Slots: The Answer Or A Band-Aid

Slot machines have been the hot topic around the country the last five years or so. Should racetracks be given the right to have them as a way to help subsidize the racing industry? As attendance at racetracks nation wide plummet, financial pressure on the racetracks and horsemen increase. Racetracks have failed to find ways to increase attendance as costs continue to rise for both the racetracks and the horsemen. The state of affairs is worsening each year in states that do not have slot machines. Purses do not keep pace with costs, overdo track improvements are put on the back burner, and the quality of racing in many jurisdictions deteriorate. It's becoming a death spiral with slots looked upon as racing's salvation.

Several States (New York, West Virginia, Delaware) and Canada allow slot machines at the racetracks to help increase revenue and attendance. These programs are boasting with success, revenues and track attendance has soared and purses have doubled or tripled. Horsemen and track management sing the praises of slot revenue. Racing programs that currently do not offer slots are losing market share to the states that do offer slots. It seems like a no brainer for every State to vote for slot machines and for all horsemen to endorse the idea. So what could be the downside to this "savior to racing"?

The current path taken by racetracks to get slot approval has been to go in front of the legislators and make the case that this is the only way to save the sport of horseracing. The State legislators buy into the idea and grant the racetracks the right to operate slot machines. The racetracks now have more business that ever while increasing purses to the horsemen who were the reason for getting the slots in the first place. As more and more States offer slots the less effect they will have for each track. Right now the State of Delaware has slots and because of this they are able to draw customers away from surrounding States like Maryland, New Jersey, and Pennsylvania. Once these States also get slots many of the customers that Delaware currently draws will most likely return to their home State to play slots. Delaware will then be forced to cut purses but the other States should be in position to raise their purses. The big effect that slots had on the original States will not have the same impact on the States that follow.

Slot machines have a much greater affect on a gamblers bankroll compared to horseracing. While the average takeout on horseracing is in the 20% range vs. the takeout on a slot machine might be 5%. The problem lies in the number of trials per hour one gets to determine ones loss for a night. The racetrack may offer 10 races in a 3-hour span while a slot machine could offer 700-2000 decisions in that same 3-hour time span. An average $10 bettor at the racetrack will lose $20 ($10/race x 10 races x .2 takeout = $20) while a $.25 slot player would lose $43.75 ($.25 video poker machine x 5 coins max play x 700 plays in a 3 hour period x .05 = $43.75).

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Very experienced players have been clocked has high as 800 hands/hour or 2400 hands in 3 hours. At this rate one could expect to lose $150 in a 3-hour session. If one chooses not to play max coins the hold goes up dramatically. With the much higher hold per hour associated with slot machines the faster slot operators will be busting out customers. Video poker machines have been called the crack cocaine of gambling. These machines are responsible for producing the highest rate of compulsive gamblers compared to any other form of gambling. While producing high revenues for the operators they also produce a higher cost to the public coffers that are forced to deal with the problems associated with compulsive gambling.

Another problem I fear with the slots is once racetrack management gets the go ahead will they much care about the racing side of the business. Will management continue to work toward increasing handle? Remember that management has done a less than stellar job increasing handle at present with that being their only source of revenue, so why would anyone believe with slots that this same management would not continue to under perform in the business of creating pari-mutuel handle? When Delaware Park received the go ahead for slots, management shut off a select number of OTBs to their signal. Their attitude became who needs the handle now that we have slots. Horsemen are shortchanged because of this attitude but with the windfall from slots they have no idea of the handle that Delaware Park has turned down.

Throughout history many industries have endured financial difficulty. Industries fall in and out of favor with the public, are mismanaged, or times change. When this happens industries have one of two choices, either fix the problems or go out of business. Slot machines offer a third choice for the horseracing industry. With slots we don't have to address the problems, we now have a new business that promises to cover up all of the problems that racing has inherited. To me slot machines are just a band-aid and not the answer. While other sports have thrived in the last 30 years horseracing has treaded water during this same period. Harness racing is a great sport that should be able to stand on its own four feet.

My greatest concern over the legalization of slot machines is that one-day slot operators will find horseracing to be an inconvenience. With huge revenue created from slots who needs the high overhead associated with horseracing. The physical racetrack itself becomes prime real estate for slot expansion. The backstretch would make a great parking lot and the barn area could be sold to developers at a tidy profit.

Summary

The legalization of slot machines is not the slam-dunk perfect solution that many believe. Horseracing has its problems, and for now the only answer (being considered) is to legalize slots. I fear the long-term ramifications that slots may bring. I wish racing could have overcome its problems without the aid of slots but the Ginny is already out of the bottle and there is nothing that one can do to turn back the hands of time. If the States that currently do not have slots don't get them soon it will further hinder horseracings chance of survival in these States. Racetracks that do not have slots will find it increasingly difficult to compete for the best horses against tracks that have slot machines. With many reservations I hope the State of Illinois will give the go ahead soon which will allow the horsemen of Illinois to retake its rightful position in the wonderful world of harness racing.

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