The casino-racecourse marriage was first introduced in 1990 as an experiment by the West Virginia Lottery Commission when it allowed Mountaineer Park to install video lottery terminals (VLTs) on its premises. The horse racing community viewed it as a last-ditch attempt at a cheap racetrack on the verge of extinction. Damn it, there wasn’t even a law on the books for something like that. When that “experiment” proved profitable, Californian Excalibur Holding Company bought Mountaineer Park for $ 4 million in cash and an additional $ 2.7 million in stock. In 1993, the West Virginia Supreme Court ruled that state law did not allow VLTs and the law needed to be changed. It allowed Mountaineer to continue operating VLTs until the relevant legislation – the Racetrack Video Lottery Act of 1994 – was passed. Today, Mountaineer Racetrack has grown from a run-down racetrack to an entertainment complex with a hotel, golf course, spa and theater thanks to the addition of 3500 spinning wheel slot machines.
Mountaineer may have been the first Racino, but it was the beleaguered Prairie Meadows racetrack in Iowa that became its greatest Cinderella history. After opening to much fanfare in 1989, Prairie Meadows immediately began to lose money. By November 1991, the long-suffering railway had filed for bankruptcy. Live racing was suspended in 1992 but resumed the next year thanks to revenue from simulcast betting. Still, it seemed only a matter of time before the hatchet fell on the Iowa route. Apparently the next step was digging an even deeper hole by spending $ 26 million to convert the clubhouse into a casino and installing 1,100 slot machines. It was the craziest bet on the longest longshots and it still paid off. Pretty. On April 1, 1995, Prairie Meadows reopened with its shiny new slot machines and 150,000 players flooded its gates. In his first year as Racino, Prairie Meadows earned $ 119.3 million. The success didn’t stop there – the higher revenues meant bigger purses, which in turn attracted higher quality horses and more fans. And it wasn’t just the circuit that benefited – Iowa’s thoroughbred breeding industry became the fastest growing of any state, going from 28 to 12 in two years. Today, Prairie Meadows contributes an average of $ 27 million annually to the county’s health care, arts, culture, education and infrastructure.
The Racino Sauce Train wasn’t just limited to Prairie Meadows and Mountaineer Racetrack, however. After the addition of slot machines in 1996, the Charlestown Racetrack wallet grew from $ 27,000 to $ 166,000 per day. A 2008 study of seventeen North American racinos showed that gross cash increased from $ 135.3 million to $ 295.2 million after installing slot machines – an increase of 118%. A shout went across the country – racinos were the future of horse racing! The sport was saved! Or was it? The cold truth is that with the introduction of slot machines on a racetrack, the pari mutuel bets drop by twenty to forty percent. While slots increase participation in racinos, they also decrease live races. Interestingly, slot machine revenue increases when live or simulcast races are held. In other words, it’s horse racing that attracts guests to go to a Racino, but once they arrive the slot hypnosis takes over and not even the second coming of Man O’War will rid them of their machines. Instead of keeping players busy between races, slot machines have become their main focus.
A great example of the effect slot machines have on simulcasting and live racing is Delaware Park. Before Delaware Park installed slot machines in 1994, 51% of wagering stakes came from simulcasting from other tracks, 30.5% from live racing, and 18% from Delaware’s exported simulcast signal. In 2008, 70% of the bets came from the exported simulcast signal from Delaware, 25% from imported simulcast signals from other tracks and only 5% from live racing. While betting on live races has plummeted since slot machines were introduced, their earnings have seen Delaware’s wallets soar from $ 650,000 to $ 35 million a year. Now, with the legalization of sports betting and the addition of table games, horse racing can take a back seat even further. While these gambling alternatives offer more income for the wallet, they do nothing to attract new fans to the sport. If anything, they distract them from it. Betting on horse racing requires skill, analysis and time while pressing a button on a slot machine does not. Plus, the payouts are faster.
Still, it is hard to deny that the benefits of installing slot machines exist, even if they come at a cost for live horse racing. Bigger bills, better quality horses, and improved backstretch facilities are just a few of the bonuses that come when racetracks turn into racetracks. Racinos involve much less red tape than traditional casinos as they are already accepted by the public as gambling sites, already have gambling permits, no land needs to be purchased and they can be built in months instead of years. Slot machines were seen as the last desperate measure for battered racetracks until January 28, 2004 when the prestigious Saratoga Racetrack added 1,323 VLTs, 2 restaurants and a food court. Today, racinos are legal in eleven states – Delaware, Florida, Iowa, Louisiana, Maine, New Mexico, New York, Oklahoma, Pennsylvania, Rhode Island, and West Virginia – and many more are hoping to hop on the bandwagon. Like it or not, racinos are here to stay – hopefully not at the expense of live horse racing.
Photo: Bergsteiger-Casino
