller, less prestigious tracks with decent purses. The horsemen need a good contract when the slots do arrive, so it would be a good idea to band together, not be breed specific.

  6. Even if slots or some other form of alternative wagering comes along I think it may not help. The biggest issue I feel is that thoroughbred racing left the Metro Detroit area for ten years, and when it returns the class of the product is far below what is was before it left. With the limited time and resources I have it is not worth my effort to put a ton of time into Pinnacle, or money. Until some quality bloodstock races at Pinnacle on a regular basis serious players will put there money into other tracks.

  7. ragman

    The horsemen used to argue that the Michigan Mile purse money should be used to raise everyday purses. I would imagine that Campbell’s dream of a “big race” at Pinnacle should they ever get slots would be met with the same resistance.

    Horsemen used to come to Detroit to race about for 8-9 months of the year and then head for Fla and La. It was a year long pursuit. I don’t get this idea of an entitlement for those who don’t want to go out of state over the winter months. There are many people leaving Michigan now in pursuit of jobs.

    I don’t know if this is true but I heard that the horsemen in Ohio were unhappy with their cut of the slots money(4%). That’s not enough with all the problems that Ohio has? I don’t think the tracks in Ohio end up with slots anyway?

    Whats would slots for track(s?) look like in Michigan. Someone give me an idea.

  8. You know the MI t-bred scene better than I do. What I can tell you is the small time breeders and owners will need to upgrade their stock otherwise they will be eaten up alive by those out of state. In Delaware, Dover Downs instituted some protectionist rules so the local horsemen could race a couple of years while they upgraded their stock. After those two years though those that didn’t basically were forced out of business.

    As for your local horsemen wanting the purse money to go to regular races instead of stakes, that doesn’t surprise me. It’s a case of horsemen just wanting all the money going to them and not trying to upgrade the product for the fan by providing them the opportunity to see some of the better horses racing.

    What will racing look like in Michigan with slots. I can help you with that. The tracks will be happy as they will be rolling in slot revenue. The horsemen that are willing to upgrade their stock will be happy as they will be rolling in slot revenue. Handle and attendance will continue to drop as nothing will be done to make the product better for the horseplayers. Sure they will get better horses to bet on but the takeout will still be too high, little if any money will be spent on the racing side of the racing plant and the bettors will still be treated like degenerates by everyone concerned meaning no one will be willing to share one dime of their windfall for the fan’s benefit.

  9. ragman

    Pacingguy

    I didn’t quite word that right. Not what do slots look like. I really meant, how do we get there?
    I was a Magna stockholder when they made an effort to build a racetrack in Romulus and get slots. At that time Frank Stronach still had a little pull in Michigan thanks to his auto parts business.
    He was able to get the people of Romulus to pass a bill approving the building of a racetrack and the operation of slot machines. That ended it. The ORC just stonewalled him. Never did get the ok to proceed. Then the casinos decided to put a stop to it for good and went on the ballot to amend the state constitution forbidding any new(non-Indian) gambling with machines. The casinos won despite a lot of outstate anti-Detroit feelings. My rep wants to be a longtime politician and he didn’t think that anymore gambling was a good idea. He also didn’t think that Troy was a good location for a Hooters. His church was against it. With a lot of the state agriculturally oriented the casinos won every county. Not even close. So Stronach and his $$$ are gone. The horseracing has no pull or leadership that I can see. If ever there is another effort to get slots at the tracks the casinos will just bury them again. One of the most powerfull casinos in the state is the Soaring Eagle located near the Mt Pleasant racetrack. They were going to let them install slots? So where does the plan,the leadership and the money come from???
    No one says it’s fair.

    • RB

      The horseman failed when the idea of casinos was being propossed,I attended a meeting held at DRC for the horsemen with management of Ladbroke. The horsemen should have right then and there started a big time campainge against the casinos being built in detroit. They buried themselves! GLD,failed as a harness track run by the Marottas!

      At one time MI racing was a regular meet for excellant horsemen.

      Hopefully they may get it resolved but I doubt it,if I recall I believe when the gov was running she sounded as though she would help getting slots at the tracks! Now the casinos are in and stroger as ever lobbiest etc… It will be one big uphill battle for Mi racing!

  10. mibredclaimer

    Pacingguy,
    I couldn’t agree with you more about the need to improve the product. It doesn’t matter how much the horses are running for if there’s only five or six of them doing it per race for a $5k tag. While I believe there always needs to be small-time racing, tracks trying to offer big-time purses can’t get away with offering lackluster options for handicappers. I’m not sure how to do this without driving the small operations out of business, but it should be discussed.

    Rox,
    I must be in an agreeable mood today, because I think you’re right, too. If Michigan wants to go for slots, they need to go as a unified force. If the tracks, and horsemen’s groups from all the breeds go at this with their own interests at the forefront, the casino lobby will crush them.

    Bill,
    As I’ve said many times before, I wasn’t around for DRC, so I can’t personally compare the two eras in Detroit. However, I do agree that the current product can be a hard sell for horseplayers.

    Pinnacle is in sort of a tough spot. Right now, conventional wisdom says the track needs slots to bring in better horseflesh. But if they were to get slots today, it’ll take at least three years for the live product to catch up to what people will demand. Things like this take time, and right now, I don’t know too many operations that have much to spare.

    Ragman,
    I’ve heard that argument against a marquee open stakes race, too. I think the public interest generated by drawing national-level horses will eventually put money in the horsemen’s pocket through bigger attendance, handle and ad revenue, but I could be wrong. At least it would be fun to see.

    Stronach didn’t get many breaks when he was trying to get Michigan Downs built, did he? In retrospect, MI Racing picked the absolute worst election to ask for more gaming, with so much conservative/religious rhetoric winning out in Fall 2004. Still, the casino lobby is going to be tough to get by regardless of the year.

  11. ragman

    Mi Racing didn’t initiate anything. The casinos went statewide to gather the required signatures to get an amendment to the state constitution on the ballot preventing any additional gaming without a local AND a statewide approval of the people. They won and that is what racing is up against.
    This leads me to believe that the best approach is to go for one casino to support horseracing AND some other attractive cause.

  12. mibredclaimer

    Ragman,
    I suppose I worded my statement wrong. I didn’t mean Prop 1 necessarily equaled Magna, or MI racing, asking for more gaming, but Magna was shooting for its racino at the same time as the 2004 election.

    Prop 1 essentially meant “Should Magna be allowed to build a racino in Deroit?”and it ran into a litany of buzzsaws.

    I do agree that getting a casino on board with a new or existing racetrack would likely help grease the wheels in getting where things need to go. A part of me was hoping the tribal purchase of Great Lakes Downs was a step in the right direction, but that was soon quashed.

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