On a muggy Monday afternoon this month, jockeys at Delaware Park Racetrack & Slots near Wilmington, Del., guided their horses on the dirt track, meandering toward the starting gate for the third race.
Grandstands with thousands of seats were largely empty. Section after section had a single spectator, or two, sometimes three.
The truth is, on this day and on many days during the racing season the thousands of seats are not really for sitting. They're a glorified roof for what's beneath the grandstands: 2,000 slot machines.
Even on a weekday afternoon, some rows of slot machines were fully occupied, mostly gray-haired customers sitting shoulder-to-shoulder. In contrast to the swelter outside, gamblers enjoyed the comfort of air conditioning and clean, carpeted floors. They fed the machines, watching the wheels spin and jar to a stop, or the video poker cards reveal themselves.
The exterior of the facility doesn't sport the grandeur of casinos in Atlantic City or Las Vegas, doesn't inspire the visual awe and excitement. But to the casual observer, the slots atmosphere inside is identical: warbling one-armed bandits, the fwit, fwit, fwit of video cards turning over, the
machine-gun ching-ching-ching-ching of a gambler cashing out winnings, coins hitting metal tray.
Delaware Park is a leader in the fast-growing industry of racetrack casinos, or racinos. Through the first six months of this year, gamblers dropped about $1.5 billion into Delaware Park slot machines $4,200 per machine per day. After paying out winnings, the facility cleared $117 million on slots alone for half a year.
It's that kind of money that has developers scurrying to plan racetrack casinos in Pennsylvania.
Locally, a $400 million horse track with slot machines is proposed for farmland off Route 33 between Easton and Nazareth.
Developers of the Palmer Township project, dubbed Freedom Park, are different from many others. Backed by a horse racing association, they say they care more about racing than slots. Even so, it's the slot machines, up to 3,000 of them, that would provide the money to make it possible.
Big money is also why Pennsylvania legislators are thinking about legalizing gaming. The House and Senate have passed separate bills, and a compromise could be considered as early as this week.
Oddsmakers in the Legislature are betting slots will become legal.
Legislators may not be able to resist a quick fix taking a cut of racetrack casino profits to pay for a $1 billion local property tax cut. In Delaware, which has three racinos, the state's 35 percent share of slot profits last year totaled a cool $201 million.
Pennsylvania's windfall figures to be much more. The state would be taking its cut from more racinos with more slot machines in each one.
For the Palmer Township plan to go from long shot to reality, lawmakers need to approve slot-machine gambling. Then the Lehigh Valley project would have to be chosen from a pool of eight applicants as a site for a new thoroughbred racetrack-casino.
Such a combined racetrack and casino has never been built from scratch in America, at least according to about a dozen experts who couldn't think of one. Elsewhere, slots were added to existing horse tracks.
Slots breed controversy
Adding more horse racing tracks is a relatively uncontentious issue, but introducing slot-machine gambling in Pennsylvania and other states has been a divisive one.
People know gaming can be an economic boon. It allowed a city to bloom in the desert of Nevada and become a popular tourist destination.
Others blame gambling for addictions to the lure of easy money and all the social costs those problems bring.
Yet the real economic impact of gambling on communities, heavily studied over the past decade by academics and governments in the United States and abroad, often lies somewhere between a win and a bust.
Evidence in this country comes from the 30 states that now have some form of casino gambling.
''Typically what happens is, there's a lot of optimism at one end of the spectrum and Cassandra-style commentary at the other end that this is the best thing or worst thing that ever happened,'' said William R. Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno. ''The underlying reality is it falls somewhere in between neither a phenomenal boom, nor a terrible disgrace.''
The economic benefits are usually jobs and tax revenue, and perhaps a tourism boost. The costs are more social, such as fueling gambling addictions that could lead to more personal bankruptcies. And money spent at other local entertainment venues could shift people frequenting the casino rather than local restaurants, for example.
In assessing the net gain or loss of gambling, it's important to know the economics of the horse-track project in the Lehigh Valley like at Delaware Park have little to do with horse racing and everything to do with slot-machine gambling, at least in terms of what generates the money.
Proof is in Freedom Park's application for a horse racing license. Developers estimate revenue of $220.1 million in 2006, the first full year it would be in operation. Of that, just $3.6 million, less than 2 percent, would come from live thoroughbred horse racing. Slots are estimated to bring in 91 percent.
That's similar to other racinos, where horse tracks are merely a technicality that allow for slot machines, the same as Midwestern ''riverboats'' that simply allow for casinos and have nothing to do with boat rides, Eadington said. Most of those ''riverboats'' never leave the shore.
So despite all the political rhetoric about saving the horse racing industry, racing will eventually be phased out of many racinos, predicted Eadington.
''In a way, this is a very strange legalization of casinos, and sort of a back door,'' he said. ''The builder would be building the racetrack solely for the purpose of operating the casino. The racing business doesn't make any money. It hasn't for quite some time.''
That may be true of other proposals in Pennsylvania, but the Freedom Park plan is different. It's backed by the Pennsylvania Horsemen's Benevolent and Protective Association, an industry group for state thoroughbred horse owners and trainers.
Developers say they will not only use some slot proceeds to boost race winnings at the horsetrack, as would be required by law, but they would funnel 100 percent of the slot profits to those purses. That's different than other racinos, where profits go to owners or corporate shareholders.
They hope having larger race winnings than other tracks will make Palmer Township home to some of the best horse racing in the country, perhaps attracting the same horses that run in the Kentucky Derby and other Triple Crown races.
''We're unlike any other operator who only wants the racing license to get the slot machine license,'' said Joseph H. Santanna, president of 100% Purses, the development group owned by the horsemen association. ''We want the slot machine license to do quality and premier racing.
''Our passion is for racing,'' he said. ''It's not for slot machines.''
That's why the group would hire an outside expert, Foxwoods Resort & Casino of Connecticut, to manage the slots operation.
Even as a premier track, though, the majority of money would come from the slot machines, while Freedom Park horse racing would just break even, Santanna conceded.
Economic plus or minus?
Freedom Park developers claim the project would create 800 to 1,000 jobs, and by 2008 would be paying more than $15 million in local real estate and gaming taxes.
Those kinds of economic benefits are seen at other racinos in the six states that have them. Last year, the $2 billion racino industry nationwide employed 11,000 people and generated $718 million in state and local tax money, a 23 percent increase from 2001, according to an annual study by the American Gaming Association.
But there are costs too, and it's a dicey task to lay odds on whether gambling in the Lehigh Valley would be an economic-development success.
Congress tried to study the issue for the nation in a 1999 report and ended up concluding that sometimes gambling helps a region, sometimes it hurts.
Landmark studies in Australia and Great Britain were equally unsuccessful in determining a single answer to whether gambling is good or bad economically for communities.
Professors around the country have dissected the issue. They too have trouble arriving at a single answer.
Clues, though, are found in places like Delaware Park and Dover Downs in Dover, Del. Both had horse racetracks that added slots in the late 1990s.
In Dover, a city about the size of Easton, the economic result has been positive, despite some initial fears, said Dover City Manager Tony DePrima.
Adding slots has helped city finances, but hasn't had a profound impact on Dover businesses near the racino, he said.
''From a city perspective, at least financially, it's meant good growth in our tax base,'' said DePrima, adding that municipally owned power and water services have benefited.
''It's been a big growth industry and has created jobs,'' he said.
However, the $200 million-a-year Dover Downs hasn't meant any largess for the quaint downtown Dover, which is less than three miles away from Dover Downs, off the heavily traveled Route 13.
Tourist gamblers simply don't go there, he said.
Likewise, the racetrack-casino in Palmer Township wouldn't benefit the downtowns of the Lehigh Valley, said DePrima, who was economic and planning director in Phillipsburg, N.J., in the late 1980s.
''If Easton and Bethlehem and Allentown think somehow these slots are going to get people to visit their historic downtowns, you can forget about it,'' he said. ''People who go to slots go to slots and go home.''
Effect on other businesses
One of the keys to assessing the impact of a casino is to figure out where the gamblers will be coming from, experts say.
Major tourist destinations like Las Vegas and Atlantic City reap the biggest benefit because people travel there from out of state, stay a few nights, spend a lot of money and take any gambling-related problems home with them.
By contrast, venues like the proposed Freedom Park draw customers from less than 50 miles away, generally catering to local gamblers, experts say.
That leads to ''convenience gambling,'' said Robert Goodman, author of ''The Luck Business'' and director of the now-defunct U.S. Gambling Research Institute in Northampton, Mass.
Goodman's research showed convenience gambling was much less lucrative for surrounding communities because of the social costs of dealing with addicted gamblers, which can amount to more than $13,000 per gambling addict per year. Those are costs borne by local counties and municipalities.
''In research we've done, we've concluded that the net result is negative in states that have convenience gambling as opposed to tourist-destination gambling,'' said Goodman, who said he has no ethical opposition to gambling, being a gambler himself.
Nearby businesses also can be hurt by a casino.
Goodman's research found local people who went to casinos changed their spending habits.
''Basically they were diverting money out of other discretionary spending activities, such as buying a shirt, buying some furniture, buying a new car, or going to restaurants, sports events and movie theaters,'' he said.
Other studies found different results. For example:
A study published in the Journal of Shopping Center Research in 1997 reported that 32 percent of people said they went shopping while on a visit to a casino, while 69 percent said they ate at a local restaurant.
A study published a year later at the Wharton School of Business at the University of Pennsylvania looked at hundreds of U.S. malls in casino and noncasino communities and found no significant effect on sales before or after a casino came to town.
A study completed for a 1999 congressional report by the National Opinion Research Center at the University of Chicago found mixed results. It found earnings for nearby construction, hospitality, transportation, recreation and amusement businesses rose after a casino was introduced. But earnings for local bars, restaurants and general merchandise businesses fell.
Freedom Park's developers propose several eating facilities, including a fine dining restaurant, a buffet-style restaurant, grandstand food and a food court, which could hurt local restaurants.
But businesses that serve the racetrack-casino could benefit.
Freedom Park's developers estimate the racino would spend $50 million to $60 million a year on local goods and services. For example, horse owners would buy $605,000 worth of straw and hay from local farmers, developers say.
Still, ''multiplier effects'' in which dollars spent lead to other spending in the economy would be limited for a facility like the one proposed for the Lehigh Valley, Eadington said.
''On balance, the multiplier effects are relatively small unless you're a true tourist area,'' he said. ''And with the racetrack-casino because it's not going to have a lot of other amenities you're basically going to have a customer who's a drive-to customer, who drives to the facility and drives home and doesn't create a lot of economic impact elsewhere in the community.''
Freedom Park estimates the racino would create up to 1,000 jobs, claiming many would be ''family sustaining'' jobs.
However, that's a subjective term.
Eadington said his research shows the jobs, at least in the slots operation, are not especially lucrative.
''It's not very labor-intensive and the jobs that are there are not high-skill, high-paying jobs, typically,'' he said. ''It's like a factory.''
And the benefits of additional employment at the racino can be offset by lower employment at nearby businesses that see lower sales because of the track, experts say.
Raymond Suhocki, president of Lehigh Valley Economic Development Corp., estimates an average of $20,000 per job for 1,000 jobs, putting the total payroll at about $20 million.
''In terms of the entire economy, it's not huge,'' Suhocki said. ''You're talking about 1,000 jobs in an area that has 300,000 jobs total. So, it's not going to wing the economy.''
The 1999 report to Congress on gambling found that unemployment rates, welfare outlays and unemployment insurance in communities with new casinos decline by about one-seventh.
Yet per capita income stayed the same, indicating the communities reap more jobs, but not necessarily better jobs. There appears to be more of a shift in the types and locations of work than a net improvement in the local standard of living, according to the 1999 Gambling Impact and Behavior Study.
Perhaps a racino's greatest contribution would be simply providing another entertainment option that raises the quality of life in the Lehigh Valley, Suhocki said.
Like the Lehigh Valley Velodrome bicycle racing track or Dorney Park and Wildwater Kingdom amusement park, a racetrack-casino would be another thing to mention in a marketing brochure to show the Lehigh Valley is a desirable place to live, he said.
''For us, it's just another attraction or amenity for the portfolio associated with the region's quality of life,'' Suhocki said.
Freedom Park developers propose a 2,500-seat arena for shows, concerts and community events. And each entertainment component of the complex the racing, slots, restaurants and arena would be accessible separately, Santanna said.
''We're going to have some fine dining restaurants, and we hope some folks will just come to have dinner,'' he said. ''They can drive right to the dining section and not have to walk through any other section unless they want to.''
In Dover, entertainment has been one of the big benefits of slots, said DePrima, the city manager.
Now, nationally known performances and boxing matches are coming to the city, something that never happened before slots.
''We have people coming to Dover now,'' DePrima said. ''It's kind of nice to have a cultural venue, even if it might be Chubby Checker or Willie Nelson.
''It's one more thing that makes it a nice place to live.''
In the end, Eadington said, evaluating slot gambling may not be measured in dollars at all.
''The aggregated effects on society at large are typically not overwhelmingly positive or negative,'' he said. ''A lot of it comes down to values, whether you think this is a good idea or not.''
Monday: A look at Pennsylvania's horse racing industry and at Foxwoods Resort Casino, owned by the same tribe that would manage the proposed Palmer Township slots operation.
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