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Panel On Change: Horse Racing is Doomed

Published: October 13, 2009 5:30 pm ET

Last Comment: October 19, 2009 2:34 pm ET | 20 Comment(s) | Jump to Comments

Jeff Gural, the owner of Vernon Downs and Tioga Downs, gave an audience of simulcasters a sobering wake up call today when he stated, “It’s so logical that the sport is going to die.”

Gural, speaking on a panel titled, Change —You Can Run But You Can’t Hide at the International Simulcast Conference in Saratoga Springs, NY, said that racetrack lobbyists who recently fought together with horsemen for slots at racetracks will soon lobby governments to eliminate racing from racetracks.

“Once a racino opens, that casino company looks at racing as a loser,” said Gural. “You’ll see the lobbyists of those track owners in the legislature trying to convince government to take the money back, allowing the racinos to get rid of racing.”

“Participants in the horse industry don’t get it but they’ll learn soon,” said Gural. “The horse industry doesn’t want to do anything to help themselves. The horse industry is very happy to be a welfare recipient. They believe somehow that they are entitled.”

Gural, who says that he himself as a horse owner will continue to fight for horse racing, pointed to racing’s failure to give fans and bettors what they want.

“It’s very unlikely that horse racing will voluntarily undergo any change,” he said. The industry is dominated by the breeders for some reason – I don’t get it. Unless the breeding business collapses any further, there won’t be any change.”

Eugene Christiansen, the Chairman, Christiansen Capital Advisors and an ad visor to governments and the racing industry, echoed Gural’s comments.

The chances of change are slim to none,” said Christiansen. “Racing as an industry is more resistant to change than anything we’ve ever dealt with.”

“If I’m right, there won’t be voluntary change,” he said. “That will mean economics will dictate involuntary change – fewer racetracks, fewer opportunities to race and the end of any prospect for the rejuvenation of the fan base. If the fan base can’t be brought back, the sport will die.”

“The fundamental problem is consumer pricing,” he said. “The amount of money taken from bettors is not sustainable. The racing industry has been extraordinarily resistant to change even if someone creates an innovative product. Betfair is a very good example of voluntary change in the global betting business. No one in the racing industry really understood what a betting exchange was. But it worked to grow the business.”

Both Gural and Christiansen called racing’s business model doomed.

Eric Johnston, Vice President of Racing, Sam Houston Race Park in Houston, Texas, gave an example of why the business model which gives horsepeople a large percentage of wagering revenues, is counter-productive.

“For years we ran promotions to get people out to the track,” he said. “We’d increase attendance by 50% and handle by 50%. When we analyzed the numbers, we realized we’d have been better off to hand every person a $10 bill at the door and tell them to go home.”

“The problem that needs to be addressed is how to recruit more consumers into this industry,” said Christiansen. “If the industry fails to reach new customers, 20 years from now, all the lights will go off. This takes wholesale change, competitive pricing, new products and pain for a lot of people, including purse levels that may decrease by 50%.”

The International Wagering Conference wraps up tomorrow.

October 19, 2009 - 2:34 pmBarry has it right! Finally

jarvis rich SAID...

Barry has it right! Finally someone who knows what he is talking about. The people you are trying to attract to the industry are never cut a break. Thank-you Barry for exposing how the bettor is treated.

October 19, 2009 - 1:30 pmI agree with most of what

Bob Colbert SAID...

I agree with most of what was said. Horse Racing does need to take responablility for it's product. But, The track owners also need to do something to promote racing and bring in fresh blood. I live on the border of two states. One has VTL's and the other doesn't.

The Racino sends me slot dollars, free gifts, coupons for free programs, food, drink. The Turf Club offers nothing. I live closer to the Turf Club but go to the racino because they are at least trying to get bettors there. For me its not about the free stuff, its about the willingness to get people out.

What would it really take for the operators of the Turf Club to offer free programs, Free drinks maybe advertise that they exsist. I was at the Racino Saturday and struck up a conversation with the guy next to me. He had no idea the Turf Club was even there. He said he must have driven past the location and never noticed it was there.

This for the track owners to step up and help keep this sport around

October 18, 2009 - 10:53 amBernie McGarry..excellent

Eric Poteck SAID...

Bernie McGarry..excellent point! This highlights a major philosophical problem with racing in Ontario. Slots are feeding a racing segment that horseplayers have absolutely zero interest in. This is not just an Ajax quarter horse problem; it is prevalent throughout Ontario harness tracks.

Most industries exist because there is a demand for the product. Ontario quarter horse and B harness tracks exist because they are subsidized. Instead of the industry using the subsidy to fortify its structure and build for a future, they choose to continue to offer a product for which there is NO CONSUMER, while sucking out every dollar possible.

When the subsidies come to an end, which will happen, so will the industry as we know it...

October 18, 2009 - 1:55 amI remember when you could'nt

I remember when you could'nt find parking or a place to sit, or even make it to the windows, they were betting 400,000 to 600,000 on the weekends at Cloverdale raceway(Fraser Downs)(little hic track in western canada)
This was before they brought in the other forms of gambling (that was supposed to help the racing industy)
The gambler had to wait 20 minutes before he could bet again

October 16, 2009 - 7:13 pmPierre Touchette recently

Brian Price SAID...

Pierre Touchette recently commented that the horse-racing industry was here long before and will be still here long after outfits like Attractions Hippiques (and "track-owner" neighsayers) have come and gone. The "racinos" obtained nice deals on land and ready-made facilities, so possibly- as part of their repayment plans?- could at least keep some of the racetracks in Western Ontario CLEAN and REPAIRED. Are they short of money, or just demonstrating bad faith after a good deal?
Not counting investment(like any other business) in land, employees,equipment, purchases, sales and staking,and also taxes paid,the horse industry is a substantial business with agricultural foundations here in Ontario, and not without political influence. Try giving $10.00 bet vouchers(rather than "pay them to go home")at future track attendance promotions.This money will then be redistributed,less the take out of course.

October 16, 2009 - 6:13 pmNorm McClurg Jeff is 100%

Norm McClurg Jeff is 100% correct. Not long ago Yonkers bragged they had increased their average "on track" handle to over $61,000 per night with the largest market in the United States. Anybody worried? Toledo's Raceway Park did $41,000 in a small market. Horsemen had better wise up, and quickly. Take 20%, or whatever is needed, from these inflated purses where they have racinos and market Harness Racing. National TV and advertising (Sports Illustrated, etc.), and then tie in our own promotions on a local level. The casino owners will not promote racing until we make it profitable. That means bringing in a new fan base. It makes me sick to watch Yonkers and see nobody their. I like Jeff was there when 40,000 would pack the place on Saturday night. Wake UP!!!

October 16, 2009 - 6:01 pmFirst of all the terminology

Norm Brunet SAID...

First of all the terminology is wrong. Some of the hardest working people I know are in the horse business. Welfare is getting something for nothing, which is not the case here, the horse industry is beeing subsidized by the racino's.
Horse racing had the monopoly on gambling for many years and due to lotteries and other forms of gambling (slots) which rivelled horse racing the goverment compensated the industry. The 2 tracks presently with the largest harness handles are non slot states, (Balmoral & Meadowlands)
The gambling $1 which use to be all of horse racing is now split 3, 4 and five ways and some is taken illegally by offshore betting books.
It's no wonder that the handles are down and decreasing.
Holdem poker is very popular today and the reason why, is that it is an intellectual challenge, people feel they can win if they play the %'s and people are reading up on it.
Horse racing can and will experience the same popularity but the sport needs to clean up the perception that races are fixed...judges need to be more vigilant when it comes to effort and lack of, condition games need to be eliminated, NW of 2 o/a 15K should be 15K period, milking classes is not popular with the bettor. If you are racing nothing less then 100% should be expected. If the fan feels he is playing on an even level then the industry will thrive once more. Unfortunately right now it is a game of inside trading and turning off new money to the sport.

October 16, 2009 - 1:12 pmI couldn't agree more with

Mike Glatt SAID...

I couldn't agree more with the comments. The industry is being subsidized by the Slots industry and at some point in time they are going to pull the plug or at least ask for concessions.

As a bettor I treat the wagering aspect of it as an intellectual challenge because after all you are wagering against someone's opinion.

Takeout is definitely a problem (25 % is outrageous on some exotic bets).
I think the one thing that the industry doesn't "get" however, is and I dont mind watching nice horses from time to time but what I value is the value of the betting proposition. I would much rather wager on a $10,000 claiming race with 10 participants than a $250,000 stakes race with 7 participants.

I know the horsemen have to be in a position to make money but with the prices of horseflesh they should really give serious consideration to offering higher purses to cheaper claimers and cut back on the high end stuff.

One thing I would like to see removed is wagering on two year old trotting races. No bettor cares about them and they are so unpredictable that they might as well run them as non wagering events. It drives me crazy when tracks have multiple divisions of these types of races running on the same card. It is useless to do this in the mind of the betting public.

The industry needs more input from the customers "the betting public". It can't all be about the horseman. After all, "we" are paying for a good portion of their purses (as well as the slots participants).

October 16, 2009 - 11:14 amWEG is worried about the

ken hayward SAID...

WEG is worried about the handle? Just anounce that Bill Robinson is allowed to race and that he has seven entered for Saturday night and watch the handle go up. What was better than betting on Bills horses. You knew you were getting a fair shot.People have let personal preferences dictate there decisions.The ORC are also chasing good people from the business.Harness racing itself is its own biggest enemy.

October 16, 2009 - 10:38 amThe problems lie with

carlo renon SAID...

The problems lie with band-aid reactionary fixes such as the new whipping rule and the real issues stay neglected. Racing is missing a whole generation of patrons,it has a perceived integrity level right or wrong somewhere on the same level as wrestling!Racing has no integrity until the patrons believe in the sport; and efforts must be made to achieve this better regulation better and more consistant judging making some of the rules simpler so they are easier to understand; like the breaking rule use the KISS method you break you have not met the condition of the race a mile pace or trot you are disqualified.Also through all the years of nepetism you have the same old people trying to run the show with the same old ideas,they DON'T work anymore it's time for progressive outside the box thinking new ideas look what casinos do to be sucessful and do it better.

Racing should not be relying on them for handouts but should be competing against them for patrons and we have the advantage if only the people will change ; as racing is a far better form of entertainment than mindlessly pressing a button on a slot machine and praying for a payout!Our patrons have an abundance of information to make a controlled and inceitful bet with more than a prayers chance to win plus we have many great equine athletes to watch!

C.Renon

October 16, 2009 - 12:35 amHow many wake-up calls can

Jim Clarke SAID...

How many wake-up calls can any industry have and still maintain any level of profitability. Harness racing has been declining for at least the last fifteen years. Everybody wants to talk but no one to date has been able to develop a forward-looking plan that will not only address the critical issues but develop concrete, executable solutions. It can be done but it can't be done if all of the political factions continue to rail about their agendas. Everyone needs to start railing about a coordinated agenda for the total industry. Come on ladies and gentlemen, we are simply out of time.

I had the opportunity to compete for the top job at the USTA on two occasions in the past five years and while I did not get the job, I did see firsthand what the industry is up against: leadership that cannot identify the core problems and leadership that is not able to develop a concrete action plan that will not only keep the harness racing industry viable but move it forward profitably on all fronts. What I ran up against on both occasions was the good old boy network where it's business as usual which means no news and no action is good news.

For all the dues paying membership and for all those yearling buyers that shell out good money year after year, it is truly shameful. BUT, it's never too late BUT clearly and truly time is not on our side.

Jim Clarke, Somerville, NJ Ontario Breeder and Owner 1988-2004

October 15, 2009 - 11:31 pmHow many racetrack managers

How many racetrack managers do you think believe the above statement, "The fundamental problem is consumer pricing. The amount of money taken from the bettors is not sustainable."?

Since 1986, the pari-mutuel takeout has doubled. In 1996 or 1997, the provincial government of Ontario dropped their takeout share from 7% to 0.5%, returning 6.5% to the "racetrack industry", which wasn't industry money, it was bettor's money. Ten years ago, the government gave racetracks and horsemen 20% of the slots bonanza. The bettors got zero. A few months later, the takeout was raised because it had "previously been scheduled".

Two years ago, WEG raised their takeout on the Win-4 by 6.95%!!! Now they have added another Win-4 because "our customers have indicated that they want more". Plus their expensive mediocre food and $6.00 beer. And I just read on another comment that racetracks and horsemen shared $340 million from the slots last year, almost a million a day! Yet they wonder why attendance and betting keeps going down.

October 15, 2009 - 11:27 amThere may be no truer words

Joe Brandon SAID...

There may be no truer words put forth then the statement that the industry is happy to be a welfare reciepient! A tiny bit of history. This goes back to the days when racing had the only show in town.then a lottery came along. The industry cried and moaned. "We can't compete with that!". And so it went as more states introduced lotteries, then gaming. To this day I can't remember even one advertising campaign of any kind educating people to the fact that racing offers extremely low odds to win as compared to any other form of gambling, not one! all they did was keep crying, let their facilities run down and worse of all, FAILED TO CATER TO THE YOUNGER GENERATION!
In this age of technolgy and video, most folks like to sit on their butts at home and wager. so be it! Go after it! I've been in this industry my entire life, arguing this point for years, always wathing it fall on deaf ears as to the powers that be. Computer betting, stay at home betting,, doesn't matter. that is where the future of the industry lies and we better embrace it now before the industry dies out completely!

October 15, 2009 - 9:30 amBernie McGarry If people

Bernie McGarry
If people have any doubt about the welfare state of the industry,check out this extreme case. Ajax Downs is a quarter horse track just east of Toronto. This past Sunday, 489 people wagered $8600 on an 11 race card with a total purse structure of $197 000. Saturday 389 people bet $4000 on a 7 race card with a purse total of $78 000. (Figures from Equibase) Gotta love those slot machines.

October 15, 2009 - 7:02 amThe bottom is falling out of

John Carter SAID...

The bottom is falling out of the handle at race tracks all across north america at an alarming rate. Last week at WEG on the 5 cards of harness racing the average handle for the 5 nights was only $940,000. dipping beneath a million dollar average handle. I had some cards from the fall of 2004 and i went back to see what the average handle was for a week making sure there were no major stake races so everything was equal. For the 5 cards just 5 years ago, same time frame the average handle was 1,641,000. The average handle at weg has dropped approx $700,000 per night in the last 5 years alone.

If this isn't getting their attention i don't know what will. If you would have said 30 years ago there would be no racing in quebec you would have been laughed at, well no one in the quebec harness industry is laughing now. I will predict in another 5 years time that the average handle at WEG will be $500,000 per night and they will no longer know what a million dollar handle is, yes this is the beginning of the end if they don't find a way to change course and attract new fans and get old ones back.

October 14, 2009 - 10:40 pmUnfortunately, Mr. Gural is

Allan Schott SAID...

Unfortunately, Mr. Gural is likely correct. This industry is destined to fail because no one wants to make changes, let the other group make the sacrifice. Studies show a lower takeout rate brings more business but no one wants to cut the takeout rate to increase the business.

Breeders control things. We get a star horse and it retires at the age of three. Mr. Gural has talked about doing something to get the horses to race longer but no one wants to make the change. I don't know why the tracks just cut the added money for two and three year old events and use it for aged events. Breedres complain it will hurt their business but what business will they have if there are no tracks? How many horses are they going to sell for the show ring?

In the states there is no such thing as a fair start. Your horse can break stride once the gate begins moving and never get back on and the bettor loses his bet. Could you see a casino not give a customer back their wager if the dealer drops the cards in black jack or a slot machine malfunctions? The tracks, horsemen and the commissions who adopted the updated recall rule decided they didn't want to the refund money when this situation arrived; so they steal the money from the bettor in the short run and chase the bettor to poker or casino games.

Bottom line is despite what the industry says, they horse players as pigeons to be picked clean and not as valued customers to be respected.

October 14, 2009 - 2:39 pmI'd like to think our

I'd like to think our product has a little more entertainment value than scratching lead over 7 of your favourite numbers. What attracts people to the lottery? Our sport can entertain, it just needs to be refined. We need to get to the new age customer. Examples - Large progressive pools, on-track racing related promotions, wagering from all locations (handheld, track, convenience store), more targeted marketing. There are lots of great ideas floating around, now we need to implement them; don't be afraid to try "change".

October 14, 2009 - 10:06 amOne can't help but pay

Bob Bowness SAID...

One can't help but pay attention, when a leader in the industry puts it on the line,in such a way that it should be a wake up call for all of us!

My firm belief is, he is bang on with regards to the industries position with the various lottery commissions.

We were convinced by them, that our product had very little entertainment value, and everyone should attend at no charge, thus diminishing our sport to close to zero in the entertainment field. We spent many hours debating this very issue with the lottery folks in our area, but to know avail. My theory then, and now is that if the show wasn't worth two bucks there was something wrong with the show. However our choice was to become a welfare recipient!!!

We believe we are a professional sport, can you think of any other where we all get in and have 3 hours of entertainment at no charge!

October 13, 2009 - 10:36 pmAn accurate evaluation of

An accurate evaluation of the present situation and the future of racing(especially harness racing). There was a preview of what he speaks of by Attractions Hippiques at Montreal. Although the people involved in harness racing don't like the word his comment that they are on welfare is exactly correct. Is there anything that can or will be done. I think not!!

October 13, 2009 - 8:03 pmI agree with the above

I agree with the above comments. We have become a very small player with a very small voice and the numbers are getting less and less each passing day.

ALL PEOPLE in this industry must decide what is best for ALL PEOPLE in the industry and look beyond what is best for them only. I was once told by a well known businessman who lectures companies on how to be successful that the problem with the horse racing industry is that everyone involved is a gambler in one form or another. And a gambler is; by his or her nature; rarely satisfied with what they have accomplished but question why they didn't do more to improve their own situation.

We have to look beyond us and make this work for everyone which will require us all to take less in the short term to have more in the long term. It won't be long before the numbers will be crunched and the majority of folks not even intersted in the industry will not want any more money pumped into a very small amount of the population. I feel we have to start at the grassroots level and work from there at local fairs with exhibitions of racing and advertising booths. Once that gets established we once again will have a base to work from, but as it is now we are existing on Racino Money and that will be dwindling as governments will have no choice but to satisfy the majority population of which we do not belong.


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