Horse racing in Ontario is still in the Wild West despite yesterday's announcement by Temporary Premier Kathleen Wynne who stated she "wants" to see horse racing to be part of the OLG's Modernization Plan. The good thing is that this is a definite policy shift by the beleaguered (very well deserving) Liberal government, but when you consider that the OLG is strongly considering privatizing everything (something the PCs, the number one opposition party in Ontario, also would like to see) and the fact that the Liberals may not be in command a year from now, if horse racing doesn't come together extremely quickly get the ball rolling with specific signed deals, what Wynne stated yesterday might only be nothing more than words of appeasement.
Horse racing in Ontario is good to go for the next 3 years (at approximately 75% of what it was last year), running on monies generated from betting and an actual government subsidy that will mostly be used to pay for racetrack expenses other than purses. Since tracks don't charge admission (if they did right now, no one would go), don't make much off concessions, and other than a handful of Woodbine races, the don't receive any corporate ad monies, their only source of income is through betting, now that slot revenues are no more.
One question of many I have is that Wynne stated racetracks have three year deals with the government regarding subsidies, yet Woodbine stated they have a two year deal. Which is it?
The biggest question right now for Ontario horse racing to immediately deal with is who is going to represent it when it comes to selecting and implementing new revenue streaming ideas that will definitely need to be in place two or three years from now in order to ensure that horse racing remains viable. Horsemen groups historically in Ontario have had a huge sense of entitlement, and even with the dose of reality that has happened over the past year, I have read many recent comments by horsemen who basically state that nothing other than reinstatement of the SARP would be acceptable. They are definitely not customer driven, and horse racing's biggest problem right now is that they don't have nearly enough customers. Racetracks are supposed to be customer driven, but because of slots revenues, customers were placed at the back of the bus. So who is going to lead horse racing into the future, and can there be a leader with all the childish infighting that happens? Whoever it is will definitely need to start understanding the gambler's psyche, if horse racing is survive and potentially grow.
Something I do find a bit troubling is that since the SARP got its walking papers from Ontario racetracks, I have yet to see anything substantial from any Ontario track that would make me want to gamble on horses more, with the exception of HPI allowing some fractional wagers to coincide (almost) with some US tracks, but that was something they were working on prior to the end of SARP. I realize that the whole industry has been suffering from deer in the headlights syndrome for a year now, but there has been no takeout reductions the past 365 days, and comparatively, especially harness B tracks, takeout rates compared to US tracks are sky high. The biggest complaint I hear about from friends is not getting paid track odds on many US exotics. Smaller bettors may not care so much about this, but the bigger bettors do, and all this practice does is chase them away, and racing like many businesses runs by the 80-20 rule where 20% of the customers do 80% of the betting.
Ontario horse racing's future is now dependent on having more customers. The problem horse racing has is that it has too high a learning curve for a game that is perceived as unbeatable (thanks to high takeout rates). Slots is a no-brain required type of gamble that gives the player the illusion of winning, even when they are not, and even though slots is not beatable ever in the long run, it awakens the same parts of the brain as crack does for crack addicts. I find it sort of disgusting the Ontario government is actually looking to expand slots to where there are more people and especially on the internet, but I'll save most of my thoughts for a future post. Poker found success because it is perceived that if you are good enough you can actually make a living as a poker player, which means that there is a perceived chance that even a casual player can make some money long term. The learning curve is nowhere near as much as horse racing, and the cost to learn is nowhere near either. Racetracks in Ontario need to lower takeout and give gambler's more psychological satisfaction. The more they have in their wallets, the more they tend to play, the more they tend to come back.
The best way for horse racing to draw in more customers is to have a weekly lottery similar to the V75 in Sweden. This can bring in a whole new audience of lottery players who may be inclined to learn more about selecting horses in individual races. But the powers that be, whoever they are, need to think ahead about keeping these customers once they have them. In order to be succesful, I think the lottery would need to hand out at least $1.5 million on non carryover weeks as a grand prize. This would mean some pretty aggressive marketing at lottery kiosks across Canada, and it is something that could easily attract US bettors at racetracks and ADWs.
Instant Racing (historical racing machines) is another way to generate more revenues and possibly attract new fan interest. They aren't slot machines, but they appeal to the same type of crowd. The 10% takeout ensures high churn and gambler satisfaction, and these machines have been very successful where there are no slots to compete with (hint: Fort Erie).
As for poker rooms, expanded gambling (roulette, blackjack, etc.) and sports betting, I don't see the justification of a gaming partnership with the OLG for anything other than racetrack related gambles is any different than the slots agreement that has now ended. I find it an insult to my intelligence that the OLG is supposed to partner up on all other gaming except slots in order to help out the horse racing industry, and yet the Transition Panel has stated that this is a possible solution, while saying the slots program was wrong.
Besides, there is little money that can be made from sports betting and poker (too labour intensive) to satisfy the needs of operating a racetrack.
So right now, there is more hope than there was a couple of months ago, but the industry better get their act together, get signed commitments from the OLG and Ontario government, and get these future ideas rolling NOW!