Slots steal spotlight from the sport

In nearby states, racinos bring money, problems

By John Cheves - jcheves@herald-leader.com

The dozen states that already have racinos — horse racetracks with some casino gambling, usually slot machines — prove that such places can rake in billions of dollars.

What they don't necessarily do is save the horse industry.

That's what some legislators, horsemen, economists and others in those states report. No one knows whether a law authorizing Kentucky racinos will emerge from the General Assembly session that starts Monday, but these other states give some indication of how racinos might work here.

Horse industry has problems

Nationally, horse racing's popularity has waned for years. Track attendance is down. So are handles, the sums wagered. Thoroughbred handles have slumped 10 percent since 2003, to $13.6 billion.

This is true even in states with booming racino operations, where a slice of casino money goes to fatten track purses and breeder incentives, making the states more attractive places to race and breed horses.

Take Pennsylvania. Racinos are so hot there that a new racetrack has opened — a rarity for a fading sport. But most of the $1.6 billion in 2008 racino revenue came from the slot machines, not the tracks. And although the sums slipping into slots exploded, the handles shrank.

Take Florida. That state has a chain of racinos and casinos elbowing each other along the Interstate 95 corridor near Miami, with more to come. But the number of Thoroughbred horses starting races is falling. And horsemen who lobbied for racinos now complain that slots — less profitable than predicted — failed to double the purses, despite promises from gambling interests.

"We got pimped on the legislation," horse trainer Michael Deters told the Miami Herald this spring.

Rather than revive the sport of kings, casino gambling claims the throne for itself, national experts say. Horses are forgotten amid the clanging slot machines.

"They just can't be dependent on slots," said Richard Thalheimer, a gambling economist who runs Thalheimer Research Associates in Lexington.

"For the racing industry, racinos provide a breather," Thalheimer said. "They give the industry a chance to experiment and do research on how to survive. ... That doesn't have to mean bringing people back to the tracks physically, but it does mean getting them to bet on horses again."

Nobody seems to know the future of horse racing.

Fewer, but higher quality, races are a possibility, said Doug Reed, director of the Race Track Industry Program at the University of Arizona.

"We've perhaps overdosed on racing. The NFL doesn't play five football games a day all year round," Reed said. "It just gets tired if you try to run hundreds of small meets a year. The audience for that isn't there anymore."

That's one reason many gambling experts and state officials warn against more states leaping into the racino business right now.

Another is the recession.

This is not a good year to expect lucrative competitive bids for racino licenses or the capital investments needed for high-quality restaurants, concert halls and hotels, they said. In Indiana, several casinos are in bankruptcy or limping toward it, while both of the year-old racinos struggle with financial problems.

For all their money, racinos bring a fresh set of problems.

Lawmakers warn that the gambling industry constantly pushes for more leeway — table games, sports betting, anything to one-up other gambling states — even as it begs for relief on how much money it's required to give the government through taxes and fees.

More than half the states have considered gambling legislation this year, including eight racino states that sought to further expand gambling or give financial breaks to the industry, according to a report by the National Conference of State Legislatures.

"The current wave of gambling expansion may be gathering more momentum as national economic and state fiscal conditions continue to deteriorate," the NCSL wrote in its report. "States continue to consider the expansion of gambling as a possible way to fund government."