slots the magic bullet, and a bit of waxing poetic

[ShadowRoll]

Originally Posted by Cannon Shell

They have some real ground breaking stuff in this article. Like live handle is decreasing on horseracing at tracks with slots. Really? No kidding? Well it is decreasing at tracks without slots too mostly because you dont have to actually drive to the track and bet like you did 20 years ago! They fail to mention that off track handle on places like Delaware is probably up 300% from 10 years ago. Of course things were great in West Virginia and Delaware 10 years ago when the tracks were all on the verge of going out of business!

The thought that slots would "make" horseplayers is and was a stupid idea. Slots give racetracks a chance to capture a segment of the gambling market that was not betting on the races but was very much competitive with their core business. By using a portion of the profits to boost purses these states have revitalized and perhaps salvaged the racing industry in Delaware and West Virginia. They have created jobs and saved jobs while funneling money back into the local communities and the state, where a standalone casino most likely owned and run by Las Vegas or foreign interests would take 100% of the money and run.

Many articles like this especially in states where issues like slots are hotly contested, I always get the feeling that the story is little more than a front for a politicians stand. Planted stories like this one seems to be, rarely examine the issue from both sides and often are too brief to really discuss the matter thoroughly.

There's a few things I hope you will clarify from your post, because I am very interested in your point of view.

First of all, do you feel the state of racing, in terms of the number of people who are fans, is better or worse than it was 10 years ago? If it's worse, then the addition of slots (and, inevitably, table games) is just a stopgap that will at some point fail to justify the continued support of a failing industry. The warning I take from the article is that there should be a refocusing on racing, as opposed to just slots, in the advertising and marketing of racinos, so that the fan base of racing increases along with overall revenues.

Secondly, there's no doubt that slots saved Delaware and Charlestown. But I wonder how long it will be until the owners of these establishments come to believe (if they don't already) that their floor space would be better used only for slots (and, inevitably, table games) rather than for a racebook or even for a racetrack. Just imagine how many machines you could fit in the space that the track at Delaware, for example, currently takes up. Although I believe that such thinking is fallacious because there must be a saturation point (i.e., just because you add more machines doesn't mean you will make more money), I nevertheless don't trust racetrack managements to take the long view on things instead of trying to cash in on what at least appears to an instant and guaranteed source of revenue. Plus, let me point out that Penn National (which also owns Charlestown) will likely go private in a year or so, and I trust private entities (such as Greenwood Racing, the owners of Philly Park) even less than publicly traded companies. Slots has become the tail that wags the dog, and I'm afraid that eventually the tail will come to believe that it doesn't need the dog.

Third, I'm not sure who you think are the politicians behind the story (and I don't mean to sound like I'm picking a fight here, 'cause I'm not). Are you saying that you believe that there's an anti-racing contingent out there, because it appears that the story isn't anti-slots (it seems to acknowledge that slots have made a lot of money), it's essentially anti-racing with slots.

[Cannon Shell]

Originally Posted by ShadowRoll

There's a few things I hope you will clarify from your post, because I am very interested in your point of view.

First of all, do you feel the state of racing, in terms of the number of people who are fans, is better or worse than it was 10 years ago? If it's worse, then the addition of slots (and, inevitably, table games) is just a stopgap that will at some point fail to justify the continued support of a failing industry. The warning I take from the article is that there should be a refocusing on racing, as opposed to just slots, in the advertising and marketing of racinos, so that the fan base of racing increases along with overall revenues.

Secondly, there's no doubt that slots saved Delaware and Charlestown. But I wonder how long it will be until the owners of these establishments come to believe (if they don't already) that their floor space would be better used only for slots (and, inevitably, table games) rather than for a racebook or even for a racetrack. Just imagine how many machines you could fit in the space that the track at Delaware, for example, currently takes up. Although I believe that such thinking is fallacious because there must be a saturation point (i.e., just because you add more machines doesn't mean you will make more money), I nevertheless don't trust racetrack managements to take the long view on things instead of trying to cash in on what at least appears to an instant and guaranteed source of revenue. Plus, let me point out that Penn National (which also owns Charlestown) will likely go private in a year or so, and I trust private entities (such as Greenwood Racing, the owners of Philly Park) even less than publicly traded companies. Slots has become the tail that wags the dog, and I'm afraid that eventually the tail will come to believe that it doesn't need the dog.

Third, I'm not sure who you think are the politicians behind the story (and I don't mean to sound like I'm picking a fight here, 'cause I'm not). Are you saying that you believe that there's an anti-racing contingent out there, because it appears that the story isn't anti-slots (it seems to acknowledge that slots have made a lot of money), it's essentially anti-racing with slots.

SR
I have no idea if racing has expanded or shrunk its fanbase over the last 10 years or so. I'm not sure how to even measure it. As I have stated before, racing "fans" have a much different relationship to our sport than other fans have with mainstream sports. Being that we our main (only?) stream of revenue comes through wagering, it makes more of a gambling hybrid than a traditional sport. The fact that less people are coming out to the races is not a new or surprising trend. But handle nationwide has been pretty consistent over that time. Obviously many people have moved to betting using account style, offtrack betting. I recall a poll done by ESPN a year or so ago that said that 25% of the population had at least some interest in horseracing which I thought was high and think they quoted it as being up from like 11%. Of course they were starting to do more horseracing so maybe they doctored the numbers? I think just the fact that ESPN wants the Breeders Cup and more big races leading up to it is a positive sign, but thats another topic.

Of course I as a horseman I am concerned that the racino tracks will/are focusing much of their marketing efforts on the slots. But I also recognize that because of the tremendous competition for the gambling dollar, that I would rather deal with greedy racetracks focusing on making money from slots than a closed track with zero dollars for purses. Of course if the slots tracks in conjunction with the states would make a concession and lower the takeout to a reasonable rate, I believe that handle on the races would surge, not in a small part due to the fact that the players simply would have more money in their pockets. I would trade all the marketing in the world for a 50% reduction in takeout.

The possibility that racinos will move to eliminate racing altogether is a possibility but unlikely for the reason that it would bring them a lot of grief and lawsuits. It is simply easier to subsidize racing than eliminate it.

I believe that Penn National going private after the takeover especially in light of the possibility of a PE Blackstone tax increase and all the fallout over it, may take a while before things are different.

I am always skeptical of stories like this that seem to have no general public interest other than to try to sway opinion by trying to paint a picture using half the canvas.

[philcski]

Originally Posted by Cannon Shell

SR
I have no idea if racing has expanded or shrunk its fanbase over the last 10 years or so. I'm not sure how to even measure it. As I have stated before, racing "fans" have a much different relationship to our sport than other fans have with mainstream sports. Being that we our main (only?) stream of revenue comes through wagering, it makes more of a gambling hybrid than a traditional sport. The fact that less people are coming out to the races is not a new or surprising trend. But handle nationwide has been pretty consistent over that time. Obviously many people have moved to betting using account style, offtrack betting. I recall a poll done by ESPN a year or so ago that said that 25% of the population had at least some interest in horseracing which I thought was high and think they quoted it as being up from like 11%. Of course they were starting to do more horseracing so maybe they doctored the numbers? I think just the fact that ESPN wants the Breeders Cup and more big races leading up to it is a positive sign, but thats another topic.

Of course I as a horseman I am concerned that the racino tracks will/are focusing much of their marketing efforts on the slots. But I also recognize that because of the tremendous competition for the gambling dollar, that I would rather deal with greedy racetracks focusing on making money from slots than a closed track with zero dollars for purses. Of course if the slots tracks in conjunction with the states would make a concession and lower the takeout to a reasonable rate, I believe that handle on the races would surge, not in a small part due to the fact that the players simply would have more money in their pockets. I would trade all the marketing in the world for a 50% reduction in takeout.

The possibility that racinos will move to eliminate racing altogether is a possibility but unlikely for the reason that it would bring them a lot of grief and lawsuits. It is simply easier to subsidize racing than eliminate it.

I believe that Penn National going private after the takeover especially in light of the possibility of a PE Blackstone tax increase and all the fallout over it, may take a while before things are different.

I am always skeptical of stories like this that seem to have no general public interest other than to try to sway opinion by trying to paint a picture using half the canvas.

It's crap, won't ever happen. It's inefficient public companies fearful of privatization through LBO's crying uncle that the the PE's have a built in advantage through the tax breaks (whose tax rates, with good accountants, are available to ALL companies.)

[Cannon Shell]

Originally Posted by philcski

It's crap, won't ever happen. It's inefficient public companies fearful of privatization through LBO's crying uncle that the the PE's have a built in advantage through the tax breaks (whose tax rates, with good accountants, are available to ALL companies.)

Before you say never, remember who is in charge of Congress. They love to pass legislation that will be "anti-big business" for political purposes regardless of how patently unfair the law is.

[ShadowRoll]

Originally Posted by Cannon Shell

SR
I have no idea if racing has expanded or shrunk its fanbase over the last 10 years or so. I'm not sure how to even measure it. As I have stated before, racing "fans" have a much different relationship to our sport than other fans have with mainstream sports. Being that we our main (only?) stream of revenue comes through wagering, it makes more of a gambling hybrid than a traditional sport. The fact that less people are coming out to the races is not a new or surprising trend. But handle nationwide has been pretty consistent over that time. Obviously many people have moved to betting using account style, offtrack betting. I recall a poll done by ESPN a year or so ago that said that 25% of the population had at least some interest in horseracing which I thought was high and think they quoted it as being up from like 11%. Of course they were starting to do more horseracing so maybe they doctored the numbers? I think just the fact that ESPN wants the Breeders Cup and more big races leading up to it is a positive sign, but thats another topic.

Of course I as a horseman I am concerned that the racino tracks will/are focusing much of their marketing efforts on the slots. But I also recognize that because of the tremendous competition for the gambling dollar, that I would rather deal with greedy racetracks focusing on making money from slots than a closed track with zero dollars for purses. Of course if the slots tracks in conjunction with the states would make a concession and lower the takeout to a reasonable rate, I believe that handle on the races would surge, not in a small part due to the fact that the players simply would have more money in their pockets. I would trade all the marketing in the world for a 50% reduction in takeout.

The possibility that racinos will move to eliminate racing altogether is a possibility but unlikely for the reason that it would bring them a lot of grief and lawsuits. It is simply easier to subsidize racing than eliminate it.

I believe that Penn National going private after the takeover especially in light of the possibility of a PE Blackstone tax increase and all the fallout over it, may take a while before things are different.

I am always skeptical of stories like this that seem to have no general public interest other than to try to sway opinion by trying to paint a picture using half the canvas.

A few things: you make some very good points, especially regarding takeout reduction. It would be an interesting experiment but I doubt anyone has the balls to implement it. As a fan and a gambler, primarily, and not so much as someone involved in the business (except, of course, with SWLY), I am very concerned with fan base rather than just total handle. Fewer gamblers with the same overall handle probably means better informed gamblers, which of course means tougher competition during my occasional weekend at the park, as well as less people to commiserate with when I lose.

As for Penn National, we'll have to see. I've been buying shares for years but I think that gravy train has reached the end of the line for small-time investors like me. I'll vote in favor of the takeover and then whatever happens happens.

You seem very skeptical of the media in general (re your comments about ESPN as well as the Sun). As someone with an undergraduate degree in journalism, i have to say that...I agree with that sentiment completely. I assume you exclude from your skepticism people like Byk, who has proven himself to be a paragon of integrity. (I know it's a heavy responsibility, but remember, Steve, that when I hear news on your show, I assume that it's from God's mouth to your ear).

Finally, let me say that when I first read your reply above, I thought you began it with the word "SIR", before realizing that you wrote "SR", and I nearly spit my drink out my nose.

[Cannon Shell]

Originally Posted by ShadowRoll

A few things: you make some very good points, especially regarding takeout reduction. It would be an interesting experiment but I doubt anyone has the balls to implement it. As a fan and a gambler, primarily, and not so much as someone involved in the business (except, of course, with SWLY), I am very concerned with fan base rather than just total handle. Fewer gamblers with the same overall handle probably means better informed gamblers, which of course means tougher competition during my occasional weekend at the park, as well as less people to commiserate with when I lose.

As for Penn National, we'll have to see. I've been buying shares for years but I think that gravy train has reached the end of the line for small-time investors like me. I'll vote in favor of the takeover and then whatever happens happens.

You seem very skeptical of the media in general (re your comments about ESPN as well as the Sun). As someone with an undergraduate degree in journalism, i have to say that...I agree with that sentiment completely. I assume you exclude from your skepticism people like Byk, who has proven himself to be a paragon of integrity. (I know it's a heavy responsibility, but remember, Steve, that when I hear news on your show, I assume that it's from God's mouth to your ear).

Finally, let me say that when I first read your reply above, I thought you began it with the word "SIR", before realizing that you wrote "SR", and I nearly spit my drink out my nose.

Thank you, sir!

[Port Conway Lane]

Thank you all. Very informative and I haven't read the article in question. I recall 6-8 years ago as I was standing in the admissions line at Laurel the slot topic came up and I was all alone in my viewpoint that it made no sense to offer competition for the gambling dollar. After listening to the viewpoints of others I was swayed slightly there could be some positives. As time went by I became more adamant that Maryland needs slots to keep up with the nearby states.

What has been discussed in this thread made me realize I've been remiss. How often has any horseplayer reading this had a casual conversation with a stranger and the topic of horseracing comes up and the stranger replies "Oh I've always wanted to go to the horseraces but I don't know anyone or anything about it."

Well it's happened to me often enough and I've never taken the time to pursue the opportunity. What better way to bring fresh money into the game and at the same time share a passion that these people may never otherwise experience.

The next time opportunity knocks I'll be there to answer and I'll reflect back to this thread and thank you again.

[phystech]

A very interesting Letter To The Editor written to the Baltimore Sun:

http://www.baltimoresun.com/news/opi...pinion-letters

You'll need to page down to the bottom - entitled "Slots shift dollars to racetrack owners".

Written by a former CFO of the Maryland Jockey Club and acting CFO of Magna.

There's got to be some rumblings about a special legislative session being called in Md to address the slots issue via the state's structural deficit that has caused this recent Balt Sun story. Makes me think it's becoming more likely that one will be called by the end of the summer.

But even if one is called, slots are far from a done deal. If you are interested in reading some input/discussion on them from the Balt Sun's talk forum, go here:

http://www.baltimoresun2.com/talk/sh...d.php?t=105867

Growing sentiment is why should a dying industry be propped up by slots just so a foreign company can be given a financial handout by the taxpayers of the state. I've argued for slots for a long time but it is getting increasingly hard, if not impossible, to support Magna and DeFrancis being handed a huge windfall.

[Cannon Shell]

Originally Posted by phystech

A very interesting Letter To The Editor written to the Baltimore Sun:

http://www.baltimoresun.com/news/opi...pinion-letters

You'll need to page down to the bottom - entitled "Slots shift dollars to racetrack owners".

Written by a former CFO of the Maryland Jockey Club and acting CFO of Magna.

There's got to be some rumblings about a special legislative session being called in Md to address the slots issue via the state's structural deficit that has caused this recent Balt Sun story. Makes me think it's becoming more likely that one will be called by the end of the summer.

But even if one is called, slots are far from a done deal. If you are interested in reading some input/discussion on them from the Balt Sun's talk forum, go here:

http://www.baltimoresun2.com/talk/sh...d.php?t=105867

Growing sentiment is why should a dying industry be propped up by slots just so a foreign company can be given a financial handout by the taxpayers of the state. I've argued for slots for a long time but it is getting increasingly hard, if not impossible, to support Magna and DeFrancis being handed a huge windfall.

I guess Franks severance package was a little short. I love when they break out the old "it going to cost the taxpayers money" reverse-psychology. If the license it "worth" $1 dollar and they sell it for .50 then the naysayers say they lost .50 instead of saying that they gained .50 which is the real world truth. Imagine if Michigan offered huge tax incentives to foreign automakers to move there? There would be outrage! But when gambling is concerned, the tracks and their long years of creating jobs and providing tax revenue to the state are forgotten.
Someone is going to make a windfall off of the project. Like them or not, Magna has made a big investment in Maryland racing. And frighteningly enough, they are probably the only hope MD has.