Detailed Examination

If Arlington Park ceases to operate horse racing, could the track still operate slot machines?

No. As proposed, the state law allowing electronic gaming at Arlington Park would require the racecourse to operate live horse racing in order to maintain its eligibility for an electronic gaming license.

The race tracks in Indiana, which operate slots, have been in bankruptcy. How will slots at Arlington Park save the racecourse’s financial future?

Indiana had exceeding high licensing fees and exceedingly high mandatory investment requirements that lead to the financial challenges. The proposed Illinois requirements have more economical licensing and investment requirements.

How have slots at racetracks helped improve the horse racing industry in other states?

Delaware Park paid $7.9 million in purse money in 1994 before the implementation of slots but paid $34.8 million in purses in 2008. Average daily purses in that same time span went from $58,642 per day to more than $300,000 in 2002 before leveling off, due to the addition of slots in nearby states, to $256,098 in 2008.

(Source: 2009 Study by Rutgers Equine Science Center)

What effect do higher purses have on the racing program?

Todd Pletcher, an Eclipse-award winning Thoroughbred trainer with stables at multiple tracks, shifted his former Arlington Park-based operation to Delaware Park in 2009 in order to compete for the higher purse money offered there.

In addition, the higher purse levels at Delaware racetracks have made their races more attractive to bettors nationally. Delaware Park races generated $21 million in out-of-state handle in 1994 before slots and as much as $260 million in 2002 before leveling off at $198 million in 2007.

(Source: 2009 Study by Rutgers Equine Science Center)



How do the breeding programs in states with slot machines at racetracks compare with those same programs in non-slots states?

West Virginia, Louisiana and New Mexico, all states with slots at racetracks, have seen their Thoroughbred breeding programs more than double from 1997-2007: West Virginia (238%), Louisiana (107%) and New Mexico (147%).

Several other states with slots at tracks have shown significant gains in their Thoroughbred breeding programs in that same period: Florida (20%), Indiana (45%) and New York (45%).

Illinois, which of course does not have gaming machines at racetracks, has seen its Thoroughbred breeding program decline by more than 15 percent in that same period of time.

(Source: The Jockey Club 2009 Online Fact Book)

If Illinois does not add slot machines to racetracks, what would happen?

Since slot machines have been added in other states, thereby dramatically improving the purses in those other states, many horsemen have left Illinois to race elsewhere or they have split their stock between Illinois and other venues.

Joe Kasperski Jr. – a former president of the Illinois Thoroughbred Horsemen’s Association, second-generation horseman and a lifelong Chicago resident – has moved his entire operation to Pennsylvania to take advantage of that state’s slots-fueled purses.

Nationally prominent Thoroughbred trainers such as Todd Pletcher, Steve Asmussen, Tom Amoss, Paul McGee, Rusty Arnold, Bret Calhoun and Bob Holthus, to name just a few, are among those trainers who have either eliminated or greatly curtailed their participation in Illinois racing because of higher purses elsewhere.

In addition, local mainstays such as Mike Reavis and Larry Rivelli regularly send horses to Pennsylvania or West Virginia to race.

Illinois also is losing trainers, horses and breeding farms to other states. According to Illinois Racing News editor Joan Colby, that magazine’s June 2009 Farm Issue had some 45-50 fewer entries than the same issue just a few years ago. Some of the larger Thoroughbred breeding farms that have closed (or have ceased breeding operations) include Horizon Farm, Illinois Stud, Prairie View Farm, B & B Farm, Lone Cedar Farm, Casey Thoroughbreds, Webb Farms, Lindenwood Farm, Maier Thoroughbreds and Shawnee Hill Farm.

Has adding slot machines at racetracks in other states caused an increase or decline in the number of racing dates in those states?

While many tracks around the country are reducing racing opportunities, states that have slot machines at racetracks are adding racing dates as more horsemen bring their stock to those states.

In Pennsylvania, one of the more recent states to add slot machines, the number of racing dates increased 23 percent from 2006 to 2008 and the number of live races in the state increased by 33 percent. Purses nearly tripled from $62 million (in 2006) to almost $177 million in that same three-year stretch.

(Source: 2009 Study by Rutgers Equine Science Center)

Do states with slots at racetracks attract more horses to race at their tracks?

Horse racing bettors like to wager on races with more horses because the potential payoff tends to be better in races with fuller fields.

Seven of the top 10 states or provinces in terms of average field size per Thoroughbred race have slot machines at racetracks and 10 of the top 15 states in terms of average field size per Thoroughbred race have slot machines at racetracks.

Only one of the bottom 10 states or provinces in terms of average field size of Thoroughbred race allows slot machines at racetracks.

(Source: The Jockey Club 2009 Online Fact Book)

Are other states concerned about the possible negative impact that the death of horse racing might have on the larger horse industry?

The Rutgers study noted that horse racing is “not the only equine discipline that will lose if New Jersey racing does not receive the ‘shot in the arm’ it so desperately needs.”

The study noted that sport competition and recreational horse users also stand to suffer, as will traditional agricultural interests such as grain, hay, and straw farmers who continue to survive and maintain open space due to the fact that their major customers are horse owners.

The study also noted that “top shelf” services that New Jersey horse enthusiasts have come to expect such as equine veterinary clinics and feed and supply stores are at risk because, while they are frequented and supported by sport horse competition and recreational users, a predominant economic flow to these entities is from the racing industry. There already exists a shortage of large animal veterinarians in the state. If racing clients ceased to exist in New Jersey, this demand would be even greater.

If tracks operated gaming machines, how would gaming machine activity be affected by racing activity?

According to a Rutgers Equine Science Center study released last year, “Average daily gross slot terminal revenue at horse racing facilities (where slots exist at tracks) is higher on racing days versus non-racing days; total number of race days, live racing handles on-track, total export or simulcast handles, and total purses increased.” The study went on to note that “state treasuries are receiving additional income from slot revenue to be used for a variety of programs, e.g. property tax relief and education.”

Are horse racing tracks well suited for gaming machines? Would gaming machines be anathema to your pari-mutuel model?

Horse racing tracks are exceptionally well suited to operate gaming machines. Horse racing is the oldest form of legalized gaming in Illinois. The tracks are existing, established gaming venues. Gaming activity at tracks is centralized and highly regulated.

Would gaming machines at tracks provide a stable, sustainable flow of revenue?

Yes. Even as the commercial casino industry as a whole faced declining revenues, the racetrack casino sector continued to grow in 2009, according to the American Gaming Association’s 2010 State of the States report. Racetrack casinos experienced

a 5 percent increase in gross gaming revenues compared to 2008, growing to        $6.4 billion, according to the report.

According to the 2010 AGA report, “While gaming and tax revenue increases were not as dramatic as in 2007 and 2008, the growth last year is significant because it came during a deep recession that hurt almost every part of the travel and leisure industries. Consumer spending at racetrack casinos rose in 2009 to $6.40 billion, a 5.0 percent increase over 2008 figures. The jump in gaming revenues was due, in part, to Indiana’s racetrack casinos having their first full year of operation in 2009 and to the continued growth and maturation of the Pennsylvania market.”

Additionally, racetrack casinos alone contributed $2.63 billion to state and local governments in the communities where they operated in 2009, a 1.2 percent increase over 2008 figures.

The report also found that racetrack casino tax contributions increased in six out of 12 states with racinos, with Indiana and Maine seeing the largest gains (125.1 percent and 16.1 percent, respectively).

Why can’t horse racing compete with the casinos in Illinois?

The horse racing industry in Illinois is not in competition with Illinois casinos so much as we’re in competition with other tracks in other states and even in other countries. Roughly 90 percent of betting on races at Illinois tracks comes from off-site locations – largely other racetracks and off-track betting parlors outside of our control. These bets return far less revenue to our tracks than wagers physically made at our tracks.

Horse racing must have flexibility in its business model to compete with emerging market forces across the nation and around the world. In order to survive, horse racing must meet the broader entertainment expectations of the public.

Illinois is now surrounded by states that allow their racetracks to offer alternative gaming to supplement their purse accounts – the economic engine of racing. Indiana is the most recent addition; Illinois tracks now compete with racetracks in both Indiana and Iowa. The Illinois horse racing industry cannot survive unless the General Assembly acts to level the playing field with other racing jurisdictions.

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