Maybe I'm Just Stupid, But...

Maybe I'm just stupid, but it appears to me that in OHRIA's recent proposal, Plan For The Future, that in lieu of losing $165 Million a year in slot revenues that went towards purses and breeding, they want funds to be set up by the government (an actual subsidy) totalling $210 Million a year, while being alright with cutting race dates and racetracks. Um OK, I must be idiotic in believing that the government will laugh their heads off at this proposal, though they'll like the cutting of race dates and tracks...less gambling competition is cool with the Ontario Liberal Party.

Maybe I'm just stupid, but in OHRIA's recent proposal they seem to be content with the end of Fort Erie. To stupid me, if OHRIA is conceding that racing can exist without Fort Erie, it makes it next to impossible to make a case to the government that Fort Erie Race Track should exist after this year.

Maybe I'm just stupid, but OHRIA seems to believe that Woodbine can race B horses. Sure, they can write $5,000 claiming races, but at a rate of $80 day pay, which owners are going to stick around to fill those races with their horses? There is a very good chance that if Woodbine is the only thoroughbred track running next year, owners of horses who run for less than $12,500 or who can't handle polytrack will send their horses away to Finger Lakes or Ohio. Some may run for the Woodbine owners there, but many will be sold for next to nothing. Once, this happens to an owner once or twice, it will take the fun out of the game, as well as taking away much of the chance that the owner can make money in the game. I know this might sound stupid but owners will dry up very quickly, leaving only wealthy trainers and owners with more money than brains to race. Maybe I'm just stupid, but I would think that OHRIA would understand the economic necessity of having a B racetrack in Ontario.

Maybe I'm just stupid, but Tim Hudak's attempt to appeal to the horse racing community and its supporters, to make sure that the Ontario Liberals don't wind up with a majority government by winning the upcoming Kitchener-Waterloo election, sounds almost pointless. The Liberals didn't need a majority government to end the Slots At Racetracks program. How will a Liberal defeat in Kitchener help horse racing in Ontario?

Maybe I'm just stupid, but the Minister of Agriculture, Ted McMeekin, comes across like a pompous A-hole when he says, “Simply put, the model that is currently in operation and is scheduled to end March 2013 is not viable, is not sustainable.” Is EHealth, ORNGE, moving the Mississauga Power Plant, or full day kindergarten sustainable? Sustainable? The SAR program was a partnership, and it is not going to mean much more money, if any, to the government bottom line, once the new operators (mostly foreign owned conglomerates most likely) take their cut of the slots profits.

Maybe I'm just stupid, but whenever I read that Bingo Halls are going to get a better deal than racetracks did because they are only going to give the government 47% of gross gaming revenues (before expenses to the Bingo Hall), while the government received 75% of slot revenues from Racinos (before expenses to the government), I either believe that the writer either doesn't understand Business 101 or is being totally disingenuous. That being stated, I know I'm stupid for even thinking that Bingo Hall owner Larry Tanenbaum is getting preferential treatment for being a Liberal Government Crony.

Maybe I'm just stupid, but I really like the idea that Finance Minister Dwight Duncan got ambushed by Marty Adler:

What bothers me is when Duncan stated that the number of jobs affected by the end of the SAR program is "not 60,000," Adler didn't come back asking "well then how many jobs will be affected?" Truth is that Duncan has no idea, and that, to a stupid person like me, shows that the decision to end the slots at racetrack program was done without the proper due diligence.

Lets Recap What The OLG Is Really Doing

The Drummond Report came out recommending that the Ontario government revisits the slots deal it has with racetracks.

It didn't take long for Dalton (Norman Bates) McGuinty and his sidekick Dwight (Have Another Donut) Duncan to start lying about the relationship between racetracks and slots (calling slots revenues tax dollars and stating they were subsidies to the tracks) and then hinting that racetracks may lose all or some of their slots revenues.

In what seems the time it took to read the Drummond Report, border Racinos in Fort Erie, Hiawatha, and Windsor were told that their slots were going to be eliminated by April 30th this year, but that the government will make sure tracks are able to operate and purses accounts will be (close to) maintained for another year as long as these tracks race.

Of course, more lies were used by the collective PR of the OLG and Ontario Liberal Party, stating these Racinos were losing money. Revenues are way down, but the only track that is close to break even is Fort Erie, and it is doubtful that the OLG was losing a dime there.

OK, so the macro reason for the slots closures has to do with the budget, or so they claim. But why close them so quickly? Because the main agenda item is to prop up the revenues for the 4 stand alone casinos (Niagara has two) that are very close to proximity to the 3 Racinos that had the slots taken away. The goal by the government is to sell these casinos (before online gambling erodes these numbers down again), and the reality is that these casinos actually do lose money.

The fact that the government is paying lots of severance to slots employees and lots of money to the three tracks for the lost slots revenues over the next year shows that immediate deficit reduction is what this move is all about, nor is it about changing the ratio of what tracks get to keep on slots revenues.

In fact, the government has made it clear that it wants to privatize all slots and casino operations within the next year or so, which means that the OLG will not have to worry about paying slots employees, maintaining machines, etc. The gaming operator will now take over that function. The question again is what will the new cut be if a track takes over the operation, and what will be the deal with expanded slots as well as online gaming which is expected in the near future.

The government is attempting to get out of paying for the expenses of gambling, and they are looking to sell their assets (by the way, someone should clue in Puppet Progressive Conservative leader Tim Hudak that what he wants is what the government is looking to do).

This isn't really what the Drummond Report said to do, but this is the new direction the government is taking. Let gambling competition run amok, and tax the gambling company as much as it can (without having no gambling companies interested in doing business with an untrustworthy government in Ontario).

Hudak meanwhile, is not getting the big picture. The government is looking to put slots anywhere and everywhere, which means that Fort Erie and the other tracks should have had the opportunity to keep them. But the selling of the casinos is the reason they were taken away abruptly.

I wonder if Fort Erie, Hiawatha, and Windsor have a legal case by having their rights denied to compete to have slots, and the way in which this was done (especially if it turns out that the other tracks will be given the choice to operate slots).

Down the road, once the government decides what their new cut is going to be on slots and how and for what price they will sell the location rights, the rest of the tracks that have slots will make their decision as to whether to operate or not. Once the Niagara Falls casinos as well as those in Windsor and near Sarnia are sold, Fort Erie may have the opportunity to buy the rights to operate slots, unless part of the sale of the casinos will have a clause that no other gambling operations can be put up within a 25 mile radius, for example.

I have to say though, Duncan, McGuinty, and Paul Godfrey make me sick with their lies and misrepresentations. Hudak, if he wasn't so clueless and wasn't so badly managed, could have been the Ontario leader right now, and one thing is for sure, this wouldn't be going down like it is right now. I also believe that there would be no closures either, nor would racing be destined to die at any location in the near future either.

The next stage in the game for the Ontario Liberal Party and OLG is to believe they are entitled to have gamblers gamble with them. It won't work as long as they maintain their Pro-Line odds mentality. See "Is Horse Racing in Ontario the Fall Guy For Government Mismanagement?"

Note: The photo above is circulating on Facebook (where I happened to come across it). McGuinty has pissed off quite a few people. Even I find the message a bit harsh but decided it fit in well with the blog piece.

Fort Erie 2010: Looking More and More Like A Long Shot

Despite the efforts of the HBPA and the Fort Erie EDTC, the likelihood that live racing will happen at Fort Erie in 2010 is very dim.

Ontario HBPA President Sue Leslie paints a rather grim picture when it comes to the potential sale of the track. "Negotiations regarding the sale of Fort Erie Racetrack are stalling. In our observations the offer made to Nordic Gaming are not in line with their expectations in terms of the racetracks value."

What value? Nordic claims they are losing $3-4 million a year. And the business isn't looking any brighter. Their handles lately have been brutal. They appear to be off around 20% of late at least.

Note to Nordic: You can barely give away a business that loses millions a year. Nordic Gaming doesn't care about that fact. They continue to ask for prices way above the market. If it wasn't for pure "extortion" this year, there would have been no racing at all.

There was government money lying around ($2 million that was supposed to go towards a feasibility project for the smoke and mirrors $300 million expansion) to give away to Nordic. There is no more money left (Nordic has it all), so there are few options left in order for racing to happen at The Fort next year.

So what are the options?

1. Nordic sells the track. Won't happen without a government bail out, as Nordic always want way too much.

2. Fort Erie doesn't open next year for racing. This will crush the already down and out breeding and owning businesses in Ontario. Right now, because of the uncertainty going forward when it comes to B racing in Ontario, there is no claiming going on at Fort Erie, and it is nearly impossible to give a horse away. If there is no out in Ontario for horse owners, demand for Woodbine horses will also get hurt. For one thing, less Fort Erie horsemen means less demand for claimers at Woodbine, and without Fort Erie, there is greater risk claiming one for $12,500 to $20,000 than ever before. If the horse isn't competitive for Woodbine bottoms, the owner pretty much has to ship the horse to the States, and many owners don't want that hassle, and they want the option at least, to watch their horse run live.

The HBPA is now pushing for slots to close if the track isn't open. This could be a great wake-up call for Nordic Gaming if it does happen. It will definitely motivate them to sell, and probably at a very realistic price.

3. Woodbine steps in and leases Fort Erie for $1. They assume all losses for the near future. This does make business sense if Woodbine's goal is to grow horse racing in Ontario and not to kill horse racing in Ontario. But I'm not sure that this is the case. As stated above, if there is no B thoroughbred track in Ontario, breeders will get clobbered as owners continue to become fewer, this time at an accelerated rate.

4. Ajax Downs runs 50-70 thoroughbred dates. This is looking like the most likely scenario. They will have a five furlong track ready to go for 2010. The only stumbling blocks are a rumoured horsemen's agreement where Quarter horsemen were promised that there would be no thoroughbred racing at Ajax through 2010. Contracts can be broken, because everyone has a price. The big negative when it comes to thoroughbred racing at Ajax is the fact they literally have no backstretch. There usually isn't room at Woodbine for B horses, so training B horses off a farm and shipping them in for race day, becomes very expensive and problematic.

5. The government (Finance Minister Dwight Duncan) buys into the Fort Erie EDTC's plan. I'll simplify the plan here: The Fort Erie EDTC wants the government to give the Consortia $15 million a year for six years to replace the proceeds Fort Erie gets from slots (which sits at around $8 million a year). The way I figure the extra $7 million will be used is as follows: $2 million extra to purses (this would be great and would encourage more ownership of horses), $3 million to cover losses (again, this is a must because the EDTC Consortia has no money, and $2 million to lease the track. The latter is a deal killer as far as I'm concerned. Giving Nordic one cent profit would be absolutely absurd.

6. The government (or the OLG) gives Nordic $2.5 million on a year to year basis to cover the losses of the track. This is probably the second most likely scenario, as it keeps Fort Erie open until Nordic finally lowers their price realistically enough to sell the joint (it is a bad time right now to begin with because of all the Magna tracks on the market. There are only so many outfits interested in owning a racetrack out there). Of course, if the government is really smart, they hire me to help get Fort Erie out of the red:) There are many ways Fort Erie can improve their bottom line.

I need to also mention the obvious: Without racing in Fort Erie, the Niagara Region's economy will get hurt big time.


If you want to help encourage the Honourable Dwight Duncan, Minister of Finance save Fort Erie racetrack, email him at (NOTE: It appears the email address may not work):
dduncan@mpp.liberal.ola.org. or fax him at 416-325-0374

For more read Perry Lefko's article in the new issue of Down The Stretch. Down The Stretch also has some early Breeder's Cup selections.