JC / Railbird

Slots

Competing

This post has been corrected. Please see the note at the end.

Plainridge Park’s new slots and video gaming parlor took in $6,154,626.38 during its first week of operation, or more than $703 for each of the 1,250 machines per day. Even considering opening week excitement and whatever pent-up local demand there might have been, that’s an impressive haul.

More than $6 million — that’s an incredible number … Plainridge is showing it can certainly compete with the existing casinos,” New England casino market expert Clyde Barrow tells the Boston Globe.

The nine percent of those revenues designated for the Race Horse Development Fund totaled $553,916.37; that’s $138,479 for harness racing, which takes place at Plainridge. I was going to insert a sentence or two here noting how much Plainridge handled on live racing during the same period, and maybe try to draw a conclusion from the slots-RHDF-handle numbers, but tracking down harness handle figures turns out to make Thoroughbred racing look like a transparent, open industry. (Harness friends, any tips?)

So, let’s use 2014 numbers, taken from the racing office’s annual report (PDF): Last year, the track handled a total of $1,108,715 on-track on 82 race days, or $13,521 per card, and handled another $6,576,620 on its simulcast feed, for an average of $93,724 per card. Pull the Pocket does a bit of estimation/comparison:

Let’s say Plainridge does $100,000 in handle per card. At a low signal fee, let’s set revenue at 5% of that handle, which would mean the track and purses would drive $5,000 per card in revenue.

If they race three cards a week, that’s $15,000 in revenue.

$15,000 from racing, $567,000 from slots.

His conclusion: There’s no point to doing the work of growing handle when there’s so little payoff compared to the casino money. Plainridge is booked for 105 cards this year. Assuming they average about the same per card as last year, they’ll handle almost $10 million, while paying out approximately $4 million in purses (estimate based on averaged recent daily purse levels; in 2014, Plainridge paid $2.6 million in purses). There’s not much incentive to push casino patrons into betting on the local racing product either: The track’s portion of daily live handle runs roughly $1400 per card on-track, or about the gross on two slot machines.

1:35 PM Correction: This post was originally published using only the on-track handle total for 2014, which led to an incorrect conclusion re: daily revenue. This was because I did not include simulcasting handle, listed as “Export Simulcast” in the annual report. The post has been revised to include that figure, and the new and/or altered text is indicated in bold above.

Opening Day

If you’re a fan of Thoroughbred racing, or anyone affiliated with Thoroughbred racing, in Massachusetts, then today is probably a bittersweet day, emphasis on the bitter — the state’s first slots parlor opens this afternoon at Plainridge, the state’s sole harness track. “The casino is projecting $20 million a month in gaming revenue.” Nine percent of that revenue will flow into the Race Horse Development Fund, set up to support horse racing in the Commonwealth with a split of 75 percent for Thoroughbred purses and breeding, 25 percent for Standardbreds. Millions have been banked, millions more will be added.

Purses at the harness track are already running higher:

Plainridge offered $38,300 in purses on Tuesday’s 10-race card. As recently as 2013, the average purse was $2,700 and last year they averaged $30,000 but were overpaid by $900,000.

“We’ve already turned $3,000 claimers into $4,000 claimers and purses can only go up. It’s all positive,” said trainer and driver Jim Hardy.

Bill Abdelnour, a director of the Harness Horseman’s Association of New England, told the Sun Chronicle, “People can pretty much count on harness racing being around for a long time.”

The same can’t be said of Thoroughbred racing, which is looking for dates and a home after Suffolk Downs and Mohegan Sun lost their bid for a Boston-area casino license to Wynn in September 2014. An application to run three days this year at the track is before the Massachusetts Gaming Commission; an update on the application is on the agenda for the commission’s June 25 meeting. The three-day proposal was criticized as not doing enough for New England horsemen in a public hearing two weeks ago.

Neither breed has enjoyed robust days in recent years — attendance and handle have been in decline for both — and how Plainridge won the slots license and Suffolk Downs lost the casino is a more complicated story than fits this post, but Thoroughbred racing was the bigger draw, employer, and revenue generator of the two by far. It’s just the latest odd turn on the long road to expanded gaming in Massachusetts that as the doors open on casinos, the future of Thoroughbreds in the state is what’s in doubt.

The Gaming Trade

Bill Finley on the approaching end of slots-supported racing:

… now things are starting to change. Where will the sport be when the slots money starts to go away? Whatever the answer is, it’s not a good one.

NYRA president Charlie Hayward speaking in support of full-fledged casinos:

“The racing industry will get 16 percent of the racino’s net earnings,” Hayward said. “We can take a little bit of pain in terms of reduced handle.”

In Hayward’s favor, NYRA numbers are strong post-NYC OTB.

The Disconnect

From Matt Hegarty’s must-read on the state of the racing business:

But continuing to fatten purses is a solution that directly serves horsemen, not bettors. In a macroeconomic sense, it’s hard to argue that the $318 million in subsidies distributed to purses in 2009 made the game better. The U.S. foal crop cratered, the bloodstock market remained in its doldrums, and handle continued to decline at unprecedented rates.

Slots are the subject above, but unleavened takeout increases are similarly flawed. We’re seeing the results of a horsemen-first view in California now.

Weekend Notes

Buzz builds for “Luck.” A producer claims, “it will be the greatest show on TV.” TV critic Alan Sepinwall (who writes some of the best “Mad Men” recaps out there) is excited — and worried — about the HBO drama, noting that it “may have the most prominent creative firepower, in front of and behind the camera, of any show in the channel’s history,” but what about Dustin Hoffman? Entertainment Weekly tabs the Oscar winner’s presence as a “breakthrough” for TV, while Santa Anita reveals what Variety didn’t, that the first season will consist of the pilot and “seven to nine additional weekly episodes.”

Sure, bring the kids for a day at the races. But don’t let them bet at Saratoga. (A trespass charge and an anti-gambling class? Oh, come on.)

Wow. Monmouth Park reports incredible results for the first 24 days of the “elite summer meet,” with attendance up 13% over comparable days in 2009, on-track handle up 43%, and total handle up an amazing 118%. The average field size is also up over last year, to 9.0, compared to 7.44 in 2009. Monmouth doesn’t mention claiming activity in its press release, but that must also be up by a huge amount, with 215+ claims so far. At the start of the Monmouth “less-is-more” experiment, Steven Crist wrote, “Gov. Chris Christie has said his goal is to make the racing industry ‘entirely self-sustaining.’ Unless handle increases from last year’s $3.1 million a day to $10 million, that isn’t going to happen.” That hasn’t happened, but with average daily handle of $7.6 million, Monmouth is still in a very good spot. [7/19/10 Addition: Business of Racing digs into Monmouth claiming activity vis-a-vis Belmont.]

By Ragozin figures, Blind Luck tops 3-year-olds of either sex.

After the Massachusetts state senate approved a casino bill 25-15 earlier this month, expanded gaming looked almost certain. There were just a few differences with the house bill to reconcile in committee, and a tight deadline for getting legislation to the governor. Difficult, but not impossible. Now, State House News Service reports, “… serious people are talking in somber tones about a two-week stare-down that yields nothing in the way of major legislation. The unimaginable — failure to sanction casinos despite Big 3 ardor and at least $1.8 million spent on lobbying during the first six months of the year — looms.” It’ll be a tense watch for slots supporters …

Yes, a gentleman!” I never tire of the General Quarters story.

A Better Strategy

Steve Davidowitz, making sense*:

Too often, the sport’s leaders look in the wrong direction to build up the fan base while seeking stop gap measures to keep some tracks afloat.

Whereas slot machines have boosted purses at several tracks in states that cooperatively legalized slots a decade ago, the numbers of contemporary tracks seeking slot machines has increased to the point where the impact is bound to be diluted, if not an apocalyptic foreshadowing to the end game of this 400 year old sport….

It is my judgment, and I know I am in the minority now, but I believe strongly that racing would be better off trying to expand on-line wagering access rather than repeatedly banging its collective head against stone walls, seeking more slot machines.

*Login alert: Davidowitz’s column is now part of the Trackmaster Players Club; you may have to register before viewing if you don’t have a free account.

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