By Ray Paulick
Credit where credit is due.

David “Blackjack” Williams, the Republican president of the Kentucky state Senate and the individual most responsible for blocking legislation permitting Kentucky’s horse industry to put slot machines at racetracks, showed up Tuesday afternoon to listen to a presentation entitled “New Business Models for Racetracks” at the Kentucky International Equine Summit.

The panel discussion, moderated by Tim Capps of the University of Louisville’s college of business equine industry program, included presentations from Nick Eaves, president of Woodbine Entertainment Group, on the track’s growth since slot machines were added to the gaming mix; Oaklawn Park vice president Louis Cella on the Arkansas track’s survival and growth due to Instant Racing; and Chris McErlean, vice president of racing for Penn National Gaming.

Also in attendance was Damon Thayer, a Republican Senate colleague of Williams who pushed for Instant Racing during the recently concluded legislative session until Williams spiked the concept.

We hope to get comments from Williams and Thayer when the panel discussion concludes.

Eaves showed the downward trend in pari-mutuel handle Woodbine, formerly operated as the Ontario Jockey Club, experienced during the 1990s. Expansion of off-track and account wagering helped slow the declines somewhat, but it was not until the company was able to reinvest in capital improvements through slot machines at the racetracks that the bleeding stopped. Today, Woodbine is planning a Cordish company project “Woodbine Live” that will take the track and casino to an entirely new level with additional retail shops, dining and entertainment.

Cella, whose family has owned Oaklawn Park for a century, lamented about how the industry has had to rely on a “110 pound jockey riding a horse around a track” while new entertainment and gaming opportunities have sprung up around the country. “Many tracks have closed and many tracks will continue to close,” he said, if racing doesn’t find a new business model that includes other form of revenue.

Oaklawn Park developed that new form of revenue in the form of Instant Racing, which takes formerly run races and replays them in a slot machine-type of game that is based on pari-mutuel pools.

McErlean spoke of Penn National’s old business model of relying on pari-mutuel wagering as something that was “not a sustainable business model.”

During a question and answer session following their presentations, I asked the panel to briefly assess the future of racing in states like Kentucky  that rely on the business model of traditional pari-mutuel betting only–and without additional revenue from other gaming, including slot machines or Instant Racing.

"Their days are numbered," said Cella.

"Over," commented Eaves.

"Ditto," said McErlean.

Following the discussion, I asked Williams if he was concerned about the future of Kentucky racing, given the answers the three panelists gave to that question. "You asked the wrong guys," said Williams. "None of those guys would even have racing if they didn't have to."

When I pointed that Oaklawn Park had been in the Cella family for 100 years and that Woodbine is structured as a not-for-profit organization that is required to invest its profits back in racing, Williams backed off slightly, but remained firm in his position that slots at Kentucky racetracks are not the answer and that publicly held companies like Penn National and Churchill Downs are far more interested in rewarding shareholders with revenue from slot machines and casino gambling than in supporting live racing.

Nevertheless, Williams said he cares about the industry. "I think about it every day," he said. He pointed out that he read on his smart phone the article in the Paulick Report saying he was attending the "New Business Models for Racetracks" discussion and wanted our readers to know that he had been at other sessions earlier in the day in an effort to better understand all the challenges the industry faces. Williams said Tuesday morning's account wagering session (which we were unable to attend) was of particular interest. Members of his staff also were in attendance both Monday and Tuesday. At least one other Kentucky  legislator, Sen. Robin Webb, attended the summit.

The Paulick Report will have more on our conversation with Williams next week. In the meantime, Williams will be attending the Kentucky Derby ("I bought my own tickets…I always have," he said.) If you see him at Churchill Downs, thank him for at least attending the conference. Who was it  that said "90 percent of life is just showing"?

We'll have more about our conversation with David Williams next week.

Tags: chris mcerlean, damon thayer, david williams, Nick Eaves, Penn National Gaming, Ray Paulick, Tim Capps, University of Louisville, Woodbine Entertainment Group

This entry was posted on Tuesday, April 27th, 2010 at 2:07 pm and is filed under Kentucky, Slot machines. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.