Six months into instant racing, Red Mile gambling handle rising steadily

A little over six months ago, Keeneland and Red Mile opened a gambling parlor with 902 instant racing machines and a joint simulcasting room at the harness track.

The facility, which introduced slots-like wagering to the Lexington market, had a soft opening Sept. 8, just before the end of Red Mile’s harness racing meet and as Keeneland’s fall Thoroughbred meet was starting.

After a slow start, the historical wagering handle has picked up steam and by the end of 2016 is anticipated to be about $35 million a month.

In September, the new operation took in just over $5.1 million, not a huge beginning. But the betting handle more than doubled in October to $11.6 million. It dipped slightly in November to $10.9 million but has risen steadily since then to $21.4 million in March.

Red Mile and Keeneland officials say they are happy with the handle.

“We opened sort of quietly without a lot of fanfare in September to make sure we had our ducks in a row operationally. So the start-up was a little slow,” Red Mile chief financial officer Shannon Cobb said. But a marketing campaign, developed with the Oaklawn Park, founders of instant racing, has helped to build momentum since November. “The ramp-up has been steady.”

The handle might pale compared to Kentucky Downs in Franklin, which has been open since 2011, but if it can build at the same rate, the Red Mile handle will begin to approach that of Kentucky Downs soon.

“By end of the calendar first year, we think the handle will be above $300 million,” Cobb said. For comparison, Kentucky Downs’ handle for 2015 was $349.6 million, according to the Kentucky Horse Racing Commission. “Market studies indicate we could be well above $35 million in handle a month.”

Cobb said they have worked to build the experience for patrons, renovating the clubhouse and offering special meal nights and entertainment, running shuttles between the two tracks and publicizing big wins.

“The largest so far is about $47,000,” she said. “Every single day we’ve got people hitting five to 15 a day. That might range from couple thousand dollars to $20,000.”

Most of the money wagered goes back to patrons in the form of winnings. The track keeps a percentage, and a smaller amount goes to the state.

When the harness racing meet starts in July, Cobb said, they expect to see bigger crowds and hope to introduce the sport to a new audience.

“We will continue to do the Junior League Horse Show in the first of July week,” she said. “We’re excited about that. And we’re continuing to analyze opportunities for development in the front of the Red Mile property. Instant racing is the anchor, so now we want to become the entertainment hub we envision, but we’ve just begun to turn our sights to that.”

The simulcasting facility also has been a success, said Vince Gabbert, Keeneland vice president.

Keeneland moved its simulcasting windows to Red Mile, which meant that bets could be taken Monday and Tuesday, previously dark days at the Thoroughbred track. And the improved atmosphere and crowds also have helped, he said.

“Simulcasting handle has gone up a tick,” he said. “It’s not down as much year over year. We’ve been very pleased with consolidation of the product.”

Gabbert said the instant racing handle also has exceeded expectations and has begun contributing to increased purses for Thoroughbreds, although he declined to be specific.

“It will grow purses over time,” he said. “Our goal and hope is to continue grow that purse model for the long term with these machines.”

Red Mile negotiated an agreement with harness horsemen to immediately double purses last year and then slow further increases until the multimillion facility has been well-established in about three years, Cobb said.

“Purses will go up, but not as much in the early years while we are trying to pay for this investment,” she said.

Gabbert said there have been no issues with police or increased crime.

“We want it to be an entertainment destination,” he said. “We worked really hard with the neighborhood association and city police to ensure we’re offering a good environment.”

The legality of historical wagering, which involves betting on previously run horse races along with some random elements to determine winners, has been challenged and is in Franklin Circuit Court.

This story was originally published April 17, 2016 at 12:13 PM with the headline "Six months into instant racing, Red Mile gambling handle rising steadily."