Is Pari-Mutual Wagering Dead…Even With Slots?

This week’s LET IT RIDE.COM HOT TOPIC comes from Frank Angst of the Thoroughbred Times…take a read and VOICE AN OPINION!

Track owner Penn National sees little pari-mutuel future

While the company’s name still references a racetrack, Penn National Gaming Chairman Peter Carlino made it clear on Thursday that he believes pari-mutuel wagering has dried up, even at tracks with added gaming.

In a conference call with investors and analysts, Carlino said his company no longer will argue that adding slot machines at tracks is a way to improve pari-mutuel handle. He said that when the company lobbies for slots at tracks, it will move to new arguments—including the ability of racetrack slots to promote agri-business—because he believes increased purses do not improve the quality of racing or increase pari-mutuel handle.

“There aren’t sufficient numbers of racing customers in the world anymore because they died,” Carlino said.

Carlino said everyone realizes Penn National’s approach has been to buy tracks that have added gaming or have a chance to add gaming. In Maryland, where Penn National owns a 49% interest in Laurel Park and Pimlico Race Course, a percentage of gaming revenues supports purses. Carlino expressed frustration that tracks currently are left out of that equation.

“A huge mistake in Maryland—that’s never happened anywhere else anywhere in the country before—was to allocate slots proceeds to purses,” Carlino said. “I’m glad that horses are going to be eating well, but they’re not going to be running well if there’s no racetracks where they can run. The legislature completely ignored the people who have the real investment in the state, the racetracks.”

Carlino said Pennsylvania’s model for racinos, which he said included large licensing fees upfront and low taxes going forward, is the best. He encouraged Ohio Gov. John Kasich to consider a similar model.

“There is reasonable hope, if not an expectation, that [Governor Kasich] may recognize the advantage of protecting the racing industry in Ohio–which has a long history and needs help–and using that opportunity–since it’s already keyed up and ready to go–to generate revenue perhaps with license fees up front and a reasonable tax rate,” Carlino said.

Carlino said his company has begun to lobby in Texas with the hope that legislators will consider taking action this year. Penn National owns a half-interest in Sam Houston Race Park.

In Ohio, where Penn National owns Beulah Park near Columbus, Carlino speculated the state could allow racing licenses to be moved to areas that will not compete with the state’s planned free-standing casinos in Cleveland, Columbus, Cincinnati, and Toledo. Carlino said Penn National is emphasizing that with racetrack slots sustaining racing, states pick up important, environmentally friendly agri-business.

Penn National tracks without added gaming will face cutbacks.

“Operating these tracks at a loss is not in our long-term plan,” Carlino said. “We will ratchet down costs in Texas. We will ratchet down costs in Maryland. We’ll do whatever it takes. We’ll be tough and brutal about that because we have to. We’re not running a public charity.”

WHAT’S YOUR TAKE?

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