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Let it ride


Is the horse racing industry winning big since the state wagered on racinos?

Clifton Adcock August 24th, 2011

An industry many considered nearly extinct has been rescued from the brink, and, as it turns out, one of the things that some speculated would lead to horse racing’s demise ended up saving it.

In 2004, Oklahoma voters passed State Question 712, which created the State-Tribal Gaming Act and allowed horse racetracks to have electronic games on the premises.

In the run-up to the 2004 election, those in horse racing said the measure was needed to keep the faltering industry alive.

Now, those in the business say Oklahoma has turned around what at the time looked to be the last days of horse racing, and by saving the racetracks once thought doomed, have helped an economically important industry.

“I think it’s fantastic. That might be an understatement,” Justin Cassity, executive director of the Thoroughbred Racing Association of Oklahoma, said about horse racing in the state. “Prior to the passage of SQ 712, most likely the pari-mutuel industry in Oklahoma would not have survived past 2007. Without exaggeration, I believe 2006 would have been the last year the four racetracks in Oklahoma would have survived.”

Constantin Rieger, executive director of the state Horse Racing Commission, said purses are up, Oklahoma’s quality of horses racing has increased, the number of licensees is higher, and the total amount wagered has grown at Will Rogers Downs in Claremore and Remington Park in Oklahoma City.

“The passage of 712 was huge for the horse racing industry, and I think all indications are whatever folks thought it would do and hoped it would do, I think it’s done,” Rieger said. “I’m sure there was a time and day that people thought Remington would be padlocked. The fact that they’re back from the brink of extinction to be one of the major players, I think that says it all.”

‘The fuel that drives the engine’
The main component that turned around the state’s horse racing industry is the very thing that some thought would destroy it: electronic games.

With the introduction of gaming machines at most of the state’s horse tracks, additional revenues were generated and put toward not only state education, but toward racing purses, facility renovations, the state’s Breeding and Development Fund, as well as other things related to the horse industry.

“Those machines are where they generate the bulk of the breeders’ program money and purse money,” Rieger said. “That’s the fuel that drives the engine.” >>>

By being able to offer better purses, higher-quality horses are brought in to race, which makes people more apt to bet on races, Rieger said.

But it wasn’t always a loving relationship between electronic games and the horse racing industry. Many attribute part of the decline of the sport to the rise of American Indian casinos and a changing entertainment landscape in the state.

All of the tracks in Oklahoma were losing money on live racing, and once tribal casinos began popping up, the bleeding increased, said Ron Shotts, director of racing at Fair Meadows in Tulsa.

“We were all basically surviving by simulcast and that was diminishing over the years,” Shotts said. “With the advent of electronic gaming and Indian casinos, which affected Fair Meadows and Blue Ribbon Downs more than Remington, we saw our numbers decline precipitously.”

Shotts said the tracks still lose money on live racing, but are able to keep their heads above water, thanks to the electronic games and SQ 712.

“If it wasn’t for SQ 712, there wouldn’t be any of the three tracks still open. It’s the only reason we’re still here,” he said. “The gaming has sort of been the destruction of horse racing and the rejuvenation of horse racing.”

Scott Wells, president and general manager of Remington Park, said electronic games appeal to people because they offer instant gratification, whereas horse racing is a little tougher.

“One is more instant gratification and simplistic. And the other is more cerebral and takes a little more time,” Wells said. “(Electronic games are) tremendously popular with people. What they don’t do is provide nearly as many jobs and labor as horse racing.”

Wells said between 3,000 and 4,000 horses will run at Remington this year, and each horse has several jobs attached to it.

Estimates for the number of jobs in the state’s horse industry range between 25,000 and 50,000. The industry likely has a $1 billion economic impact on the state, Rieger said.

Other states that do not have electronic games are having a tougher time maintaining their horse racing industry than those that do, Wells, Rieger and Cassity said.

For instance, Texas is surrounded by states that have gaming, and its horse industry is considered in decline, Rieger said.

“Texas is being squeezed out of the horse industry. It’s hard for the horse industry to stand on its own anymore,” he said. “Texas is in that bad cycle that Oklahoma was in.”

Numbers game
From 2001 to 2005, the net amount wagered at Oklahoma horse racetracks (live racing and simulcast) declined by 37 percent, according to numbers from the Oklahoma state auditor and inspector’s office.

Even after the introduction of electronic games, the net wagered amount at the tracks continued to decrease, falling about 27 percent between 2006 (the first full year that electronic games were available) and 2010, and falling 55 per

cent between 2001 and 2010, according to the state auditor numbers. Looking at the money from off-track wagering, however, there is a big jump in the revenue during 2005 and 2006, followed by a slow drop, with a slight uptick in 2010, arresting the decline seen since 2006 in total combined revenue.

All of that 2010 uptick can be attributed to off-track betting.

The increases in amounts wagered from other locations on races at Remington, Will Rogers and Fair Meadows are directly related to the passage of SQ 712, Cassity said.

Electronic games are tremendously popular. What they don’t do is provide nearly as many jobs and labor as horse racing.—Scott Wells

“Our horse racing is better than four years ago, which is directly tied in to the passage of SQ 712,” he said.

From 2006 to 2010, the total amount of money taken in from electronic games at racetracks increased by 35 percent, according to state auditor numbers.

By 2009, electronic games brought in more money than onsite wagering, the state auditor numbers show, although combined revenue from the tracks and off-track wagering still exceeded gaming revenue.

At Claremore’s Will Rogers Downs, which is run by the Cherokee Nation, the amount generated by horse racing has never exceeded the amount brought in by electronic games, and in 2010, the amount of money from electronic games was nearly fourfold the net amount wagered at the track.

One notable exception is Sallisaw’s Blue Ribbon Downs, which closed in 2010. The Choctaw Nation operated it, although the track is located within the Cherokee Nation’s boundaries. Controversy ensued in 2003 when the Choctaws purchased the track just prior to the Cherokees bidding on it at a sheriff’s auction.

Revenues from the electronic games at Blue Ribbon practically stayed flat from 2006 to 2009, and guest facility revenue severely declined in 2009. After the Choctaws purchased the track, the Cherokee Nation opened a casino in Sallisaw in 2006 just off Interstate 40. Revenues from electronic gaming at Blue Ribbon never peaked above $5 million, and in 2009 the track pulled in a little more than $7 million from horse racing.

After the closure and sale of Blue Ribbon in 2010, only two tracks with electronic games remain: Will Rogers and Remington.

A third horse racing track operates without electronic games: Fair Meadows in Tulsa is operated by the county and has agreements with the three tribes in the area — the Osage, Cherokee and Muscogee (Creek) nations — that allow them to subsidize the track in lieu of having electronic games.

That money given by the tribes to Fair Meadows is the only thing keeping the racetrack in the black, Shotts said.

“That’s still the case,” he said.

“If we didn’t have it, we wouldn’t be racing.”

When the Chickasaw Nation took over ownership of Remington in 2009, it wasted no time in beginning extensive renovations on the racetrack.

The Legislature initially limited Remington to only 650 electronic games, although that was later increased to 750 games. Hours of operation are also limited by law.

Wells would not say whether there are plans to seek an increase in the number of games allowed at the facility, but did say that the recent renovations at the park are just the start of a larger plan to expand attractions.

“We have a master plan that’s just breathtaking,” Wells said. “It’s pretty unusual to turn around a place as fast as this place has been turned around.”

‘Horse country’
Wells and others said they were optimistic about the future of the industry, and for good reason. With the state’s horse breeding industry gaining significant traction, tomorrow holds promise, they said.

“I think the future of horse racing in Oklahoma is extremely bright,” Cassity said. “As far a national landscape, I think the future is bright, but I think racing needs to adopt additional variables to make itself more attractive.”

With American Indian tribes owning two of the three racetracks in the state, it’s likely that those tracks will continue to thrive, given their success in the gaming entertainment industry, Shotts said.

“I don’t know how the prospects for their continuance could be any better,” he said. “Being part of Tulsa County, we won’t go anywhere, as long as our horse racing doesn’t operate at too much of a loss.”

Despite the changing industry, horse racing still holds a special place in a state that began with a big horse race in the Land Run, Wells said.

“Obviously, the entertainment landscape has changed. What hasn’t changed, is when people see really outstanding horses racing for big money, it’s exciting. That connection to horses hasn’t changed,” Wells said. “We’re horse country.”

Photos by Shannon Cornman

 
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