Pena, O'Neill, Horse Medications, Apologists, and Slots

I don't know what pisses Horseplayers off more, the fact that some "super" trainers win at 25% plus because they are obviously either using undetectable drugs or illegal methods in order to gain an edge over their rivals, or the fact that they are able to get away with it year in and year out.

I know what pisses me off more than anything, it is the apologists who claim that these trainers are superior and know where to place their horses.

There are only so many ways to train a horse, and only so many ways to feed a horse. It is insulting to the intelligence of the Horseplayer to state that these trainers have found a magical way to feed and train a horse that triples their productivity over average trainers. Especially since many of these "super" trainers have operations all over North America.

It only makes sense that if a trainer is superior at winning without cheating, that they would be detailing their horses daily, knowing their horses inside and out. Yet we often see high percentage trainers winning at two or three different tracks a day. No way are they on site. And to think that their training program is superior or that the assistant trainers at these tracks have an edge over the trainers who have an operation and race at one track or circuit strikes me as complete fantasy.

For a few years, I've seen apologists make their case for "super" harness trainer Lou Pena, who was very average when training in California (though he did get a few positives there). His record since moving to the East has been nothing short of sensational, and his win off the claim percentages defies any sort of logic. Yet, he was able to go on and on and on because there was no evidence that he was cheating...so it must be superior hay, oats and water that was giving Lou the edge. Nobody with half a brain or more bought it, but the apologists were spewing it anyway.

It seems the apologists were wrong. According to a thorough investigation, using vet records, Pena was throwing in the kitchen sink, yet somehow getting by the test barn, which is cause for rage amongst Horseplayers and any Horseman who plays by the rules.

It goes to show that all these defenders who state that with today's technologies even the itsy bitsiest of overages can be detected, thus making horse racing the cleanest sport out there, are full of hooey up to their eyeballs.

You have to wonder what exactly is motivating a drug trainer apologist. I can think of three reasons. 1) They are a trainer who knows they can't compete without cheating. 2) They are an owner who does well with a drug trainer. 3) A Horseplayer who gets good tips from outfits that rely on using performance enhancing techniques.

California just suspended Triple Crown hopeful I'll Have Another's trainer Doug O'Neill, but the suspension will not start until after the Belmont. The ruling is a bit mind boggling, stating that they found that O'Neill didn't milkshake the horse but the horse in question had a TCO2 level of a horse that was milkshaked.

Here is a list of violations by Doug O'Neill since 2005 compiled by Ray Paulick:

2005: 2/5/2005, Bay Meadows, Jake Skate, Dantrolene; 3/10/2005, Santa Anita, Spirited, Dexamethasone; 5/27/2006, Hollywod Park, Wisdom Cat, TCO2; 1/17/2008, Santa Anita, Chicks Rule, TCO2; 12/27/2008, Santa Anita, Esperamos, Flunixin; 8/20/2009, Del Mar, Bench the Judge, Bute overage; 2/12/10, Gulfstream Park, Pinkarella, Testosterone; 4/3/2010, Hawthorne, Stephen's Got Hope, TCO2; 4/30/2010, Churchill Downs, Enriched, Omeprazole Sulfide; 8/25/2010, Del Mar, Argenta, TCO2; 2/5/2011, Santa Anita, Separate Forest, Etodolac; 9/17/2011, Fairplex Park, Naturaliste, Hydroxydantrolene.

Now these are violations that actually showed up in test results. Remember, harness trainer Pena has 1700 such violations in one jurisdiction, and none showed up in test results.

Horse racing has a problem. A big problem. It is a culture of chemists (trainers and vets) who are taking well educated shots when it comes to giving horses the right concoctions that get past the test lab. I'm positive Lasix helps with the overall masking of most of these concoctions.

On a positive note, a vet, Sid Gustafson came out with a must read piece in the New York Times Racing Blog (The Rail) called Alkalinization, Lasix and Milkshaking. In it, he call Lasix a performance enhancer, and hints that race day meds (and even meds given up to three days out) are not only usually done to enhance performance but are outright dangerous to the horse and the rider on race day.

This is surprising coming from a vet because usually you have to question a vet or trainer's financial interest when they discuss drugs, and same day medication, etc. Maybe the tide is turning.

Finally, slots. What does slots have to do with this post? Right now there is a grim outlook when it comes to the Ontario horse racing scene as the Ontario Liberal government has decided to put an end to the slots at racetracks program come the end of March next year. I've supported the horse industry tremendously on this blog and other places regarding what I believe is a terrible mistake by the government in ending a program that works, and is good for the Ontario economy, and even if it was destined to end, a year is not a fair time considering that the breeding and ownership of horses is a four or five year cycle.

But when I go to sites like Standardbred Canada and see apologists calling the suspension of Pena a witch hunt, my sympathy for the horsemen goes out the window, and it actually makes me OK with the ending of the slots program, anywhere. Word of advice to super trainer apologists: SHUT UP ALREADY, your attitude is akin to sealing a coffin.

Horse Racing Sure Could Use Another, But It Probably Won't Happen

Horse racing has had nothing but bad press this year.  From the cancellation of Luck to the New York Time articles and a lot of other stuff in between.  The industry desperately needs a horse who has a shot to win the Triple Crown.  If I'll Have Another wins the Preakness, the interest in the Belmont and most importantly the TV viewers, will be four or five times higher than a Belmont with no Triple Crown hopeful.

The problem is that, no matter how much I want to see I'll Have Another win, it just doesn't look like it will be in the cards.

I'll Have Another had a relatively easy trip, and the wire came at a time when it was his turn to be in the lead.  Sure, he can improve off this race, but chasing Bodemeister this time around will probably lead to less desirable results, and it appears that strategically I'll Have Another has no choice but to think chaser.

Bodemeister on the other hand is a very good horse but I think he has Facebook IPO written all over him.  Horses leading against the same competition in a previous race that was longer are often a sucker's bet when cutting back.  Horses that ran like this in drill like fashion are very likely to bounce on top of that.  And historically, the Preakness does not favor the horse who will be leading at the head of the stretch.

It doesn't matter that Bodemeister is the only speed going into the race, I think he'll be lucky to hang on for third or fourth.

So who do I like?  How about who do I love?  CREATIVE CAUSE, that is who.  He has a horrible trip in the Derby and if any horse appears that it will improve off the Derby it is this one.   He beat Bodemeister three starts back, with a very good speed figure, and I think he will show his superiority again in the Preakness.  And the distance has CREATIVE CAUSE written all over it.  I think it is just a matter of how much he wins by.

If speed comes back, Went The Day Well could easily complete the exactor, with I'll Have Another and a tired Bodemeister fighting it out for third and fourth.


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Ontario Minister Of Agriculture Tweets On The Racing Industry

Ted McMeekin is Ontario’s Minister of Agriculture. He is taking heat, and rightfully so, because he is completely going along with the OLG plan to modernize gaming in Ontario. Despite the fact that up to 60,000 horse racing related jobs, mostly in agriculture, will be affected, and many will be lost. It is questionable that the government will wind up with more revenue if the OLGs plans come to total fruition.

What is certain is that if everything happens that the OLG and the McGuinty Liberal government want to happen, there will be many jobs lost in OLG Racinos as new operator will come in and run a more efficient ship.

The new operators, foreign investors like MGM and Caesars will take much of the profit out of Ontario. Some new casino jobs will be created in places in urban centres like Toronto but it will be pale in comparison to the devastation that will be created in rural communities, as many in the horse racing community will be out of work, from grooms to track front side workers.

Those that do the hiring like trainers and farmers, will also see their incomes drastically drop, assuming they stay afloat. Trainers will definitely have to cut costs and run smaller operations, horse owners will start disappearing as it will become very difficult to make enough purse money to stay in the game (most owners lose money regardless of the purses, but lose a lot less when slot money contributes to the purse structure).

 Farmers will be selling less hay, oats and bedding, and there are countless other jobs that will be affected. And then there is money that those who derive most of their income working at the track spend within the local communities.

From restaurants to mom and pop shops to car dealerships, everyone will hurt. To his credit, which will probably lead to his future downfall, McMeekin has engaged many “Joe Blow’s” on Twitter. Here, in his own words, are his Tweets regarding the ending of the slots at racetracks program (I’ll add a little timeline and some of my own thoughts where applicable):

The Drummond Report came out on February 15th. Nowhere in it does it state to end the slots at tracks program, though there were definite leanings towards tweaking it. McMeekin is asked about his stance when it comes to cutbacks in the horse racing industry:

“the government will look at all recommendations of the Drummond report and make decisions on how to proceed.”

Even though the OLG announced on March 14th that they were ending the slots at tracks program March 31,2013 and that they were taking slots out of 3 tracks April 30th, there was quite a lot of time between another Tweet on the industry until he was asked if he would show up at the 2nd OHHA rally at Queen’s Park March 26th (his answer was pretty much a no, though I’m not quite sure he was there or not:

“thanks - already met with horsemen, trainers, vets, track owners, Ag leaders, OLG, MPP colleagues, the Finance Minister and others”

When asked to comment on the 60,000 jobs that will be affected on April 12th prior to the budget being voted for, he ignored the question:

“Moving forward will require sustainable new business models community by community. OLG will soon be talking with municipalities.”

On April 13th he was asked about the fact that the plan to end slots was abrupt and if he thought it was right not to phase it out over more time instead of turning the industry upside down. His answer shows he has no concept about the industry, the fact that horse racing is a 4 year cycle when it comes to breeding or buying a yearling. Also, how at that time could the industry know how to put a new model in place when they were in the dark about what the new deal would like:

“Want to predict the future? then create it! Clearly time to construct a new business model that works + moves industry forward.”

When confronted by the FACT that Liberal propaganda ads called the slots at tracks a Secret Deal between wealthy track owners and the PC government when it was first implemented. McMeekin shows complete lack of understand (ignorance) and gives an answer to a question not asked, however he contradicted the lies put out by his Party:

“Nothing secret about slots at racetrack past or present. OLG needs workable and constructive options for racing to move forward.”

On April 16th, after reading a story about how Hamilton would gladly host a full scale casino though they were worried about the impact regarding Flamboro Downs (everyone still in the dark, including McMeekin, that only those who have run a casino in the past will be eligible to run a casino (including racetrack casino) in the future:

“Want to lay groundwork for a new slots/horseracing business model? See Hamilton's motion to work with OLG and private sector”

Here is a series of Tweets. When asked about saving jobs and horses, McMeekin shows how in the dark he was on April 17th: Notice how he spells OHRIA wrong twice not once which would have been forgivable. To me, it shows he just doesn’t care:

“Key to ongoing horseracing industry is developing a new business model. OHIRA needs to work with OLG and host communities.”

”Slots at racetrack $ partnership will end March 31, 2013. Municipalities will work with OLG on any new business models.”

When asked about meeting with OHRIA:

“OHIRA and anyone else interested in developing a new horseracing/slot business model need to meet with OLG and municipality.”
 
More:

“Industry has struggled and must be turned around. Sell as sport +entertainment. Work with municipality/OLG on new RFP model”

Totally out of touch with the fact that horse racing is a 4 year cycle:

“Call it whatever you want. Reality is that a new business plan needs to be develooped. Working with Hamilton to do exactly that.”

“You tell me. A viable busineess plan Involves telling your story, being innovative and finding a new model that works.”

“No one throwing away an industry. Like other businesses need a viable business plan. It's not up to gov to develop your plan.”

Someone mentions that horse racing generates over $1 billion in expenditures without slots:

“i like the way you're thinking. Time to get at it and not rely on government to ensure business viability.”

May work? May totally destroy the industry and its 60,000 jobs? Is this guy for real? How about the fact that the OLG new strategy is completely speculative and that much of that new revenue will fly out of the country to Vegas companies?:

“OLG saying new strategy fully rolled-out they will add $1 billion MORE than current revenue stream. Fewer viable tracks may work.”

“Old math vs new math. OLG projects their new approach will raise up to an additional $1 Billion. New business model coming.”

Here he is mocking another Twitter who asked that the government honour their old deal:

“Woulda, shoulda, coulda won't change anything. Slots/horse partnership as exists will terminate 03/13. Time for new busiiness plan”

April 19th. He seems to know a bit more. Congrats:

“simply put - OLG will develop in collaboration with municiipalities a series of venues - perhaps some tracks and other venues.”

Drummond never stated to end the program. Where is the review?, where is the job impact study?:

“Drummond called for a review and a new Business model. I spent some time talking with him about this and other things.”

When told the OLG keeps industry in the dark, and McMeekin is supposed to represent the horse racing industry. He accepts no responsibility:

“OLG is Ont Lottery and Gaming.Comes under perview of Ministry of Finance not Agriculture. Angry? Focus your comments to OLG.”

When asked about Hamilton and Flamboro April 20th:

“OHIRA is on it. They are seen as the "official voice" of the horseracing industry. That said I facilitated a Ham/OLG meeting.”

From May 1st and 2nd:

“SO largely privately operated now. Slots being redeveloped with willing-host municipalities and with new business models.”

“the decision to terminate the slots at racetrack program was taken by the OLG based on their land-based gaming strategy.”

Sounding like a pompous ass:

“Industry will survive with new business models. Can only predict future by creating it. Stop complaining/get to work”

When told he let rural Ontario down by voting for the budget, he accepted no responsibility:

“Decision made by the OLG not me. I believe horseracing will survive with new business model(s) and will work to that end.”

May 10th to present. He finally knows that there will only be rental agreements with the racetracks, so the deals will be between tracks and the new operators. He seems mixed up and clueless, oh and pompous and uncaring:

“so get on with developing new business models in concert with tracks/OLG and municipalities. Predict future by creating it.”

“Key is tracks/municipalities and horsemen working together to est. interest in new business model. Then discuss RFP with OLG.”

“I hear you. OHIRA/OLG the two key players on the horse side while municipalities/OLG will make RFP and venue decisions.”

Here he debates a PC MPP who supports the slots at track program. Again, he abstains himself of any responsibility but he does keep with the theme that he really doesn’t give a care what happens to the 60,000 people in the industry:

“Pointing fingers is easy and lazy. Use your skills to help OHIRA/OLG develop new effective business models”

“Try being honest rather than partisan. Decisions on horseracing were taken by OLG. OLG ?'s go to Minister of Finance”

My turn to confront him. I hate disingenuous behaviour. Again, he shows no knowledge that the industry is a 4 year cycle. It is kind of like telling a 64 year old that he won’t get his pension next year, but he “thinks” the industry can make a new plan by next year without much devastation:

 Cangamble: RU being blatantly dishonest or just plain ignorant. Drummond Report never stated to end slots program.

McMeekin: @Cangamble Talked openly about need for land-based gaming strategy and rationalization of slots at tracks. The study led to end of program.

Cangamble: @TedMcMeekin Horse crap sir. There was no study based on the Drummond Report the gov did. I don't know of 1 Drum. rec to be implemented.

 McMeekin: @Cangamble Gov. said all along Mr. Drummond would make recommend and the gov make decisions. Several Drummond recommends not implemented

McMeekin: @Cangamble OLG land-based study parallel to Mr. Drummonds work. The slots/track deal will end 3/31/13.Time to find alternative bus model."

Finally, he implies that the government (not the OLG) has been working on their plan to kill racing for two years. Consultations? With who?:

“Gov. is not one-dimentional. The study took two years. There was extensive consultation and then some tough decisions taken.”

I think any partial person can conclude that Ted McMeekin simply doesn't care what will happen to up to 60,000 people with jobs either directly related or partially related to the horse racing industry. It is hard not believe that McMeekin is nothing but Dalton McGuinty and Dwight Duncan's bitch who was given a political favour (yeah that happens) to get his new position. It may sound harsh, but I believe its true.

After all, if you check his resume, he has little experience with the agriculture industry, and obviously doesn't even understand the horse racing industry, or the repercussions of cutting the slots program with tracks within a year. Both he and Dwight Duncan don't even know the exact number of people who will be impacted by this "OLG decision." That isn't responsible government, not even close. He may appear to be like a pompous buffoon with his position and knowledge about the Ontario horse racing industry, but he still looks like a scholar compared to Finance Minister Dwight Duncan (my border collie does too, so I'm not saying much).

Both should do the right thing, and resign their positions yesterday. They make Ontario look like a farce. To call them embarrassments is to give them too much credit.

To check out McMeekin on Twitter (though he might close his account after I hit publish): @TedMcMeekin Dwight Duncan: @DwightDuncan And finally, if you like to laugh, here is parody Twitter site that mocks Dwight Duncan(It might actually reflect what Duncan is really thinking, not really saying): @HonestDwight I don't know about you, but I expect more from politicians than what I've seen from these elected officials.

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.`

Chantal Sutherland Nude? You Decide! Oh, And My Derby Picks

Just did a Google search on the internet and I found this alleged picture of Chantal Sutherland that was allegedly in Vanity Fair, allegedly taken by Bo Derek:

My Kentucky Derby Picks I like Hansen. Ramon Dominguez is arguably the best jockey in North America, and he got to choose between two contenders. He picked Hansen. Hansen had a real good speed figure two starts ago, came back 42 days later to run a great prep race, leading on polytrack most of the way in pretty quick fractions. With that race under his belt, I expect a peak performance. The gamble is can he rate? I think he can. Trinniberg figures to take no prisoners, and morning line favorite Bodemeister won't be too far off in second. I question whether this one can rate, so I am pitching him. Alpha, the horse Dominguez didn't choose looks like he'll be part of the exotics when the official sign goes up. Creative Cause can also roll in for a piece of the pie. He hasn't been worse than 3rd in 8 mostly difficult races. The Cangamble long shot is Optimizer. I expect a perfect trip and he is prime to reverse his form from that last start. His previous race makes him a contender.

Will Bingo Halls Get The Pulled Slot Machines In Ontario

Barring a last minute miracle, April 30th is the last day slot machines will be played at Fort Erie, Sarnia, and Windsor Raceway.

These three locations were selected because of their proximity to non racetrack casinos, as the OLG appears to be either helping the big casinos show a profit and/or they are attempting to prop up the numbers in those casinos for potential sales or to entice operators to get involved at other locations.

The Ontario government and the OLG needs to attract gaming operators to take the risks in building new locations, expanding old locations, and taking the burden of employee expenses and maintenance off their hands.  In other words, the government is kissing the butt of American companies like Caesars and MGM all at the expense of the Ontario horse racing industry, and all the jobs and  the economic impact that the industry creates within Canada, numbers that the government don't seem to know  (Minister of Finance Dwight Duncan's mindless questioning of the industry claim of 60,000 people who are either employed full or depend partially on horse racing) or if they do know, they don't care about it.

Andrea Horwath and her NDP Party voted for the death of the horse racing industry on Tuesday by having her Party not vote against the Liberal budget.  A vague concession of transitional aid for the racing industry was agreed on, but nobody has a clue what that means, except that possibly the best case scenario, it could buy another year before we see the major repercussions of losing close to half of the industry's work force, and the impact on businesses that somewhat depend on the racing industry as well.

The OLG is not going to let those slot machines rot, as each is a potential money maker.  Their destination is unclear, but speculation on this topic has uncovered some interesting ideas, and possible implications that the end of slots at racetracks deal was something that was in the cards for some time.

Bingo halls have been in the news of late.   Earlier this week, the Bingo Hall in Sudbury announced that they will start expanding their gaming in May.   Two days ago a headline read: Mississauga to Participate in Charitable Bingo and Gaming Revitalization Initiative.

Further investigation lead me to an OLG press release from a year ago, explaining the expansion plan:

"The collaboration of OLG, the OCGA and the CGAO heralds plans for an expansion in the number of Gaming Centres offering an array of new electronic games. The new games will allow Gaming Centres to be more competitive and appealing to a broader demographic, while providing a different gaming entertainment experience from traditional casinos or slots at racetracks. This initiative is intended to offer players an interactive environment, a new way to play bingo and charitable social games and enhanced customer service."

Another interesting thing...I'll report, you decide....one of the major players in the Charity Bingo Industry is Boardwalk Gaming and Entertainment, a private investment holding company controlled by Larry Tanenbaum (The Kilmer Group).  


Tanenbaum is best known as the Chairman of Maple Leaf Sports and Entertainment, but his ties to the Liberal Party and Ontario Premier Dalton McGuinty are undeniable, and his other ties with the city of Toronto makes him a potential huge benefactor as a possible casino operator in Toronto:


"Larry Tanenbaum served as National Revenue Chair of the Liberal Party of Canada during Prime Minister Paul Martin’s term of office. He currently serves as a member of the Ontario Investment and Trade Advisory Council, and recently served on the Independent Fiscal Review Panel of the City of Toronto and the Mayor’s Economic Competitiveness Advisory Committee of the City of Toronto. He is a member of the Advisory Council, Toronto Board of Trade and is an Honourary Co-Chair of the Greater Toronto Marketing Alliance."

The Charitable Gaming initiative apparently goes back 5 years, started at one of Boardwalk's Bingo Halls, but it started to gain legs around a year ago.

The OLG and Ontario Liberal government seem to be one and the same with their "there is the door" approach to Municipalities when it comes to trying to convincing them to expand gaming.  "If you don't want gaming, there are plenty who do."  Mississauga recently heard that pitch, which also included the threat of closing the Bingo Hall in the near future due to declining numbers.

And then you have Oakville, a town that apparently wants Charity Bingo, but doesn't want slots machines and VLTs.  The thing is that OLG won't agree to expand Bingo there without allowing for the possibility of bringing in machines the town is against.  Again, threats that the Bingo Hall will possibly shut down without the agreement are being used to convince Oakville Town Council.

Seems to me like the government and OLG and Ontario government is using a Mafia How To Handbook in order to get this Modernization of Gaming Plan of their to work.

Also, doesn't it seem odd that the government and OLG is going out of their way to help declining Bingo businesses, and casinos that are losing their operators money, while ending a business partnership with racetracks that was beyond successful?

For a real eye opening read, check out Item 3 in the Mississauga Corporate Report for April.   There is a discussion of the real decline in Bingo, and the Gaming Revitalization Initiative.  I found it interesting that according to projections the Bingo Hall, the government and the Charities will all wind up making more money.   Wait a sec, does that meant the government is subsidizing Bingo Halls?  Anyway, the responses by the OLG on page 44 shows they are playing hardball on many issues, and at the same time, not guaranteeing the Bingo Hall will in fact not lose money.

It does appear from looking at the projections that the OLG will net a higher percentage of revenues from Bingo Halls than they do currently from the racetracks, with less risk as well.  And assuming they can capture the same amount of degenerate slot players to play in the Bingo Halls instead of racetracks, they will come out way ahead.  But to me, that is a huge unnecessary risk the OLG and Government is taking on.

Mississauga accepted the deal with the Devil.   It probably opens the door for a full scale casino there if Toronto says no to one.  The big question is will both Toronto and Mississauga need a referendum to build a new casino.  We might have a good idea about that when a Private Members Bill is vote on May 3rd.  The PCs are definitely on board with making referendums mandatory.  This gives Andrea Horwath a chance to redeem herself as well, she stated publicly that municipalities should have referendums before a new casino is built.

If I am right and slot machines and VLTs are on their way to Bingo Halls, it will not bode well for racetracks who will be in search of a new deal next April.  More competition will not create many new addicts, but it will attract some of the addicts to sites outside of racetracks, which means less revenues no matter what the new deal looks like.

The OLG should have just stuck with privatizing gambling at racetracks, giving the racing industry the ability to partner and make around the same as before while expanding gaming on the racetrack grounds, grounds that are completely acceptable to majority of people in Ontario.  Instead the inept Dalton McGuinty and his Minster of Propaganda Dwight Duncan are hell bent on destroying jobs, families and a thriving industry.  What is motivating them to take this unnecessary risk?   It is either political favours or a vendetta against perhaps the now marginalized OHHA, or most likely both.

Hasty Decision To End Slots Program Must Be Reversed

The horse racing industry in Ontario is now in the homestretch regarding the slots at the racetrack program that has been in place since 1998.  Even though, the Liberals and the OLG have already decided to end the program, the official sign won't be posted until next week when the budget is voted on.

The fate of thousands in Ontario who rely on the horse racing industry to butter their bread is in the hands of NDP leader Andrea Horwath.  Horwath seems hell bent on making a deal with the Liberals to get the budget through and avoid another provincial election, that many Ontarians would love to have, but many would like to avoid.

One of the deal pieces is the slots at the tracks deal.  This morning, Horwath already conceded giving up on the removal of HST on home heating bills, one that won't cost her any votes.  However, she stands to gain a lot of popularity if she can get the government to increase income taxes 2% on those making more than half a million dollars, something that over 70% of Ontarians agree on.

The racetrack deal is probably second or third demand left on her list (which also includes not accepting a wage freeze on public sector employees, most of whom are overpaid to begin with).   The racetrack deal is crucial to her to win future votes from the Liberals, and stay true to her party's line which frowns upon destroying livelihoods and cutting the job force.

Since Tim Hudak and his PC Party has opted out of negotiations regarding the budget, the horse racing industry is relying on Horwath to get the decision to cut slot revenues out of the purse structure equation to be reversed, or if not reversed to vote against the budget and cause an election soon.

Poll numbers indicate that the PC's would win a minority government, but the NDP is a very close second, and depending on how this comes down, they could very well win the election, as the PC's have shown zero personality throughout this process.  One thing is for sure, the Liberals would finish third, and Finance Minister Dwight Duncan's political career would be over.

Horwath has to realize something the Liberals don't seem to get, that the Liberals are not a majority, so everything that they proposed is not carved in stone.


Hasty Decision
The decision to end the slots program looks like it was made by someone with a vendetta, and not a responsible decision.  There is even speculation that McGuinty was pissed off at the OHHA for campaigning against him last election.

How in the world does OLG President and CEO, Rod Phillips, not know why the successful slots program was cut?   It was obviously not his move, nor was the ending of the program recommended in the Drummond Report (only that it should be re-examined on a track to track basis).

No, this has vendetta and/or corruption written all over it.

Minister of Finance Dwight Duncan has come across as either a liar or an idiot or a mixture of both with his statements regarding the slots partnership with the racetracks, first by calling the revenues tax dollars (when anyone in Ontario pays income taxes or GST, not one dime goes to the tracks), to calling it a subsidy (if MGM gets a casino in Toronto, will their profits after cutting in the Ontario government and paying expenses, be considered a subsidy too?).

But the biggest thing that makes Duncan look like an inept fool is doubting the industry and government claim that there is 60,000 jobs in Ontario that either rely fully or rely somewhat on the horse racing industry.  Whether that number is 1, 60,000, or 250,000 I think it would be expected that a government that "makes a tough choice" would know exactly how many jobs would be affected and what the impact on the communities would be as well.   Especially the Minister of Finance.  The government is supposed to weigh in maximizing revenues versus social impact and job creation.  Duncan or the Liberal government doesn't have a clue how much social hardship, unemployment and welfare ending the slots deal will create.

Duncan has completely alienated himself from his home riding in Windsor, and thus killed his political career regardless how this plays out.  I doubt he could even get a job mucking stalls at Flamboro Downs after the dust clears.  He might be in line to get back in the rehab business especially with all the casino gamblers he is hoping to create.

POLITICAL UNCERTAINTY
The Modernization of Gambling In Ontario plan is full of holes and questions.  This is another reason why ending the slots deal makes very little sense.

First some background.  Last year over $1.7 Billion dollars was lost at Racinos in Ontario.  Tracks and Horsemen received 20% in total, municipalities around 5%.  The remaining $1.28 billion was left for the OLG to pay casino and OLG wages, and casino and OLG expenses and upgrades, etc.   The balance is used for a variety of government expenditures.

As for the tracks portion, many tracks in Ontario are non profit which means they are mandated to reinvest the monies back in the track (monies that go back in the economy).  The Horsemen share mainly goes towards purses, most of which stay in Ontario.  A misconception (attempted to be perpetuated by the Liberal Spin Boys) is that the monies go to rich owners.  First off, there are many owners who in the middle class, and secondly, even with slots monies inflating purses, most horse owners (outside of trainers who own their own) lose money.  In fact, because  they collectively lose money, they contribute more money to the economy than they receive in purse monies.

True, there are international (mostly American) outfits which come to Ontario to race, but they spend a lot of money here, and conversely, Canadian owners and trainers frequently bring back monies from the USA, or at least receive and spend money in the USA too.

The plan going forward is to privatize gaming in Ontario.  In other words, the OLG will no longer pay for slot employees, casino expenses, etc.   Personally, I have no problem with privatization.  The government should not be involved in the gambling business, though that is not exactly what is happening here.

Privatizing will take away from the OLG's risk going forward, and the new slots operator to start anew when it comes to employee wages, something that appeared to be getting out of hand at racetrack casinos.  Still, I would expect the new operator who assumes the risk would expect the equivalent of around 20% of all revenues to make it worth their while.

The OLG and Liberal government are hoping for RFPs (Requests for Proposals) from private businesses (which can include racetracks) to take over or move slot operations.  They are also looking to have the new operators add table games, and perhaps sports betting.  However, there is no real mention of how much of a take they expect from the new operators.  There has been speculation that the OLG wants 100% of the slots revenues.  Meanwhile, at Caesar's in Windsor, the OLG takes 20% of total revenues (the revese of racinos), and the casino operators still lost money last year.

What I'm stating here is that in order to attract non fly by nighters to operate casinos who are willing to build and expand, the OLG must offer them a significant chunk of the total gaming revenues including slots.  Table games are very expensive to operate versus slots.

I'm not even sure if anyone can say, what the heck, I'll operate a casino.  I'm sure there are some regulations that make it that a company must have a strong balance sheet and assets before entering an agreement to run a casino.   There is also the question of who assumes the risk of problem gamblers who may turn around and sue because they put themselves on the self exclusion list.  That could cost a casino operator a pretty penny just to defend such a case.

And then there is government uncertainty.  Just as an inept government can come along and end the slots program, a new government can come along and start it up again.

How would you like to be a casino operator and have the government change the rules on you with one stroke of the pen?  It happens.  And don't kid yourself, it will be part of both the NDP's and PC's platform come next election, whenever that is, if the slots program officially ends.

Let not forget that most municipalities will vote against a casino that is not at a racetrack if a referendum is called.  This includes Toronto, which is speculated to be a major reason for the governments quick movements to end the slots program.  Racetracks are the only places deemed acceptable for casinos in most instances, that is why they got the partnership deal in the first place.

What this all means is that the government will have to give their new partners far more than 20% of the slots revenues they are giving to tracks today (again, the idea it is a subsidy is laughable).   And there is no guarantee they will find partners dumb enough to do business with them either, or locations they can either move to or start up in.

The government could easily make less money bottom line with this new initiative, and regardless, they will never live down the job losses caused or the social hardship that this "tough choice" will create.  Economics 101 suggests that the deficit will actually increase if the decision isn't reversed.

See also Sportsman: Fight For Our Future  and Pull The Pocket: Strategic Problems and Bad Policy

Around The Horn

Luck

I was getting into it.  It looked like it was going somewhere.  Character development was occurring rapidly.  Then a horse flipped and died.  A fluke accident.  Show was canceled.  A fight to keep it going would have occurred if not for the below par ratings.

Breakdowns 

Breakdowns have always been an unfortunate part of the racing game.  Intrigued about them when I was a kid at the track, but I've learned to hate them, and I actually become very uncomfortable watching a horse breakdown now.  I hate watching steeplechase racing, I find it almost barbaric.

That being said.  The industry needs to shut up trying to defend itself from the Times article.  Move on, and reduce breakdowns as much as possible.  End of story.

Drugs

Written about drugs in horse racing many times.  The Times article is going to force federal regulation, and I think that is necessary as the industry is too dysfunctional to get together and say enough is enough and Horsemen who seem to constantly defend the use of drugs are hurting the game immensely.  Again, apologists for drugs, shut up.  Lets get this game to grow.

We need uniform drug testing in every racing jurisdiction.  Cheaters need to be treated as criminals.  There needs to be a major deterrence to use those who experiment with drugs not being tested for. The appeals process needs to take days, not years.   Woodbine seems to be on the right track.

Track Takeout

We've seen takeout start to edge down recently.  Some tracks need to be applauded (Hastings, Charles Town, Beulah to name a few).  Still a long way to go to compete with other forms of gambling and grow the game properly.  Check out HANA's 2012 Track Ratings for Takeout info.

New Carryover Blog

Just about every thoroughbred and harness racing carryover can be found here.  Lots of good links too can be found on the sidebar.

New Horse Racing News Aggregator

Check out Goatzapper  Links to what is currently happening in the horse racing world.  Updated usually at least a couple times a day.

It Is Easy To Have Zero Respect For McGuinty and Duncan

The Ontario Liberal government and the OLG is plowing ahead in their efforts to kill off Ontario's horse racing industry. Notices were sent out to at least 3 more tracks (and perhaps all the remaining tracks) on Friday, which stated that site holder agreements between racetracks and the OLG will end March 31, 2013.

So unless things change, tracks and other entrepreneurs/businesses will now get to compete for the right to house slot machines. The OLG will be looking at who will give them the best deals (making the OLG the most money) in each municipality. The biggest change is that slots will not be operated by the OLG anymore, so the only expense the OLG will now have is the cost of buying machines (the way I understand it), which they will lease out to the new private casino operators, or make it part of the deals.

What the OLG is hoping for is a bigger cut from the $1.7 billion in gross revenues that slots produces a year. Part of the problem with the OLG operations was due to paying for too many employees and upgrading casinos, and these expenses were mounting each year at an accelerated level. And of course, there is the issue of $345 million that was being earned by tracks and Horsemen for having slots compete with parimutuel betting at the racetracks. Lets be clear, that $345 million isn't going to be cut to zero, because anyone who operates slots is going to take the risk if a healthy profit can be realized as many risks are involved.

For example, dealing with a government that seems to be able to do what they want when they want is sure to scare off any potential partners. The other big thing is that the government has stated they will get into internet betting this year, which means that slot players will have the ability to lose money from home. This is sure to cannibalize slots wherever they are physically located. I believe the government will probably settle on giving out $150-$200 million (based on past years total revenues) in potential profit to the new private slot operators in total, I think any number lower than that is unrealistic. Tracks may be able to live with that, but will they get the chance?

Distrusting the Ontario Liberal government as I do, I am sure that they know they have offers on the table right now in many cases that they find acceptable right now (most likely friends or friends of friends that are going to get favors from the McGuinty gang). The way the government has acted so far, tells me that there are quite a few dirty deals looming, as the Drummond Report which came out barely a month ago stated to review the racetrack slots deals on an individual basis....and this obviously has not happened:

Recommendation 11-11: Review and rationalize the current provincial financial support provided to the horse racing industry so that the industry is more appropriately sustained by the wagering revenues it generates rather than through subsidies or their preferential treatments.

Recommendation 17-4: Re-evaluate, on a value-for-money basis, the practice of providing a portion of net slot revenues to the horse racing and breeding industry and municipalities in order to substantially reduce and better target that support.

But then again, the Drummond Report also recommended closing a Niagara Casino (didn't happen), closing an OLG office (didn't happen), and cut out all day kindergarten (didn't happen).

As for all day kindergarten, to me, it shows that the government isn't really serious about reducing the deficit. All day kindergarten costs Ontario taxpayers (yes, it is paid for out of tax dollars, unlike the slots revenues which is after tax monies lost by casino gamblers) $300 million a year. It is simply glorified day care. I remember half day kindergarten and the only thing I learned was not to eat paste, and the only thing I remember is getting a mat to have a 15 or 20 minute nap each morning. All day kindergarten is a luxury that saves parents day care money. It was an easy thing to cut, regardless of what they do regarding horse racing.

The freeze on public sector workers is OK, but not nearly enough. If the government was really going to get tough, they would cut the pay of 95% of the 79,000 on the Sunshine List (those who make over $100,000) in times when the government can't afford them. My reason is pretty simple, most of the people on this list couldn't get anything close to the same type of money and benefits if they were in the private sector. This is simply the government's ineptness in allowing salaries to get out of hand. Cut their pay 5%-10%, other than doctors whose pay I wouldn't touch, nobody would quit their jobs if this was done. If a government was serious about balancing the budget, this would be a no brainer.

Instead, the Liberal government went on a propaganda campaign, rivaling that of Hitler's Germany, pitting all day kindergarten and health care against the horse racing industry.

Calling the revenues the tracks and Horsemen received subsidies was the first big lie. To quickly refute it, if the government does end up privatizing the casinos, is the money that the new operators (in some cases it will be racetracks) make a subsidy? Of course not. It is money made due to a business deal with the government. It isn't tax dollars, as Goebbels Duncan tried to make it, but after-tax-dollars, that the government was sharing with their business partners.

The Biggest Reason Why McGuinty and Duncan Can't Be Trusted

Where is the job and community impact report on what happens to those who make their living or most of their living in the horse racing industry or the communities that have horse racing?

You'd figure that a government about to kill an industry would know how much unemployment it would cause, how many people are exactly in the industry, how much impact potential job losses would have on businesses within the communities affected, etc. This does not to even appear to be the case in any shape or form.

Goebbels Duncan recently spewed out:

'the employment figures showing 60,000 people are employed directly or indirectly by horse racing are "grossly exaggerated," and that "nobody" buys that number.'

I'll admit that I find that number to be high, unless one is talking about things like restaurants that may lose 15-20% of their business, as well as similar types of scenarios, however it appears that the Liberal government themselves put out reports in 2004 as well as 2008 which pegged the number of those employed directly or indirectly to be upwards of 55,000 people.

How can a move to cut this many potential jobs without at least an attempt at due diligence? Of course that propaganda machine spins it another way, McGuinty and Duncan, are promising the creation of 2,100 to 3,000 jobs from this "modernization" plan, but fail to address the destruction this plan will cause.

How much due diligence was put in on their new plan? I have zero faith that it was very much.

OPSEU is demanding answers from McGuinty regarding the rumours that Ontario Place will potentially house a casino.

It seems that within only a few months since getting elected, McGuinty as done a complete about face regarding gambling in Ontario, not enough time to have a concrete plan, making their decisions regarding the horse racing industry appear very hasty.

CAN MCGUINTY BE STOPPED?

A referendum on new casinos in Toronto or anywhere close to a track would be a death knell for McGuinty's casino plans. In almost every instance, if not all instances, the people would vote against it, especially if a racino already exists.
McGuinty has stated that the law that makes it MANDATORY to have a referendum (public vote) that was in the OLG Act of 1999 has expired. It may be true, it may not be. As we've seen, everything McGuinty or Duncan needs to be fact checked...I wouldn't trust them if they said that the earth revolved around the sun.

According to this article, a referendum is still needed unless the Ontario government has changed the rules. If a referendum is required, it could put the tracks in a powerful position if they acted together, as they would be the only places (outside the non track casinos that exist right now) that can legally house slots and casino gambling. The tracks can dictate a similar type of deal that the government has ripped up.

If a mandatory referendum isn't required. It is time to put pressure on Hudak and Horwath to make it required again. Both were recently quoted saying they believed it should be required:
"Both Horwath and Hudak say the province should re-implement mandatory referendums for new casinos."

I don't know what the hurdles are that are required in making a referendum mandatory again, if they aren't mandatory now, but the way things are going, either playing the card against McGuinty which trades off allowing him to open a Toronto casino without much of a hassle or playing hardball and preventing a Toronto casino from opening altogether seems to be the only good options available to the racing industry in Ontario right now.

I'm all for privatization of the casinos. But I also think that they belong at racetracks and I think that a deal where tracks and Horsemen wind up with 60-75% of what they used to get would be the fair thing to do.

Fate Of Ontario Horse Racing Is In Andrea Horwath's Hands

Ontario Premier Daulton McGuinty's budget needs to be voted on because the Liberals have a minority government. Tim Hudak's leader of the Progressive Conservative Party has already stated he will vote no. This leaves the NDP and their leader Andrea Horwath the ability of either passing the budget or voting against the budget which would trigger a provincial election. She is also in a position to negotiate some changes in the budget, a budget which includes the ending of the slots deal with racetracks in Ontario.

Unfortunately, politics isn't about doing what is right. It is mostly about who will give you the most donations in the future, paying back those who donated in the past, and making decisions based on the current status of one's party with an eye towards more power and seats in the future. Oh, and the odd dirty deal where some money slide under the table to the politician.

The NDP really gained during the fall election, winning 17 seats. They still came in third. They would not be expected to even come close to a majority if they forced another election. Popularity for the Liberal Party has dropped significantly since the election, which means that the PC could possibly win with a majority. They would definitely beat the Liberals now that the Liberals have alienated the horse racing industry couple with the public's knowledge regarding ORNGE. But a PC victory isn't good for the NDP's objectives, as they are to the left of the Liberal Party, which is left to the PC Party. However, putting the PC's in charge might be a decent gamble for the NDP going forward, banking on the PC's to screw up so that the NDP would have a shot of winning the following Provincial election (but I don't think they thinking like that).

The other factor to consider is the cost of the election. Both the PC's and the NDP are still in the hole from the fall election. This definitely is something that will hold Horwath back from causing an election within the next two months.

Horwath has been inundated with calls from the racetrack community since stating she will listen to the public regarding whether to vote yay or nay for the budget. But I'm pretty sure the decision has been as long as she can make it look like she won something through negotiations with the Liberals prior to the vote.

It would be great if one of the concessions would be a continuation of the racetrack slots deal until at least 2015. Though this is unlikely because the Liberals seem to have their heart set on mindlessly destroying the horse racing industry in Ontario. I'll get to that in my next post.

Fort Erie Racetrack Beyond 2012

There will be a horse racing season at Fort Erie this year. Beyond that, the prospects are not very good without outside help.

Grossly unfair as it was, slots from the track will be pulled at the end next month, barring a very unlikely decision reversal by the OLG. The OLG has assured that the expected payments of what would have been if the slots were in place, would still be paid to the track this year. However, as it is right now, next year, Fort Erie is on its own.

Fort Erie is in big trouble if it has to fend for itself. From various sources and using extrapolation, a ballpark figure on what it costs to run a track for a season can be guesstimated. For the past three seasons (including 2012), thanks to the negotiations of the EDTC with the government, Fort Erie was able to receive $5.6 million instead of the $2.9 million they were only supposed to get a year from slot operations. Purse accounts received $2.9 million from slots as well, which represents 10% of the slots revenues at Fort Erie.

The Town of Fort Erie also pitched in as well from part of their municipality share of slots to try to keep the track at a break even level, as did the HBPA.

Fort Erie does give out around $100,000 a day in purses, which means that around $4 million must be generated by wagering. This also means that the track makes around $3.5-$4 million from wagering.

Nordic Gaming, the company that owns the track, leased it out to the EDTC the past 3 years, and in return received $100,000 in 2010, and $600,000 last year and this year.

In total, if Fort Erie to run a 75 day season in 2012, it appears to need more than $10 million to operate. Though the EDTC does not pay staff inside the casino, I imagine they will be able to cut some jobs that might be related to the casino from outside of it.

WHY IS HORSE RACING NEEDED AT FORT ERIE

In Ontario right now there are two thoroughbred tracks. Woodbine is home to large purses, and owners who pay big bucks to keep horses in training. Fort Erie is Woodbine's minor league affiliate. If a horse can't compete on polytrack or can't compete for $10,000 claiming or greater, they generally wind up at Fort Erie. Sometimes horses are given up on too early, or improve enough, and the might wind up back at Woodbine, and there are quite a few horses that toggle between the two tracks.

The existence of a B track is very important to most Ontario owners and breeders. The owners need an out that is simple. If the out for an owner of a horse who isn't cutting it at Woodbine is to ship to the US (which requires finding and trusting a new outfit miles and miles away in most cases), or trying to quickly get rid of the horse (which could, unfortunately, mean sell for meat), the owner will quickly become disillusioned, and most small owners and partnerships will either drastically reduce exposure or get out of the game completely.

This is not good news for breeders who need as many owners in the game to keep the demand for horses as high as possible. Many small owners also breed, without a B track, they will disappear as well.

From Woodbine's standpoint, with fewer owners and fewer horses, they will have a very difficult time filling races over as the years go on, and that is going to be very bad when it comes to their betting handle.

Woodbine is trying to become a recognized A track but will resemble Penn National instead.

Could Woodbine run a bunch of $5,000 claimers? Even if they wanted to, I doubt it. At $80-$100 in day pay rates, owners are not about to hang onto those horses even if they could get stalls at Woodbine. And those who might be able to pay Fort Erie rates ($45-$60 a day) while racing off a farm or training center, will quickly learn that they will be at a serious disadvantage running against horses dropping from $12,500 who have been training at Woodbine.

How about Ajax taking over as the B track location? They did build a five eighth oval, but unless they can house around 500 horses minimum in their backstretch (which they can't right now), it just won't work, for reasons cited above. There would be too much of a disadvantage and overall hassle if too many owners need to ship from anything but a racetrack.

Fort Erie is the perfect locale for a B track and it just doesn't make much sense not to have it around.

THE OPTIONS FOR RACING AT FORT ERIE BEYOND 2012 (outside of closing the track down altogether)

1. If nothing else changes, a shortened season with maybe 35-40 race dates might be in the cards. If expenses to run the tracks can be cut down to around $4-$5 million this is a definite possibility. But a shortened season means even fewer outfits will be attracted to stable at Fort Erie, and also may not be enough of an out for the Woodbine based owners and outfits. This will probably create shorter fields at both Woodbine and Fort Erie.

2. A new owner willing to gamble (or Nordic willing gamble...unlikely) that they can make a go of it by cutting expenses and focusing on horse racing handle, that they can make Fort Erie close to profitable. This is a long shot on the surface, and it might be appealing to someone with lots of money to lose who just wants to own a racetrack.

3. The OLG and Ontario government has stated that they are looking to privatize slots in the short term. However, Fort Erie wasn't even given the opportunity because of its proximity to the Niagara Casinos. The fact that Fort Erie is a different municipality than Niagara makes this move by the OLG even more unpalatable. I'm not a lawyer, but the move by the OLG has anti-trust written all over it, and if the OLG goes the privatization route at racetracks, I believe that Fort Erie should be given the opportunity to run their own slots. At this time, the OLG hasn't even hinted at what the new cut would be (they used to get 75% of slots revenues, but had to cover all the casino expenses. They receive 20% of gross revenues at the Caesar's at Windsor which the OLG does not operate and pay casino expenses, and Caesar's operators lost money even with that deal last year).
Depending on Fort Erie's ability to get back slots and what the new deal would be makes this scenario a possibility that has some hope.

4. An actual government subsidy to keep Fort Erie alive. The loss of slots jobs will be devastating enough to all businesses in the Fort Erie area, but loss of the track will turn Fort Erie into a ghost town. Whether this gives the Ontario government reason to step in, in light of their mandate to reduce the deficit, is up in the air, and something I wouldn't bank on. Small help from the HBPA will most likely happen if needed.

5. Woodbine's future is also unclear. They are perceived to know more than what they are saying, but that might just be a perception. Do they know what the new cut will be, do they know they are getting expanded casino gambling? Or will they get a much lighter cut than they are getting right now, and with the OLG getting into internet gambling soon, how much cannibalization will there be on current and future casino customers?

Whether they realize the importance of a B track now or not, they eventually will. And if no other option keeps Fort Erie alive next year, they might just step in and lease the track or even buy it back and operate it knowing they will most likely lose some money.

One thing track closures do for Woodbine is it increase their "home market" for HPI where they don't have to split betting commissions with tracks that close. If Fort Erie goes under, or if Woodbine ends up leasing or owning the track, they wind up with a full market of over 450,000 residents in the Fort Erie home market. A market that really hasn't been advertised probably because it isn't that profitable with a split....but without a split, it would be worth Woodbine's efforts most likely. Bottom line, because there is a lot of overlap in Horsemen operations between Woodbine and Fort Erie and factoring in more betting revenues, it might not be that difficult for Woodbine to run a break even operation at Fort Erie in an effort to maintain Ontario's current level of thoroughbred racing and breeding and horse ownership.

6. In a worst case scenario, Fort Erie revenues will now be totally dependent on what it makes on customers betting horses. The EDTC has not shown that they understand the Horseplayer yet. They did drop takeout on the Pick 4 last year to 17.3% (something that increased handle on that bet), but their total handle dropped 17%, which was much higher than the industry drop in 2010.

There has been a shift in the mentality of the Horseplayer lately. They've become more informed. Many are cognizant of track takeout. Takeout on doubles and exactors at Fort Erie is over 26%. There are most likely many who will not even look at Fort Erie because of that. Then there is the churn factor and its psychological effects. Slots works because they have a payout of around 90-93%. Players last, and even think they are winning when they are not...or at least think they are close to winning. The longer they last, the more they want to come back, the more likely they are to go more and expose more friends and family to their game. The same is true of horse racing, and even if it means paying out an extra $2 or $3 a day, that money will wind up back in the windows.

At 26%, whether the player knows it or not, they have no chance of even thinking the game is somewhat beatable.

Fort Erie must reduce takeout on exactors and doubles to 21% absolutely tops (Woodbine charges 20.5% for these two wagers). If that is something that Fort Erie management can't rationalize on its own, how about bringing in rolling doubles to make up for any deficit they think they might overcome (though I strongly believe that without having to resort to expanding the wagering menu, just dropping the exactor and double takeout will have a very positive effect on both handle and bottom line for the Fort Erie track).

Barring a bad reduction in field size, on track handle should rise just because slots are no longer available at The Fort.

The reality is almost $30 million was lost by "gamblers" at the slots in Fort Erie last year. Though Horseplayers and slot players are generally not the same person, there is some overlap and couple that with the racetrack now being the only game in town (OK, Fort Erie does have a Bingo Hall), it can be expected that at least some of the $30 million will now be lost betting on ponies. How much is the big question. But it doesn't have to be a huge percentage to fill in the gap that slots is leaving.

The $30 million lost on the one armed bandits means that over $300 million was churned by slot players. In order to bring in $8 million extra to the track and the purse accounts, that means that around $45 million more needs to be churned on
track, and this includes simulcast wagering too. Believe it or not, I don't think that something like this is totally impossible. Even if they can capture another $20 million churn, it would help prospects for next year immensely.

But attracting churn means lowering the takeout, and paying real odds on simulcast races despite whatever takeout the other tracks have (it really pisses off players when they get less than the real payoff is).

Fort Erie needs to get with the mentality that it isn't a crime to let players leave with money in their pockets. They won't get cannibalized by slots when it comes to that money, and a player that leaves with money is a lot more likely to come back.

Are The OLG and Liberal Government Flying By The Seat Of Their Pants?

This modernization plan by the Ontario Liberal government and the OLG is starting to remind me of a Jackie Mason monologue: Do you know whats going on with slots and the racetracks? I don't know but someone else must. Where can I find this someone else? Start with Dalton McGuinty, he seems to know most of what needs to be known. But does he know everything? Not everything, maybe the OLG knows everything. They don't seem to know everything either. I think they thought they knew everything, but they don't know everything anymore. How about Finance Minister Dwight Duncan? He seemed to know everything too, but he doesn't know everything now, except maybe when it comes to donuts.

To make sense of the above, we'll have to look at some real information and real laws that are now coming out of the woodwork.

First, in my previous post, I stated that slots were taken away rather quickly from Fort Erie, Hiawatha and Windsor race tracks because it is the OLG's goal to sell the nearby casinos, so by taking away the slots from the tracks, the bottom line revenues for the casinos would go up making them more attractive to buyers.

Looks like I was wrong as it is illegal for a private company to both own/lease and operate a casino in Ontario according the Criminal Code of Canada, unless exceptions are made. Exceptions are not a gimme when there is a minority government whose popularity has shrunk since getting elected only 5 months ago.

These laws throw a monkey wrench when it comes to the idea that racetracks can have privatized gaming. The racetrack right now owns the property that the OLG is leasing from them. If a racetrack or even another business were to take over the operations on the tracks, that would mean that the OLG is neither leasing, owning or operating the casino. This is against the Criminal Code, unless a loophole exists that they can get away with just leasing gambling equipment to make it a go.

So in Fort Erie's case, lets say that the $30 million in revenues a year caused a break even for the OLG after operating expenses and the amounts paid out to the track, horsemen and municipality. Even if $5 million of that makes its way over to Niagara Falls, that is $5 million more bottom line for the OLG and the operators of the Niagara casinos.

Now by taking away the slots without giving a privatization option to these border tracks, the province and OLG have declared these tracks as nothing but competition. And I'm sure they are hoping the tracks close down completely so that if any gambling is done, it will be on OLG product. It sounds slimy, but heck we are talking about McGuinty here.

The biggest news that came out today is that McGuinty has stated that Municipalities can hold referendums when it comes to introducing new casinos (like in Toronto). Well, according the OLG Act of 1999, a referendum MUST be held. With the recent poll that shows 60% of Torontonians against a new casino, the likelihood of a yes is far from a sure thing. Unless, those bottom dwelling Liberals can pass new legislation regarding a referendum having to be held (and I wouldn't it put it past them).

In fact, the way the laws are written now when it comes to bringing in a new casino, there are quite a few hoops to jump through.

It appears right now that the Liberals and OLG have written a check their asses can't cash. Who knows, maybe they'll decide to leave well enough alone. For the racing industry, its many direct employees, and the many businesses these employees support or help support, one can only hope.

UPDATE: McGuinty has said that the provision to have a mandatory referendum has lapsed. So that means McGuinty has one less hoop to jump through. He can bully a new casino through in Toronto now, and even if the majority of Torontonians want a referendum, politicians can do what they do best and lie or come up with an excuse for not having to do a referendum.

Bottom line, no one has even mentioned what the split will be on the new privatization deal, and this reinforces my belief that there isn't a person who knows everything yet.

CANADIAN POLITICS NOTE

For my American readers who might be confusing Ontario or Canadian Liberal Parties with political liberals in the USA, every political party in Canada is to the Left of the US Democratic Party. The Federal Conservatives and the Ontario Progressive Conservatives are to the right in the Canadian political spectrum, with the Liberal Party on the Left, and the New Democratic Party closer to the Far Left.

Personally, I'm a social liberal (by American standards), while fiscally I'm close to the centre (center in American language).

One final note: Kim Craitor, the Liberal representative for the Niagara Region (including Fort Erie) has had threats against his life and now fears to set foot in Fort Erie. Craitor, took a lot of credit (whether he deserved it or not) when a deal was made to save racing at Fort Erie three years ago, but he was nowhere in sight when an OLG gunslinger came to town last week to take away the keys to the slot machines at the track.

Politicians don't need to have their life jeopardized (besides the fact that one can get jailed for doing the threatening). You get even with them by voting them out.