by | 11.17.2010 | 12:46am
By Ray Paulick

The old cliché about necessity being the mother of invention helps tell the story of the significant turnaround that Oaklawn Park in Hot Springs, Ark., has engineered in the last decade.

In the mid-1990s, when neighboring states approved casino wagering, Oaklawn lost 40% of its handle. Charles Cella, whose family owns the track, put $5 million of his personal funds toward purses to keep racing viable. There was talk of Oaklawn going out of business.

When track officials were rebuffed in efforts to bring slot machines or casino wagering to Oaklawn, two of the track's top executives, general manager Eric Jackson  (pictured, left) and wagering director Bobby Geiger, got together with Ted Mudge, then president of tote provider AmTote, to brainstorm about possible gaming alternatives to slot machines.

“We worked for 36 hours straight,” Jackson recalled in an interview with the Paulick Report at Oaklawn Park last weekend. “What we came up with was Instant Racing, which we think is a perfect gaming product for racetracks.”

The first 12 Instant Racing machines were installed at Oaklawn Park in 2000. Using previously run races, the Instant Racing machines employed a pari-mutuel model for wagering (the blended takeout is about 9%, with 15% of the revenue going to purses). The games were a hit with racetrack visitors, and more machines were added. The success of Instant Racing helped convince the Arkansas legislature to approve other electronic games of skill in 2005, and a local referendum subsequently passed, permitting such games as video poker and blackjack. Today, Oaklawn Park's gaming room has a total of 500 machines (350 of them Instant Racing), and a 90,000 square-foot-addition on the south end of the grandstand will allow the track to double the capacity of machines. Phase one, scheduled for May of this year, will bring in 150 more machines. Phase two is scheduled for the end of the year. 

The increase in the number of machines will permit Oaklawn, which already offers its highest purses ever, to have an even higher purse structure in place for the 2010 racing season.

Revenue from Instant Racing machines contribute toward one-third of Oaklawn Park's daily overnight purses. A constantly updated electronic sign outside of the gaming room keeps a tally on how much the electronic gaming has contributed to purses: the number currently exceeds $17.6 million. Jackson said Oaklawn Park also has paid $600,000 in royalties to other tracks whose races were used for Instant Racing. There have been 12 generations of Instant Racing machines since 2000. On a slow day during the non-racing season, Jackson said, about 2,000 people will visit Oaklawn Park's gaming room to play Instant Racing and the other electronic games. He called it a “very predictable business.”

“We caught lightning in a bottle,” said Jackson, who's worked at Oaklawn park for 30 years, the last 21 as general manager. “We are mystified as to why other tracks haven't tried it.”

Before casino competition in neighboring states, before Remington Park was built in Oklahoma, and before pari-mutuel wagering was approved in Texas, Oaklawn was the undisputed king of Thoroughbred racing in the region, attracting fans from Texas, Louisiana, Oklahoma and other neighboring states. The increased competition from tracks in Oklahoma and Texas made the Oaklawn team work harder and smarter, but the casino competition nearly put them out of business. Instant Racing may have saved Oaklawn Park, but the track also offers superior customer service, presents a high-quality racing product, and a good overall entertainment experience.

Jackson is proud of the management team assembled around him, which he calls “seasoned, tested and excellent. They've been together a long time and really are very good at what they do.”

Bobby Geiger, the wagering director, has been at Oaklawn 25 years, as has food and beverage director Jimmy Johnston, Nancy Muncrief in accounting, and Kim Baron in the track's marketing department. Racing secretary Pat Pope has been part of Oaklawn's team for 20 years, and track announcer and media relations director Terry Wallace has been there 35 years. Larry Snyder, the longtime leading rider at Oaklawn, has been in the stewards' stand for 15 years.

“When you walk through our various departments, it is not unusual to find folks who have been here 20, 30 or even 40 years,” Jackson. “A lot of loyalty – employees to Oaklawn and Oaklawn to employees.”

Jackson is also proud of the fact that Oaklawn Park has incorporated gaming into its wagering menu without changing the focus away from horse racing.

“More than a dozen tracks have gotten gaming,” Jackson said, “and everyone else has brought in casino folks to run the business. The first thing that happens then is racing becomes a step-child. That's not going to happen at Oaklawn Park. We're going to stay true to our mission.”

Copyright © 2009, The Paulick Report

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  • Ttrunk

    Great story Ray. Racetracks need to spend more time analyzing what actually seems to be working in the industry rather than just focusing on what’s wrong. Clearly there are some marketing initiatives and business models that are thriving despite the troubled economy and the lack of visibility of Thbd. racing in the sports and entertainment marketplace. Fans are packing the stands at one track to get in on $1 beers. Tampa Bay Downs is having great success creating a comfortable and affordable experience for retirees. And Oaklawn, as you have detailed, is booming. Maybe the folks at NYRA could spend some time taking note…and then actually doing something about it.

  • irabird

    Well done! Would this work at Ellis and Turfway?

  • Al

    Rosecroft Raceway in MD tried to get the Instant racing machines deemed a pari-mutuel business and they were shot down by the state’s Attorney General.

  • wesly

    Patrick will come to refute this all….

  • Don Reed

    Perfect. And for an example of why they sensibly didn’t go the other way, visit the Stepchild Harness track in Saratoga.

    There, a garish, profitable, & soulless Casino stands in stark contrast to the remaining betting facility, which – aside from a new restaurant facility – is the same wretched dump that it was ten years ago.

  • Noelle

    Is anyone in Maryland listening? It’s interesting comparing the steady rise in Oaklawn’s fortunes against the steady decline at Magna-owned tracks over the same ten years.

    I read about the MD AG shooting down the idea of instant racing machines at Rosecroft, too – between Magna and the MD state government, the future of MD racing looks gloomy right now.

  • paul tjoumakaris

    Can you tell me what effect instant racing has in a pari-mutuel track that has slot machines?
    what % share of revenue being produced by instant racing machines vrs slot machines?
    Are the instant racing machines in tracksa threat to regular casinos in the same market?
    Can you provide a list of tracks that have these machines with and without slot machines?

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