Ontario is facing a $16 billion budget shortfall and its debt has doubled in the past eight years. The provincial government intends to make sweeping changes in its gaming policies to help staunch the flow of red ink.

The Ontario Lottery and Gaming Corporation proposed plans (on March 12, 2012) to end the Slots at Racetracks Program by March 2013, almost immediately shutter slots operations at three racetracks (including Fort Erie), build a new casino in Greater Toronto (not necessarily at Ontario’s flagship track, Woodbine), and expand slots facilities beyond racetracks.

The existing practice of devoting a portion of casino gaming revenue to assist horse racing is certainly a subsidy but is not unique. Governments themselves routinely funnel taxpayer money to private ventures. For instance, various agricultural commodities in the United States have federal price supports and government spending for biofuels like ethanol dramatically boosts demand for corn.

Similarly, state and local governments often try to keep companies from moving elsewhere, as well as entice companies to build manufacturing plants and distribution centers locally, through incentives such as tax abatement, infrastructure upgrades, and worker training programs. Sports complexes are commonly built wholly or partially with public funds.

The justification cited for subsidies is almost always their salutary effects on employment and tax revenues. Likewise, the major rationale espoused for supplementing pari-mutuel purses from slots business is that horse racing is the economic progenitor behind a complex and lucrative agricultural and business supply chain, which provides a good livelihood for numerous people in the private sector and plenty of tax money for public coffers.

The gist of this line of reasoning is embodied in a recent comment by Bill Walker, a member of the Legislative Assembly of Ontario, about the province’s current gaming plans: “I’m very concerned that the… government wants to put hundreds of people out of work and dismantle the agriculture sector, which is a major contributor to our rural economy.” Walker’s lament could easily apply to governmental attempts to curtail slots contributions to horse racing in Indiana, Pennsylvania, and West Virginia, or to prevent contributions entirely in Kentucky.

In Ontario, the logic among top elected officials is that additional casinos, more convenient slots locations, and online gambling is a better path to economic development than racinos. Another allure is that the slots money presently being diverted to horse racing is there for the taking now, in the midst of a monumental budget crisis.

When racetrack owner and lessee Jeff Gural was a panelist at the 2009 International Simulcast Conference in Saratoga Springs, NY, he cautioned: “Once a racino opens, the casino company looks at racing as a loser. You’ll see the lobbyists of those track owners in the legislature trying to convince governments to take the money back, allowing the racinos to get rid of racing.”

While this may not be true of all racetrack companies, it is a valid criticism of some.

Ominous developments in Ontario and several American states clearly demonstrate that reliance on slots revenues is not a panacea for what ails pari-mutuel wagering. The vast majority of racetracks assuredly need slots to compete with the proliferating number of casinos, as long as there are legal safeguards that the pari-mutuel product is not slighted or even spurned once slots are up and running.

Gural, for example, suggests that a portion of the revenue be allocated to marketing of racing and to improved drug testing. Such pari-mutuel-focused concepts offer horse racing a sturdier bridge to the future than depending on fool’s gold–the prolongation of slots supplements for sustenance.

Copyright © 2012 Horse Racing Business

Originally published in the Blood-Horse. Used with permission.

This is a tough time for Oliver Wills. He can’t sleep. His annual review is approaching and he will be asked to grade his own job performance last year, then to present his plan for the next two to five years.

Oliver Wills’ job is to protect the Thoroughbred breed in North America.

Most people don’t know Ollie. He is an industry veteran who works in the background. His performance isn’t easy to judge, it plays out over generations.

For the past three decades, Ollie’s job has been increasingly difficult. With the legalization of Bute, then Lasix and other meds, the ability to “prove the breed” has been clouded, if not completely blurred.

There is no Oliver Wills, is there? There is no job to protect the Thoroughbred breed in North America.

Most would say it is The Jockey Club’s job to protect the breed. Of course, they maintain the breed registry and affirm parentage, but they don’t protect the breed in North America, because they have no role in racing.

[*Editor's Note: See a comment at the end of this article by the president of the Jockey Club concerning race-day medication.]

Thoroughbreds are performance-based. Breeding theories must be proven on the racetrack; around the world it is done with the best 2-year-old and 3-year-old races.

When I started out at the Thoroughbred Record in 1972, the saying of the day was, “We are trying to improve the breed.” That conversation is still going on in other countries, but I haven’t heard it here in a very long time.

This isn’t about our past. This is about our future.

The current series of articles in the New York Times will bring intense scrutiny and perhaps federal intervention to stop performance-enhancing drugs in racing. As the Times points out, the greatest abuse is in states with racinos at the lowest levels in various horse breeds.

A federal ban on performance-enhancing drugs would go far in cleaning up racing, but would it go far enough to “protect the breed”? In the sausage making of legislation, would bleeding meds be allowed as therapeutic?

The Times has additional pieces in this series. With the Kentucky Derby on the horizon, publicity and politicians will converge on the issue and there will be a degree of chaos in the industry.

In the midst of the coming storm, the Thoroughbred Owners and Breeders Association (TOBA) and its American Graded Stakes Committee (AGSC), will meet in a couple weeks and discuss whether alternative strategies should be used this year to ban all meds and peds in 2-year-old graded stakes.

On March 17, I made my case for a new TOBA strategy (click here) that could do the unthinkable. It could bypass state regulatory approval, by requiring racehorse owners to make their 2-year-olds eligible to receive graded status. Sanctioning would be between only TOBA and the racehorse owner.

When they meet, TOBA trustees will discuss many issues. Without question they will be caught in the swirl of emotion and media coverage around the Times series and the efforts for federal legislation to ban drugs from racing.

Although it is a theory, I believe the trustees can walk and chew gum at the same time. They can meet the deadline, fast approaching, of the first 2-year-old graded stakes with a new strategy that achieves the drug-free objective AND they can start discussing and working on a future in all racing without drugs.

To walk the talk, how about every TOBA trustee who continues as a trustee, make their 2-year-olds eligible for graded status in 2012? That sends a clear message that TOBA is stepping up to protect the breed.

So, in the absence of anyone already having the job to protect the Thoroughbred breed in North America, I nominate TOBA’s AGSC.

If you agree, then please contact the six TOBA members on the eleven member AGSC, because if they vote to require racehorse owners to make their 2-year-olds eligible for graded status, which means they will be “super-tested,” then it is a done deal for 2012.

The AGSC will have achieved its objective: Every 2-year-old in North America earning graded status in 2012 will have been free of medication and performance-enhancing substances.

Breeders will start the process of proving the breed by culling out bleeding traits and open our market to international standards. We will not only be in harmony with the other countries, but in addition, the 2012 graded stakes will be apples to apples with the 2-year-old Breeders’ Cup races.

Then in 2013, the AGSC will lead the way in protecting the breed through all the 3-year-old graded stakes leading to our classic races.

The job performance of TOBA and the AGSC will be reviewed annually and like everyone with accountability knows, they may have some sleepless nights.

It will take all of our wills to change racing in a way that is meaningful for breeders.

Let’s mark 2012 on the calendar as the year TOBA and its AGSC did move to protect the Thoroughbred breed. And once again in North America, have a conversation about improving the breed.

Copyright © Fred A. Pope 2012

The six members of TOBA on the American Graded Stakes Committee are:

David Richardson, M.D., Chairman
John Amerman
William Farish, Jr.
Seth Hancock
Mike Levy
Peter Willmott

*Note: The following statement was released today by the Jockey Club:

“The Jockey Club continues to believe that horses should run only when  they are free from the influence of medication and that there should be  no place in this sport for those who repeatedly violate medication  rules.”

James L. Gagliano, President, The Jockey Club

_______________________

(The views expressed by guest authors are not necessarily those of Horse Racing Business.)

The adage that history repeats itself appears to be true for horse racing in the United States. One hundred years ago, racing in the sport’s epicenter of New York was in retreat—in fact, shut down–owing to laws that banned gambling.

In 1908, New York governor Charles Evans Hughes and the legislature instituted the Hart-Agnew bill that outlawed wagering. The New York Times reported that “the anti-race track gambling law… ‘will seriously cripple, if not absolutely destroy, thoroughbred racing of high class in this state,’ is the fear expressed by the State Racing Commission…”

New York racetrack owners continued to operate in 1909 and 1910 by using a loophole that permitted “oral wagers” among patrons and another loophole that racetrack owners were not personally responsible for bets made on their premises.

A New York Times article said: “New York’s measures are merely anti-gambling measures, and if the racing associations continue to claim that the Directors of racing associations should not be held responsible for gambling on their premises it is a fair confession on their part that racing without gambling in New York state is impossible. If that is the case either the Constitution of the State or the institution of racing must go…”

The article went on to say: “Any one who knows the facts knows that the five tracks in New York City are not necessary for the better breeding of horses or testing the speed of horses, and that the amount of money now invested in those tracks would never have been invested in them but that the presence of protected gambling at racetracks under the Percy-Gray law made such investment not only safe but enormously profitable.”

The New York legislature added laws to close the aforementioned loopholes in Hart-Agnew. In particular, racetrack owners were made criminally responsible for any wagering that took place at their tracks. This had the effect of terminating New York racing from 1911-1913. A favorable court decision permitted New York racetracks to open for business once more in 1913, though several tracks never did.

A century later, New York is again the epicenter of a challenge to racing (from a series of New York Times articles) that is roiling the sport nationwide and has the potential to relgate it to the dustbin of history. This time the brouhaha is over the evils of drugs and racetrack safety rather than over the evils of gambling.

Despite predictions to the contrary, the events of 1908-1913 did not set New York horse racing back for a protracted period of time. If this history is a reliable guide, the sport and business of racing in the United States can institute the necessary reforms to keep it viable in the 21st century.

The Times is betting this won’t happen: “as with previous reforms in this disreputable industry, it faces long odds.”

Suppose a person in 2112 looks back over the past two centuries of horse racing in America. She reads of the threat to horse racing’s very existence in 1912 and again in 2012 and of how racing survived the 1912 challenge.

But what did she read about 2012?

This answer depends, of course, on the history that the contemporary men and women of the horse racing fraternity are about to write.

Copyright © 2012 Horse Racing Business