Established in 1998, Ontario’s Slots at Racetracks Program brought a windfall to racing in the Canadian province with 20 percent of revenue from new slot machine parlors at racetracks directed to the industry. The government’s sudden decision to cancel the program in 2012 dealt a nearly fatal blow to racing and breeding in Ontario. Two years later, veteran Canadian racing journalist Dave Briggs explores the ill-fated slots era in a six-part series with an eye toward lessons for racing jurisdictions in America that derive revenue from other forms of gaming.
Jane Holmes had her press release already written. She was anticipating horse racing would get very little from the Ontario government, if the industry received anything at all.
“We’re sorry we didn’t get as much of a tax break as we would have liked... We’re disappointed the government didn’t recognize the importance of horse racing in the province...”
The date was May 7, 1996 and Holmes, then the executive director of an industry alliance called the Ontario Horse Racing Industry Association (OHRIA), was flipping through a preview copy of the Ontario budget when she felt a jolt of excitement at what she read.
She was definitely going to have to rewrite her press release.
That day, widely regarded as the biggest in the history of Ontario horse racing, the government delivered both a pari-mutuel tax break and paved the way for video lottery terminals — later changed to slot machines — at racetracks.
One shouldn’t underestimate the role of OHRIA, Holmes, and key players such as former Woodbine president and CEO David Willmot in uniting fractious industry partners in common cause, but how slot machines became part of the deal is more a story of politics and fortuitous timing than industry collaboration.
In 1996, the Progressive Conservative (PC) government was in the second year of its mandate under Premier Mike Harris. The most right-wing of Ontario’s three major political parties, the PCs rose to power on a platform of economic austerity that was the antithesis of the previous left-leaning New Democratic Party (NDP) under Premier Bob Rae. The Rae government was widely unpopular and, despite legalizing casino gaming in Ontario, the NDP struggled with the economy during a time when the province was experiencing its worst recession since the Great Depression. Mike Harris’ plan to improve the government’s balance sheet was driven by aggressive government cutbacks and the development of new revenue streams — of which, expanded gaming was key.
The Harris government officially opened two commercial casinos early in its mandate to add to the casino the NDP opened in 1994 in Windsor, across the river from Detroit. Harris’ next step was to try to expand gaming with smaller facilities in municipalities across Ontario. When citizens and local governments balked at having casinos in their backyards, the PCs went to Plan B: Put slot machines in racetracks and give host municipalities at least a 5 percent cut of the action. Only a small number of communities took issue with that plan, and the Slots at Racetracks Program (SARP) was officially born on June 26, 1998.
Given that harness tracks in Orangeville and Kingston had closed in 1993 and 1995, respectively — and many other tracks were in financial trouble — the original memorandum of understanding dictated the principle aim of the slots program was to support live racing. The terms of the deal were relatively simple. The Ontario Lottery and Gaming corporation (OLG) would be in charge of running the slots program across the province. Racetrack owners were required to pay hefty infrastructure costs to bring their buildings up to OLG standards, while the OLG would pay for the installation and ongoing operation of the slot machines. The cost for common areas was split between the OLG and the racetracks.
Despite operating in privately-owned racetracks, the OLG maintained complete control of the slot parlours in those buildings. In exchange, the horse racing industry received a 20 percent cut of the slot machine revenue to compensate the industry for use of its facilities and to offset cannibalization of racing customers. It was mandated that the 20 percent be split evenly between racetracks and horsepeople that received their 10 percent cut in the form of a direct purse injection. After the initial modernization costs, there were few specific terms on what the racetracks could do with their share of the slot revenue, which would later pose a problem.
Six months later after SARP officially came to life, Windsor Raceway became the first Ontario track to open a slot parlour. Others quickly followed and slot halls were open at most tracks by 2002.
With 15 Standardbred, one Quarter Horse, and two Thoroughbred tracks covering almost all of the Ontario’s major population centres, SARP quickly became a winner for the province and the horse racing industry. Before the program was unceremoniously chopped by the government in 2012, SARP produced annual revenue of some CA$1.1 billion for the government from its 75 percent cut, some CA$90 million a year for municipal governments, and about CA$345 million a year for the horse racing industry.
The program provided, on average, 65 percent of the total purse structure for Ontario’s tracks, helped fund massive infrastructure upgrades at Woodbine Racetrack and its sister harness plant, Mohawk Racetrack — among some other tracks that invested wisely in facilities — supported 30,000 full-time equivalent jobs and helped make massive improvements to the quality of the province’s breeding industry.
Most of all, SARP was instrumental in preserving a proud Ontario tradition of horse racing that traces its origins there to 1793 — more than 200 years before the first slot machine began ringing at a track in the province.
Tomorrow: Ontario’s rich racing heritage
Dave Briggs is the co-editor of Canadian Thoroughbred magazine and a freelance horse racing columnist and features writer. For 18 years, he was the editor of harness racing trade publication The Canadian Sportsman.