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Racetrack casinos: 25 years and counting?

By Nick Sortal

Racetrack casinos continue to tilt more toward the “casino” and less toward the “racetrack” – and are changing their names to reflect that, which exposes plenty of issues.

As last weekend’s winter meeting of the National Council of Legislators from Gaming States (NCLGS), Steve Geller, a former president of the organization, was among those discussing the history – and the future – of horse tracks, dog tracks and jai-alai frontons, including whether legislators should vote to decouple casinos and pari-mutuels. He noted that the gaming industry is closing in on 25 years of the first partnership between a pari-mutuel and a casino (at a Rhode Island jai-alai fronton in 1992) and that industry and societal changes necessitate a constant re-evaluation.

Geller, who spoke by phone after his session, was part of a panel, led by Representative John Viola of Delaware, that was assigned to provide the attending legislators with a status update and outlook on pari-mutuels.

“I believe one of the biggest issues facing pari-mutuels in the future is decoupling,” said Geller, noting that he was speaking neither in favor of nor against the idea. “If you are a state that has racinos, either you are discussing decoupling or you will be discussing decoupling.”

The racino arrangement grew because of competition between states, he pointed out.

“Once one state started doing it, then it forced others to,” said Geller, noting that in the early years Delaware harness tracks struggled before adding slots. Once the slots arrived, the pari-mutuels in neighboring states suffered – and responded by creating their own racinos.

Geller, a Florida legislator from 1988 to 2008, said that a big reason he pushed through a bill to allow card rooms in Florida was to benefit the agribusiness industry. Slot revenues at racetracks helped keep the dog and horse breeders solvent.

But dog racing fell out of favor, partially because of a big push from animal rights groups, such as Grey 2K.

“And permit owners just found it a lot more profitable to own a casino,” he said. “The cost of operating a thoroughbred or even a greyhound track is expensive. It’s just must cheaper to offer slots.”

For example, Twin River Casino (formerly Lincoln Greyhound Park) in Rhode Island asked legislators for decoupling in 2009, as a way to fend off bankruptcy. Geller said the request was denied, but in 2010 the state took the request and went one step further: the legislature banned greyhound racing outright in the state.

Competition from the lottery, riverboat casinos, and Indian gaming also has siphoned off pari-mutuel interest, as well as a preference for faster action.

“These days everyone has attention-deficit disorder. The pace has changed,” Geller said. “They want 20 bets in three minutes.”

Geller, again in the vein of presenting all options, noted that others supporting decoupling question whether government should mandate a business remaining open even though it is losing money.

There is opposition, of course.

“Others say racinos are losing money because they’re not spending money,” Geller said, acknowledging that could be an exaggeration. Still, he noting that at one track “… in order to watch the greyhounds you go through an unmarked double door, then walk down a corridor, then someone would open the door if you knew the password.

“The fact is more of the pari-mutuels have given up and they’re not investing in their facilities and they’ve done nothing to attract women in hats,” he said “They say ‘Well, we’re not making money so we can’t invest.’”

He added that another argument against decoupling is that the racinos obtained slots because they were a pari-mutuel.

“If you decouple should you keep your permit?” he asked.

The NCLGS winter meeting concluded Sunday in Scottsdale, Arizona. It included discussions of tribal gaming, lotteries, casino expansion, electronic gaming developments, and taxation. The site has more information.