11 January 2013

Catch Up Time

I haven't posted for awhile. I could probably write a few blogs about each of the following topics, but I'll keep things as brief as possible.

Thoroughbred Handle Was Up For The First Time Since 2006

Before breaking out the champagne bottles, handle still didn't outperform inflation for the 2012. When will the industry get it, they have a great game, but takeout is too high which means horse racing is not competing with other forms of gamblers. The industry wants to grow, but just keeps their collective head in the sand when it comes to takeout.

Should Horse Racing Executives Be Allowed To Bet?

Integrity issues if executives bet? Is that a joke? I've never once thought that if a racing executive bets it affects the integrity of the game. Horse racing needs more bettors, not less. Don't look for conspiracy theories to prevent those who may want to bet from betting. I look at this like I look at gay marriage. Homosexuals have as much right to be miserable as heterosexuals if they choose to get married.

It is a given that Stewards shouldn't bet on races they are overseeing because they can change the outcome of the race. But when it comes to executives there are quite a few others that bring about a higher level of integrity issues than them.

For instance, vets who know which horses got work done or treated before a race, which horses are close to being lame, etc. Some tracks only have 1 or 2 vets in the backstretch. Still, at an average 21% takeout, even with their knowledge, they would be lucky to grind out a profit, and that is why they probably don't wager much.

Then you have trainers, jockeys, backstretch workers and their immediate families who have a special inside of whether their horse may be ready to fire today or whether their horse got a vodka shot in the knee.

How about those who work at hyperbaric oxygen chamber centers? I'd love to have their info. In fact, I think it is about time that these treatments become public knowledge. Just as Eric Poteck pointed out, in this ESPN interview on giving Horseplayers a bigger voice, the NFL, which publicly shuns gambling, caters to the gambler more than horse racing does. Who are the injury reports for? If an NFL player sprains his toe on a coffee table, we hear about it, but if a horse pulls up in a workout, forget about it unless it is voluntarily disclosed.

Horse racing has lots and lots of integrity issues and conflicts of interest when it comes to racing and attempting to place Horseplayers on an equal playing field, but racing executives not being allowed to bet? C'mon Man!

The Ontario Horse Racing Situation

It is January 11, 2013 and the racing industry is as clueless as to what happens after March 31 as they were around a year ago when the announcement that Slots At Racetracks were coming to an end. There are no dates announced, Woodbine trainers who usually ship in early February have no clue when training will start there.

The Liberals, who are minority leaders in Ontario have to elect a new leader in a couple of weeks, and there is faint hope that if one of a few certain candidates win, the end date of March 31 will be at least postponed until further review.

The Ontario Bingo Hall Should Be Scandal

Regarding Bingo Halls. I was wrong. Even though I was perhaps the first to figure out that something unsaviory was occurring with Bingo Halls, the OLG and the McGuinty-Duncan Liberals, I also believed the cut the government was getting was profit equal to the same percentages of profit the government (through the OLG) received from the SAR program.

However, Darryl Kaplan's Standardbred Canada piece, The Ugly Truth Behind The OLG Bingo Expansion, points out, in the OLG's own words, that the Ontario government receives zero in their coffers from this gambling expansion, which if I'm correct, now changes the minimum age for slots players (yes those things are slots no matter how much bull the OLG feeds us that they are not) to 18 from 19. Go get that tuition money OLG!

So here you have a business that was losing money, unlike the more than successful racetrack slots program, and the owners of the Bingo Halls will most likely clear more than 20% of gaming revenues now (47% minus expenses to run the hall), similar to what tracks and horsemen split at tracks under the SAR agreement. This is scandalous, but the OLG knows they are big advertisers with the dying print media, so very little will probably be done or written about it.

How did Boardwalk Gaming know to buy up Bingo Halls the past few years when Bingo Hall revenues were on the decline? Psychic I guess. I'd love to see the email trails.

Is money the Bingo Halls getting "a subsidy," "their portion of a business agreement," or "taxpayer money." I wish someone would directly ask Dwight Duncan while he still has a job.

Ontario Industry Really Should Have Focused On The Negatives Of Gaming Expansion

Most communities do not want expanded gambling. Ontario is comfortable with slots at tracks and racetracks, but predictably it is beginning to show that the public does not want stand alone casinos in their neighbourhoods. Even OLG Chief Huckster Paul Godfrey admitted he wouldn't want one in his neighbourhood (is this guy a moron or what?).

Barrie residents do not favour having a casino either.

The social impact of having casinos everywhere is terrible. This was proven in Russia recently:

Gambling has been a major policy problem for the Russian government since the early 21st century. The problem was the rapidly increasing number of slot machines and gambling houses, including casinos, spreading all over the country. This caused a great concern for the government. According to city officials, after the year 2002 there were 58 casinos, 2,000 gaming rooms and approximately 70,000 slot machines in Moscow.[1] It became a greater problem for the government because the younger population was widely exposed to the obtrusive advertising of gambling houses. Teenagers missed school to crowd around slot machines hoping to win some money. This behavior affected the society’s welfare in a way that was external to the market, thus, giving rise to a negative externality. Experts from the Russian Association of Gambling Business Development claimed that approximately half a million people on a regular basis indulged in gambling in the capital city of Moscow. At the same time, city psychiatrists, who met with people addicted to excessive gambling, provided quite different information arguing that the number was much higher. “The head of the extra-hospital aid in the National Narcological Scientific Center Taras Dudko says that the number of people regularly going to Moscow casinos, bookmaking offices and gambling houses is over 1.5 million people”.[2] Additionally, money laundering was another concern of every city government that failed to collect estimated tax revenue from gambling businesses, that kept the profits and did not share them with the city by avoiding tax payment.[2] These were the major rationales for the government to get involved and implement a policy on gambling restriction. One of the policy solutions to solve the gambling problem in Russia was proposed in the form of limiting the number of gambling establishments throughout the country. Additionally, the Moscow officials proposed to bar slot machine parlors within 500 yards of a residential area, which would force operators out of all urban areas in the country in order to protect the young generation from being tempted to lose money using slot machines.[3] The major policy problem about excessive gambling in the Russian society and their people’s continuous discontent with the spread of gambling houses all over the country finally led to the implementation of federal policy. Russia closed down its casinos overnight as gambling was banned nationwide. Thus since July 1, 2009, according to the Federal Law № 244 “On state regulation of organization and management of gambling”, the gambling business in Russia has been allowed only in four designated zones.[3] The ban was to protect the health of society, and was expected to put an end to the era which witnessed an eruption of gambling fueled by a lawless business culture, which caused great costs to the society.

The reality is that slots and other video casino games are the crack cocaine of gambling. Players, due to the frequency of "wins" when at a machine are under the illusion that they are winning or close to winning. Because the game is not parimutuel, long term players have zero shot of winning, unless they win a very infrequent super jackpot (which isn't even an option at most terminals). It is a mindless wager, and prays upon the gambler in a way that is completely different from those who play thinking gambling game like sports, poker, and horse racing (which are conceivably beatable because there is an element that after the house edge there is still room for good players to beat not so good players. When it comes to lotteries, at least gives the person the dream of winning huge, nowhere near as addictive as slots and not as costly for the overwhelming majority of those who play.

When it comes to horse racing, it is probably the least addictive form of gambling these days with its collective 21% takeout. Wins are not as frequent, and even if a newbie decides to give it a try, it doesn't take long to realize that you will end up broke most days you go to the track, and the learning curve is huge and further investigation leads to the fact that there aren't any visible winners who beat that takeout rate, so why learn?

Potentially, horse racing is the greatest gambling game in the world, but again not at those prices.

Fort Erie 2013: I'm Not So Optimistic Now

Although my sources are giving Fort Erie hope, when I read what FELRC head James Thibert recently stated, I'd have to say it might be a longshot.

Less than a month ago he was quoted:
“Selling the track is not a requirement to race, it would just help because it shows the potential for new investment."

However, earlier this week, Thibert was quoted: "If a buyer can be found, the track can stay open."

So what changed? Reading between the lines, and I could be wrong, I hope I'm wrong, the transitional panel may have said no to Nordic Gaming getting a dime in leasing profits from the transitional fundings, and Nordic Gaming may have come back and stated, "then there will be no racing at our track."

And if the Horse Racing industry gets its major wish, which is to get the dead date of March 31st postponed, I doubt it means Fort Erie would get its slots back or its deal back from the last 3 years. Would transitional funds still be available? I can't see that if the SAR program is extended.

Quick update: Thibert was quoted again, stating the track doesn't need to be sold. Also, he states the $16 million price tag is too high for potential investors, and I see that. There is plenty of land between Niagara Falls and the Peace Bridge, the racetrack location isn't very special. For international companies, land is still cheaper in NY state, and for retail, well the Welcome Centre that was built across from the track some 10 years ago was a dud right from the start. And then you have the element of Fort Erie's biggest employer shutting down, well that will only cause all real estate prices in the area to plummet, and many businesses will either go under or think about it.

From that it might be a good idea to give Nordic some lease money until a buyer comes along, but it appears that the only buyer interested in Fort Erie right now, would be one interested in buying a track, and with Ontario's current horse racing climate to consider, nobody will be buying a track until there is much more clarity.

Update 2: In the article linked above in Quick Update appears to have leaked out that Western Fair is getting $10.5 million in transitional funding. Is that per year for 3 years, over three years or over a longer period of time or a one time funding? Is that for the track to operate? Or is it to be split with purses? Will takeout commissions only fund the purse account? Who knows, but maybe this slip up will lead to answers quickly.