8 May 2012

If OLG's Evil Plan Comes To Fruition There Will Be 6 Tracks Tops

It is amazing to me that the OLG's plan to destroy horse racing in Ontario hasn't been spelled out in full. Kind of gutless if you ask me, that details seem to trickle out every once in a while bit by bit.

 The campaign that Dalton McGuinty, Dwight Duncan, and the OLG have waged to date has been not only very deceitful but very confusing for everyone involved or keeping an eye on the developments. The slots for racing program is dead, but there was still a lot of ambiguity surrounding tracks still having slots in the future and profiting from it.

 Well, in the last week or so, some of the answers have been leaked out, and it amounts to horrible news for the racing industry. If the OLG gets their way, slots at racetracks will be run by casino operators who made a successful bid with the OLG on a track to track basis. The casino operator can't be anyone, it has to be a company that has operated casinos in the past, and a company most likely with a decent balance sheet. This means companies like Great Canadian Gaming, Caesars, and MGM (not sure if Larry Tanenbaum's Plaza Gaming and Entertainment have experience actually operating a casino) are the early front runners to takeover operating casinos from the OLG. I imagine, the OLG could still operate a casino or two if no acceptable bid comes in at certain tracks, but they would rather divest from it.  

In the end, these casino operators will wind up getting a subsidy with revenues of close to the amount that racetracks and Horsemen were getting. And much of that money will not be spent in Ontario.

Now, more news, which could have been guessed at, as come to surface. The tracks that still have slots in the future will only get revenue generated through rent to the operator.

How much rent? That can only be speculated upon, but it has to be enough to pay for the cannibalization that slots takes from parimutuel betting. There will be no onus to split the rent with the Horsemen, and no requirement to race in order to keep slots open.

 So here is how this will probably play out. Harness tracks that are for profit will shut down. None can be profitable right now on parimutuel wagering alone. In all likelihood, the tracks will either rent to the new operator or sell to the new operator, and then sell the land that isn't needed for the slots operation, including bulldozing the racetracks. Racetrack land isn't that easy to sell in most cases because of environmental damage to the site but that is a different story. Lands will be cleaned up, and tracks will be sold. Not for profit and non profit tracks may try to continue. Hanover, Clinton, Grand River, and Western Fair are owned by agricultural societies mandated to race.

The reality is that outside of Western Fair, handle is microscopic at the other venues, and even if they can stretch rent from the slots operators and the revenues from betting on horses, it is unlikely that any of these tracks will be able to race for more than 10-20 days a year each, and at much reduced purses. The only horse owners these tracks will attract are owner trainer driver types. Flamboro and Georgian Downs are both owned by Great Canadian Gaming. It is pretty much a given that GCG will operate and expand casinos in these locations, but it also pretty much a given that racing will cease at these locations as well. All other harness tracks, including Rideau Carleton will be toast. And unless a special deal is made, I doubt Ajax will have any incentive to run live races either.

As for Woodbine/Mohawk, they will survive as 60% of their operation is funded by wagering on horses, though Woodbine Entertainment may reevaluate whether to continue a racing operation in Mohawk. Woodbine also stands to gain a full cut of all wagering in home markets that cease to have racing in the future. As for their rental agreement, well that depends on whether Toronto is forced to have a referendum or not. If Woodbine is the only acceptable location for a casino, then they can ask for and get the moon from whichever casino operator takes over.

The same is true in other municipalities throughout Ontario. A mandatory referendum for expanded casinos will slightly help the horse racing industry in getting better rental deals, but not enough to save the 10 tracks that will be eliminated from racing....unless lawsuits come about or the Ontario government changes its direction (OHRIA seems to be the only hope available to sway the government), there will be carnage brought upon most of the 60,000 people who derive all or some of their income thanks to the horse racing industry.

As for Fort Erie, these new revelation have me wondering what the EDTC thinks they can possibly accomplish by asking to run the casino and paying the government $1 million a year. First, they don't qualify to run a casino, and secondly, the government isn't interested at all in a million dollars a year, from a competitor to their Niagara Casinos.

Again, an enormous case can be made that a B thoroughbred track in needed in Ontario to keep the industry from dying, but the government doesn't seem to care about keeping the industry from dying, in fact, they are the one pulling plug.

 Keeping everyone in the dark got the budget through. What I learned about politics through this: Andrea Horwath looks like a dupe. Minister of Agriculture Ted McMeekin proved himself to be a Liberal Party shill, and Propaganda Minister Dwight Duncan is either the biggest idiot on this planet or one of the biggest liars on this planet.

I'm not the only one who shares this opinion of Duncan. Yesterday, in Ontario Legislature, PC MPP Jeff Yurek deservedly ripped Duncan apart:

`I think one of the problems is that the Minister of Finance just isn’t understanding finance. For instance, up until yesterday, the government was very adamant about cutting the so-called subsidies to the horse racing industry. When you use the term “subsidy,” this sounds like a very reasonable thing to do. After all, a subsidy uses money collected through taxes and puts it forward to some program or business. If, in fact, the government is paying the horse industry a subsidy, cutting it would enhance the province’s fiscal position.

But I have just one question for the Minister of Finance: Does the government use tax revenue to subsidize the horse industry through the slots-at-raceways program? The answer is no. I would hope the government realizes this, because the agreement between the OLG and the horse industry is very clear. The horse industry does not receive a dime until someone inserts a coin into a slot machine located at their track. This is not a subsidy; it’s actually a revenue-sharing agreement. I’m sure the minister will tell me he has made some responsible concessions.

The reason I bring this up is because before the budget was released, the Minister of Finance made the slots-at-raceways program a very big and public issue. Given the amount of time he has dedicated to talking about it, one would be forgiven for thinking that this one measure in itself might balance the budget. He tried using an example of how the government was going to prioritize health care and education over less pertinent items. In all his tough talk, the minister failed to mention how he would make up the $1 billion in profit the government receives from the program. That’s right. One program, the slots-at-racetracks program, is not a subsidy, but it actually is providing $1 billion that is used to fund essential services like health care and education.

This is our Minister of Finance: someone who doesn’t know the difference between an inflow and an outflow, a subsidy from a revenue-sharing agreement. This is the man in charge of the province’s finances, a man who would cut a revenue source that provides $1 billion each year just because he doesn’t know the definition of the word “subsidy.” It’s either that or all the minister’s talk of horse racing was less about actual finance but instead a political game he was playing to stick it to rural Ontario.`

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