As the Ontario horse racing industry struggles to make sense of all that has happened in the last few months, plans steamroll along from the government and the Ontario Lottery and Gaming Corporation.
At the same time a political panel of three former cabinet ministers has been struck. They will talk to the industry to determine how racing can transition to a sustainable model.
So let’s face the truth of sustainability.
Since slots were introduced in 1998, Ontario’s racetracks have eliminated or phased out the vast majority of their revenue sources. With racinos on site, and thanks to a requirement of the OLG, admission charges and parking fees were eliminated, simulcast areas were pushed to the back of many facilities. In some cases, dining services, including restaurants and bars, were passed along to the OLG to run.
As slot revenues flowed in, tracks focussed on the high profit area of their facilities and in many cases neglected the struggles to increase wagering and drive other revenues.
For sustainability, racing must rewind and start from scratch.
With the vast majority of dollars bet coming from off track sources, where the commission coming back to the host track is only 3 per cent, it`s tough to rely solely on betting handle. Even a miraculous increase of $1 million in betting would only equate to $30,000 in revenue, still a fraction of the purse pool commonly offered on a single card of racing. Thus, the industry needs to take a multi-pronged approach.
Racing must go back to earning admission, food, beverage and sponsorship revenues. To do this, the sport needs to once again become event focussed. A 20-day racing carnival, with admission fees and food sales, sponsored and co-branded with the corporate world – will work. Charging people to enter the gates for a Tuesday afternoon of racing will not.
Racing must look beyond its borders. Through Horseplayer Interactive, we can bet on races from a dozen different countries. Yet we haven’t yet packaged or sold our own racing package abroad. It must happen.
In Australia, the industry has proposed that newly introduced fees on imported horses and stallions go back into providing domestic breeding incentives. Such a proposal is another option. You could take it a step further and see if additional money should be raised through a levy on stud fees or sales commissions across the board.
On the betting side, with the right model, it is not impossible to offer a $1 million jackpot at every track in the province, on every night of racing. One option is through the combination of a superfecta-type bet and a random number generator. There are many other ways of accomplishing the same goal in a renewable fashion.
How about betting exchanges, the world’s most popular form of wagering on a horse racing, most popular with those 18 to 34. Surely we could take the game to a new audience with its introduction.
As for purses, the industry has close to $100 million coming in between now and March 31, 2013. Starting today, those funds need to be held back to sustain a few years of racing, at least until things stabilize.
With any sustainability plan, I’d suggest that the industry is behind the eight ball. If this government appointed panel does its job effectively, it will work with racing to develop the tools and secure meaningful funding to carry out the hard work that must take place over the next few years.
It is time to pull up our sleeves and make this work.
Darryl Kaplan
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