Ohio’s Racing Future No Laughing Matter
You might say Ohio's Thoroughbred industry is a lot like Cleveland.
For many years, the city was the butt of late-night jokes and to outsiders, exemplified the decline of urban America. Within the racing industry, Ohio became a similar source of derision in pointing out problems plaguing the sport – low purses, short fields, poor quality, a crumbling breeding industry.
But much the same way Cleveland remade itself and shed many negative perceptions, Ohio's racing business could be poised to trigger a renaissance.
“We've been in a death spiral,” said Robert Schmitz, chairman of the Ohio State Racing Commission.
Schmitz is among those hoping to lead the Buckeyes out of the dark days. Ohio, a state with a rich history of harness racing, is hitching the industry's “sulky” to the dramatic increase in gaming approved by state lawmakers in recent years.
The current strategy is a dizzying array of moving parts, designed to maximize casino and racino revenues across the state, with benefits for Thoroughbred and Standardbred breeding and racing.
Thoroughbred track Beulah Park, near Columbus, is planning to relocate and build a racino in the Youngstown area. The harness venue, Raceway Park, will do the same, shifting from Toledo to Dayton. Scioto Downs has already added video lottery terminals, and the state's five other tracks – the Cleveland area's Thistledown and Northfield Park, Cincinnati's River Downs, and Lebanon Raceway near Dayton, have plans to add them. When all is said and done, there will be seven racinos and four stand-alone, Vegas-style casinos.
“This is a new paradigm for us, a whole new deal,” said Schmitz.
For the racing commission, the ‘deal' amounts to 3% of the tax the casinos pay to the state – money that will go to purses, breeding funds, and to a lesser extent, the racetracks. Schmitz is particularly keen on improving Ohio's Thoroughbred breeding program.
“There are a very, very limited number of Ohio-accredited horses, by an Ohio stallion out of an Ohio-owned mare. Currently, there are probably 60 of them in the entire state, and those horses are eligible for accredited races. What I want to do is increase that number.”
Schmitz said that goal will be much easier to achieve once the VLT revenue starts flowing, giving tracks the ability to substantially increase purses.
“We've been racing for a baloney sandwich,” Schmitz said. “Hopefully, we can upgrade to a cube steak or a porterhouse.”
There are already signs of progress in the state's breeding industry. The number of Thoroughbred broodmares registered in 2012 was 174, up from 113 in 2011. Seventeen new stallions were registered in the state last year, and early in 2013, The Cliff's Edge, who stood for eight seasons in Kentucky, relocated to Fair Winds Farm in Ohio. There have also been increases in registered Standardbred mares and stallions.
But Schmitz acknowledges the shift into Ohio's new “paradigm” will not be like flipping a switch. It will take time, and it's already clear the road will be bumpy.
Horsemen and the racetracks, most of which are owned by casino companies, still need to work out agreements on splitting VLT revenues. The two sides also have differing visions when it comes to the racing calendar.
Chris McErlean, vice president of racing at Penn National Gaming, which owns Beulah Park and Raceway Park, said the company has approached horsemen about cutting race dates and restructuring the statewide schedule.
“Honestly, it was met with ‘we'll do what we want to do',” said McErlean. “I think that's where an opportunity is being missed. The racing model does need to change in terms of racing dates, and we haven't gotten much response on that.”
Dave Basler, executive director of the Ohio Horsemen's Benevolent & Protective Association, said horsemen have talked with PNG about racing dates, but the horsemen want a packaged deal that includes an appropriate number of stalls and dorm facilities at the proposed Youngstown track. Basler said PNG is planning 500 stalls, while the horsemen want to keep their current level of 1,100.
“We said we will discuss an overall agreement with regards to the racing schedule and backside amenities,” Basler said. “We're not going to sign off on a cut in racing dates without the backside amenities. Clearly, a 500-stall barn area will not work.”
The racing commission and the gaming companies are also tussling over the new facilities. In addition to the Penn National Gaming tracks being relocated, Churchill Downs and its partner Delaware North are moving Lebanon Raceway about 20 miles closer to I-75. The racing commission wasn't happy with plans for a 700-seat grandstand at the new venue, a figure Schmitz compared to the size of some county fair seating.
“We want to move the sport forward, not backward,” said Schmitz. “Getting (casino companies) to devote more to the racing side, that's our challenge. We're in the process of looking at their plans.”
McErlean said for PNG, it makes little sense to build a traditional racetrack when live racing attendance numbers don't support that. Instead, the company wants to create integrated venues that better reflect the current market.
“We're pleased with what we're putting forth,” McErlean said. “We have the benefit of starting from scratch, and we have a good plan for integrating the racing business customer and the gaming customer.”
The disagreements over scheduling and facilities are similar to those in other states where gaming revenues subsidize purses. Track operators push for a leaner schedule to maximize the racing side, while horsemen fight for their opportunities to win.
Schmitz and the horsemen believe contraction, as a general strategy, makes little sense at a time when purses are about to take off.
“We want to encourage live racing,” said Schmitz.
“Unfortunately, horsemen and commissions, they look at racing dates as a benchmark for success,” McErlean said. “If we can put on a good product and do well in racing and can make money in racing, we want to do it. It's tough in a lot of places, and from that standpoint, I think Ohio does have an opportunity to do some things and still offer a good product and benefit the horsemen.”
At recent Ohio Thoroughbred meets, field sizes have averaged between six and seven starters, while cards have averaged seven to eight races. But horsemen see a different future in store.
“Field size will unquestionably go up in 2014 and beyond,” said Basler. “A major part of the problem has been a purse structure that makes it pretty tough for a guy to sustain a business. Trainers will just ship out to other states.”
Basler, head of the HBPA, said horsemen have had both positive and negative communications with track operators in discussions about Ohio's future.
“Given the trends in the racino industry, we have to be concerned,” Basler said. “Understandably, a publicly-traded company that operates a racetrack looks out for their bottom line first, but a balance needs to be struck. To a large extent, the horsemen in the state of Ohio are reliant upon the racing commission and state legislators to maintain that balance to ensure the equine industry is protected going forward.”
For all involved, the early numbers from the state's first racino, Scioto Downs, are encouraging. While live handle fell 7.4% in Ohio last year, Scioto Downs saw a 26% increase in wagering. The track also estimated that attendance was up 40% since the addition of VLTs last June.
“The way it's set up, there's a breezeway between the VLT operation and the racetrack, so people are migrating over to the racing side,” Schmitz said.
Schmitz believes the pieces will start to fall into place for Ohio's Thoroughbred industry once the Thoroughbred tracks add VLTs. Schmitz and Basler both hope funding can also be directed to welfare and safety initiatives, Thoroughbred retirement, and equine research among other things.
“This is an evolution. You can't think of everything at once,” Schmitz said. “Right now, the Thoroughbred industry has no cows in the barn. It'll take time. The money's not there now.”