26 March 2013

Countdown To The End Of SARP: One Final Proposal

What a colossal mess hit and run artists Dwight Duncan and Dalton McGuinty created by mandating the end to the Slots At Racetrack Program, using false assumptions, without doing their homework first. With only 6 days until the end of SARP, the Ontario horse racing industry is still in limbo regarding race dates and purse structure and even location, when it comes to the future of the majority of racetracks. Never mind time is running out on another breeding season as well.

It has become evident that even the Transition Panel has bitten off more than they can chew, having only landed racing agreements with not-for-profit tracks. They have been trying to broker deals since December, but hit a major speed bump.

As I understand it, based on what has been put out there in the media and interviews, for-profit tracks have all signed deals with the OLG when it comes to renting out the slots facilities, however, if they choose to get a racing subsidy, rent counts towards their revenues, therefore, in most cases, if they don't race, they make money from rent, but if they race, the best they can do is break even. No matter how much a racetrack owner may love racing, if you are a businessman, you pretty much have no choice but to take the rent money only. Even if there is a possible rainbow at the end of all this junk, a track can always race again in the future if there are profits that can be made from racing.

Can the government justify giving a for profit-track a profit using tax dollars? That is question that we will see answered in the next few days....maybe.

I don't understand how the brakes weren't applied on the end of SARP. The lie by the quitter Dwight Duncan, that there were only 5,000 people in the industry was enough evidence for the government to back down on the decision until further due diligence was done. And then when OMAFRA came up with their conclusions that a major subsidy would be required to keep horse racing on life support, considering all the potential lost jobs, a capable government would have just adjusted the SARP program. But the inept, larcenous McGuinty government was still calling the shots back then.

And now, we are seeing major resistance when it comes to putting a new casino just about anywhere. What this really is saying is that will of the Ontario people are OK with casinos at tracks, in other words, tracks are perfect business partners when it comes to OLG slots, and they should be treated as business partners.

Is there time for a solution? I'm not sure. With the OLG already accepting RFP's for Gaming Zone operators to step in and replace many of the overpaid overcompensated OLG workers, I'm not sure that if a new government was elected today, that they can stop it. But then again, I'm not a contract lawyer.


I've had plenty of time to think about solutions. I don't think giving a subsidy from tax dollars is acceptable at all, nor does it address the future beyond two or three years, as well as there is no incentive for for-profit tracks to continue.

What would I do if I was Premier Wynne?

I would extend the SARP program for 4 years, giving ample time to integrate a possible horse racing lottery, sports betting, Instant Racing, etc. as new sources of revenues so that horse racing can stand on its own. It is my belief that slots are dying a slow death anyway, and racing needs to market horse racing as a competitive gambling game.

I would change the SARP program to 7% for horsemen and 7% for tracks (this saves face sort of). The reality is that at least a good 20% of the industry is gone at this time anyway thanks to the past year's uncertainty.

I would mandate that the entire horsemen's share of slots goes towards Ontario bred races and breeder incentives. This eliminates the $30 million government subsidy, as well as the necessity of the extra 2% the TIP program receives from wagering (which inhibits tracks from experimenting with lower track takeouts). Too much of slots money went to foreign players. Nothing wrong with reciprocation, but it was way too much and took away from Ontario breeders and owners and trainers. Betting revenues can be used to fund open races very effectively.

I would mandate that of the 7% tracks receive, that 33% of it is used towards local marketing and province wide marketing and developing. The balance is to be used for racing operations and some of it will be profit (for for-profit tracks).

I would split racing gross revenues for live racing 55%-45% for the horsemen-racetracks, the same split for home market (simulcast and exported) wagers based but using net revenues instead. I would also add that if a track decides to rebate their home market customers, that 45% of the rebate is deducted from the horsemen share as this incentivizes the tracks to do this which will be great for growing the customer base.

I would mandate that track takeout for Ontario horse racing can not exceed 16% for WPS, 19% for Doubles and Exactors, and 22% for all other wagers (this includes the 1.3% the government receives). This will allow Ontario tracks to compete with all North American tracks and handle and customer base is sure to grow. Even Ohio has a 22% cap on takeout.

Allow tracks to be able to match offers from outside operators in order to run their own casinos. If they can run pari-mutuel wagering, they should be able to handle slots and table games too.

Finally, I would offer slots back to Windsor, Sarnia, and Fort Erie. Taking slots away from these tracks didn't help the numbers at the stand alone casinos. In fact, Windsor casino just announced major layoffs today. If it means that under the 7%-7% proposal, along with slots, that Fort Erie can only race 40 days, so be it. If everything I've put out here is done, horse racing will grow, and Fort Erie dates will eventually grow too.

Update: Wynne just announced that there will be racing at for-profit tracks Fort Erie, Flamboro Downs and Georgian Downs.

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