Posts Tagged ‘racino’

By Ray Paulick
Perhaps I was wrong about Kentucky Gov. Steve Beshear when I wrote on Sunday that I didn’t think he would be able to demonstrate the kind of leadership necessary to help push through legislation allowing Kentucky racetracks to install slot machines and better compete with tracks in other states.

This afternoon, Beshear issued what for him was a tough and pointed statement on the subject. In so doing, he added a proposal for slots (technically they will be called Video Lottery Terminals and be run by the Kentucky Lottery Corporation) to the agenda for the special session of the legislature, to deal with the state’s budget crisis. The Democratic governor called for the session to begin June 15.

The Kentucky Equine Education Project applauded Beshear’s initiative, issuing the following statement: "We are extremely excited that the governor has chosen to include VLTs at racetracks on the special session agenda. His leadership on this initiative should be applauded by everyone involved in the signature industry of the state. We’re confident that he and most members of the House and Senate will shepherd this legislation through successful passage. It is critically important to level the competitive playing  field with others states. This is exactly what is needed and at the exact time it is needed."

Click here to view Beshear’s official proclamation on the horse industry and the need for VLTs to assist it.

Following is the full press release issued by Beshear’s office:
 
Beshear: Gaming necessary to help save horse industry
VLTs would be limited to tracks, provide needed revenue

FRANKFORT, Ky. (June 4, 2009) – Saying Kentucky’s horse industry is threatened with extinction, Gov. Steve Beshear today added a proposal to this month’s special legislative session to allow expanded gaming at the state’s racetracks to increase purses and breeder incentives.

“Kentucky’s horse industry – a living, breathing part of our cultural heritage and one of our strongest, most precious  commodities abroad – is in a state of crisis,” Gov. Beshear told reporters today in announcing his proposal. “Some even say it’s dying.”

Gov. Beshear said the proposal – which would limit Video Lottery Terminals (VLTs) to approved racetracks – would level the playing field for Kentucky’s horse industry, which has faced increasing competition from states that have increased race purses and breeder incentives from expanded gaming proceeds.

The result, he said, is that Kentucky is losing race dates at Churchill Downs; other tracks are facing closure and owners, breeders and jockeys are going elsewhere to board and race horses. About 100,000 jobs are connected with the horse industry in Kentucky, which translates into a $4 billion economic impact.

“Kentucky is, and remains, the horse capital of the world,” Gov. Beshear said. “But if we do not act, if we refuse to stand up for our signature industry, that title could be changed to Former Horse Capital of the World.

“As Governor, I cannot – and I will not – stand idly by and let that happen. Not without a fight. This proposal would allow thousands of working-class Kentuckians to continue to provide their families with a roof over their heads, food on their tables and the ability to send their kids to school.”

The Governor said his administration is continuing to work on draft legislation, which he hopes will be finalized in the coming days. He said it would contain details of how VLTs, which would be run through the Kentucky Lottery Corporation, would be taxed and generate revenue for both the state and industry.

Gov. Beshear said that while expanded gaming at the tracks would not impact the upcoming year’s budget, it would create recurring net revenues, which could help close the gap created when federal stimulus dollars are no longer available in two years. Such revenues would, undoubtedly, help with funding for schools, health care and public safety. Moreover, Gov. Beshear said, he believes the legislature can move forward with this proposal without a Constitutional amendment.

“The legislature, in our judgment, has the authority,” he said. “Now, we must determine if we have the will.”

Finally, Gov. Beshear said, that while he is willing to consider other ideas for helping one of Kentucky’s signature industries, it is time to make a decision on gaming, which has been the subject of intense debate for many years.

“Time is of the essence, and right now, this idea is the only one on the table,” he said. “It’s time to vote on it – up or down, with full knowledge of what is at stake and what is at risk … Political machinations and calculations are, frankly, not a part of my reasoning today. The unknown cannot be an excuse for timidity or inaction.

“Today, I am calling on legislators and the people of Kentucky to come forward and save the horse industry … before it is too late.”
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By Ray Paulick

UPDATED TUESDAY EVENING:

 Stock prices soared Monday in Magna Entertainment, the racetrack company that operates Laurel Park and Pimlico in Maryland, where voters are deciding today on an amendment to allow 15,000 slot machines at five locations in the state.

The share price jumped by 92%, from $1.82 at the opening bell to $3.50 by the day’s close. Magna Entertainment, which also operates Santa Anita Park, Golden Gate Fields, Lone Star Park, and Gulfstream Park, among other tracks, trades on the NASDAQ under the symbol MECA. One-day trading was the heaviest that it’s been since Sept. 30, when the stock plummeted from $4.00 to $1.75. Earlier this year, Magna exercised a 20-for-1 reverse stock split to maintain its position on the NASDAQ.

UPDATE: Tuesday afternoon, Magna Entertainment sent out a press release saying the company "is not aware of any specific developments" connected with the sudden increase in share prices. MECA closed at $3.97 Tuesday afternoon, an increase of another $.47 (13.4%). 

Even with Monday’s gains, adjusted share prices are down 95% from what they were when MECA went public in 2000. The company is saddled with hundreds of millions of dollars of debt.

Polls indicate the Maryland constitutional amendment permitting slots will pass, though there is no guarantee that Magna Entertainment will be one of the operators of the slots parlors. Approximately 7% of revenue from the machines will subsidize horse racing purses, with 2.5% going to racetrack renewal.

When Magna Entertainment purchased the two Maryland Jockey Club tracks from the family of Joe and Karin De Francis, the agreement gave the former owners 18% of any future profits MECA earned from slot machines.

The company announced Monday that a previously announced deal fell through to sell excess property near Ocala, Fla., where company chairman Frank Stronach had once hoped to build a racetrack.

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By Ray Paulick

Best unintentionally funny line of the week came from John Brunetti, the owner of Hialeah Park. Discussing a conversation he had with Halsey Minor about the technology wizard’s interest in buying and reviving the shuttered South Florida racetrack, Brunetti was quoted in a trade publication as saying: “I have told him that in some ways I don’t think he understands this business.”

Does Brunetti think he understands this business? How could he? If he did, how did he let Doug Donn outsmart him on every move and get control of the best winter racing dates for Gulfstream Park? Why did state legislators and regulators turn their back on him? How did Calder crush Hialeah in head-to-head competition? Why did Brunetti raise take out to the point that he chased away any remaining horseplayers Hialeah had? Why has the track sat empty for more than seven years?

It’s a mortal lock that Hialeah will never reopen successfully with Brunetti as the owner and operator. I happen to think John Brunetti is a nice guy who loves racing, but I have zero confidence that he can revive Hialeah Park on his own (and I may be more optimistic than state officials or Florida horsemen).

Does Halsey Minor know everything there is to know about Thoroughbred racing? Of course not. But he comes to the game with passion, enthusiasm, capital and confidence that he can return Hialeah to some semblance of its past glory.

Brunetti isn’t the only industry veteran who thinks Minor may be nothing but a dreamer if he thinks he can revive horse racing as a sport. I’ve heard from a number of racetrack executives and horse owners who said they’ve heard it all before. But what is the alternative for Hialeah Park or operating tracks that are hanging on by a thread? Lobby to get slot machines, turn the facility over to a casino company and hope it will subsidize the money-losing portion of the business indefinitely?

Should Brunetti and others in the industry just blow off this opportunity that Minor presents to give horse racing in the Miami area one last chance to stand on its own as a sport?

I remember when Frank Stronach came into racetrack ownership and said he would try to make the sport more compelling and entertaining. In the beginning, Stronach said he had no interest in getting slot machines at his tracks. But Stronach became a victim of his ego, forcing in too many of his own bad ideas and forcing out too many executives who dared to disagree with him. He almost seemed obsessed with getting control of as many tracks as possible without having any idea what he was going to do with them all.

Gulfstream Park was the first Florida racetrack to get slot machines. Under Stronach’s vision, Gulfstream became the least successful slot machine operation in North America, based on the benchmark of dollars won per machine per day. Calder will be adding slots as early as 2009 after getting approval in a local referendum in January of this year. The rebuilt Gulfstream Park is more slots parlor and simulcast theater than it is a facility to host live racing. In short, it’s a disaster.

Calder, built to host hot-weather summer racing, has always struck me as a cold and impersonal track, but it’s never seemed colder or more impersonal than it is today. In a recent weekday visit there I stumbled across what seemed like no more than several hundred fans scattered throughout the first two floors (most of the third floor is closed).

Count on Churchill Downs management to pigeonhole those fans in as small an area as possible once the slot machines are installed and plugged in. Racing at Calder will become secondary, though its purses will be healthier than they are today because of the slot subsidies. But what will Churchill Downs management’s long-term vision be for racing at Calder?

Minor said he has no interest in bringing slot machines to Hialeah Park. The competition for slots players is intense, with the Seminole Native American tribe holding the market share advantage at their Hard Rock Casino in Hollywood, Fla. Minor wants to focus on the excitement of racing and the fact that it’s the only sport you can legally bet on. 

Racing needs people like Halsey Minor, and people in the industry should be doing everything possible to help him succeed.

Copyright © 2008, The Paulick Report

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