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.
The numbers are staggering, but we can all learn plenty from them.
Ontario’s Slots at Racetracks Program (SARP) once injected CA$345 million into purses each year in an industry that supports 30,000 full-time equivalent jobs. The program’s cancellation was a major contributing factor in an estimated 9,000 job losses.
Between 2011 and 2013, Ontario’s horse racing industry suffered a decrease in total purses of 35 percent, a race dates cut of 39 percent, and a mass exodus of human and equine talent. The number of stallions standing in the province is down 43 percent (243 to 138); the number of licensed owners is off 31 percent and the number of licensed racing participants has dropped 28 percent. Just on the harness side, where the province was once a world leader in the sulky sport, the number of Standardbred mares bred by Ontario owners is down 60 percent and the number of mares bred to Ontario stallions declined 56 percent between 2011 and 2013.
Everyone from caretakers to owners and breeders to veterinarians has felt the pinch. In fact, in the first week of April this year, two prominent veterinary clinics in Southwestern Ontario have closed — the London Equine Clinic and the Biederman Equine Clinic.
“Right along with the breeders, [reproductive vets have] invested in infrastructure and equipment and training to serve that industry. So, they’re in dire straits as well. Everyone is affected by the reduction of racehorses,” said Dr. Melissa McKee of McKee-Pownall Equine Services, a group that once operated a clinic at Mohawk Racetrack.
The Ontario Lottery and Gaming corporation’s (OLG) decision to terminate SARP was painful enough. The swiftness with which the program ended was particularly damaging.
“I have 50 broodmares and my family is in the business. I’d like to not be radical here, but I was submarined like anyone else,” said owner, breeder, and equine lawyer Bob Burgess in March 2012. “I was always told the contracts between the tracks and the OLG were for a fixed term of five years. I was never told there was an out clause.”
In June 2012, the president and CEO of the Woodbine Entertainment Group summed up a feeling widely shared in the horse racing industry.
“I haven’t talked to one person outside of the industry, when confronted with the numbers says, ‘(Canceling the slots program) makes sense,’” said Nick Eaves. “We won’t be in a position to operate if we are in a spot where we’re sustaining ourselves on pari-mutuel only.”
It took nearly a year of convincing, but the government has finally agreed with that assessment. April 1 was the start of a five-year, CA$500-million investment in horse racing, which the government believes will keep the industry solvent long enough to get back in bed with the OLG on a long-promised “integration” on future gaming initiatives. A three-member Horse Racing Transition Panel comprising former provincial cabinet ministers, each from one of Ontario’s three major political parties, crafted the plan. It calls for better transparency and accountability, aims for province-wide coordination and branding of the Ontario racing product, gives WEG control of Ontario’s teletheatre and advance deposit wagering system for all, and has produced a Standardbred Alliance that has eight core harness tracks sharing some costs and working together on purses and a joint racing schedule.
The investment “brings some stability back to the industry in the short term,” Eaves said April 2, and is an indication the government has finally acknowledged “the size, value, and contribution of our industry.”
Most of the CA$500 million will go purses through 2018. It’s a lot of money, especially now that taxpayers are directly on the hook for horse racing.
But, to put it in context, it is still about 28 percent of the CA$1.725 billion that would have been injected to purses from the old slots program over five years.
“I’m much more optimistic than I was a year ago and two years ago,” Eaves said. “But that’s not to pretend that there aren’t still challenges ahead.”
Other racing jurisdictions either with slots now, or flirting with them, have a lot to learn from Ontario’s missteps.
First, educating politicians and people in the racing industry about the benefits of the program is tantamount. That will require detailed, accurate records from the start and one industry voice authorized to speak on behalf of the entire sport.
Politicians need to be told ad nauseam about how many jobs were created with the industry’s share of slot revenue, exactly how much slot money is churning in the economy, exactly how much the program is returning to taxpayers, and details about how the program has improved a homegrown agricultural product — the quality of horseflesh.
People in the horse racing industry need constant reminders that slot money is not their entitlement, won’t last forever, and has to be reinvested in the industry to make every effort to create racing customers, improve the game, and attract more people to bet on horses or buy them.
Everyone needs to understand it is a tenuous partnership under constant scrutiny that will always be viewed as a subsidy by the government and a concession by the industry — regardless what either side thinks.
One of the great failures of SARP was not having mandatory requirements for how the industry — both tracks and horsepeople — spent the slot money.
Before any slot revenue is allocated to tracks or purses, it would be wise to set aside a generous percentage for marketing, infrastructure improvements (including getting the sport on television more often), breeder incentive programs, animal welfare initiatives, donations to all major political parties, and charitable donations that are well publicized. Benchmarks need to be set and expenditures reviewed annually.
Political donations are obvious, but charity is also a key for maintaining a good relationship with politicians. The trick is to spread the money as widely as possible across the entire state or province, help improve communities in each political district, and be sure the politicians in that region know all about it.
Because, make no mistake, at some point the politicians will come for that slot money. Chances are, those not well armed to defend it will be doomed to a similar sad fate suffered in Ontario.
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.
Graphic created using infogr.am.