Slots fail to keep bettors at track

The Baltimore Sun

WILMINGTON, Del. -- Eleven years after Delaware allowed slot machines at its racetracks, the purses horses compete for are higher than ever and the races more competitive. The grandstand at Delaware Park is spotless, the restaurants are new and the parking (for a mere $3) is valet.

But hardly anyone is there to watch the horses, much less bet on them.

The cheers of the crowd as the horses came down the home stretch one afternoon last week were not quite loud enough to drown out the soft hum of the air conditioners that kept slot machine players cool in the casino attached to the grandstand. Fewer than a hundred people were sprinkled among thousands of empty seats at the track.

Maryland racing officials insist that they need slots at the state's tracks to revitalize their industry, which they say is suffering from competition from Delaware, West Virginia and Pennsylvania, where expanded gambling subsidizes purses and attracts the best horses. But the experience of those states shows that slots have done nothing to attract more people to horse racing.

"There's no correlation," said George Sidiroplois, the West Virginia Racing Commission chairman. "It's inverse, in fact."

Figures from Delaware show that live betting on thoroughbred horse racing in the state has dropped by 40 percent since slots were legalized in 1996. Six months after slots came online at Philadelphia Park in Pennsylvania, betting is down by 20 percent. West Virginia's wagering handles increased sharply a few years ago when the state's tracks began broadcasting their races nationally, but betting has leveled off and begun to decline.

Maryland is due for another round in its decade-long debate over whether to legalize slots. Pressure has been mounting for months as many lawmakers, particularly in the state Senate, have looked to slots as a way to close much of the $1.5 billion budget gap Maryland faces next year.

But it was an announcement two weeks ago by the Maryland Jockey Club that it would cut purses at its races for the rest of the year to make ends meet that led Gov. Martin O'Malley to proclaim slots a necessity to save the state's historic horse racing industry - and the jobs and horse farms that go with it.

"All these things are threatened by their inability to compete with tracks in states around us who are able to offer slots," O'Malley said at the time. "We can't expect them to thrive, or even survive ... if we handicap them and don't allow them the tools that the tracks in all the other states are using."

The tracks in neighboring states are thriving in the sense that horsemen and jockeys are competing for three times as much money as they did before slots, and track owners are making millions. But that hasn't done anything to stem the declining popularity of horse racing.

"This place used to be mobbed," Jean Carter of Wilmington said while going through the racing forms in Delaware Park's nearly empty grandstand before the start of a race. "Either people went broke, or a lot like to go to the slots instead of horses."

Maryland Jockey Club President Lou Raffetto acknowledges that racing has declined in neighboring states, but he insists that that won't happen here. Maryland has a horse racing tradition that eclipses that in Delaware, West Virginia and Pennsylvania, and has the farms, breeding operations, infrastructure and committed track owners to match, he said. In those other states, Raffetto said, "they really don't care."

"I've been in the business over 30 years, and I'm not naive," Raffetto said. "I really believe the difference in Maryland is going to be that the people that run Maryland, and I'm referring to all the people involved in the day-to-day operations, care about what racing looks like, care about where the program is headed.

"It's going to be not just about slots raising purses to enable the horsemen to make a better living," he added. "It's going to be about bringing people back out to the facility and showing them what a great sport this is."

In Delaware and West Virginia, marketing for the tracks tends to focus on slots, not horses. Charles Town Races and Slots in West Virginia, for example, rents billboards in Baltimore that advertise the number of slot machines there and even the number of parking spaces. But they don't mention the races.

In Pennsylvania, slots backers made many of the same arguments Maryland's racing industry has about the need for slots at the tracks, but horsemen there say they feel they've been betrayed.

Philadelphia Park is the only thoroughbred track in the state that has begun a combined slots and racing operation. When the track's owners applied for a slots license, they promised a new $300 million casino. As a temporary move, they squeezed horse betting operations into the fifth floor of the grandstand and turned the rest of the space over to slots.

But barely six months after the slot machines came online, the track's owners were back before the Pennsylvania Gaming Control Board asking to be released from their commitment to build the casino and free up betting space for racing again.

"It was a real bait and switch," said Michael P. Ballezzi, executive director of the Pennsylvania Thoroughbred Horsemen's Association. "They're more interested in providing their gaming product in the form of the casino and not in the racing product. The racing product is on the back shelf. ... It's gotten to be something in the way of the casino, and that's not what we bargained for."

The track's chief executive officer, Hal Handel, did not return phone and e-mail messages last week.

In the first four months of the year, Philadelphia Park logged just under $7 million in bets on live horse racing, down from about $9 million during the same period in 2006. But during the same period, the track saw nearly $1 billion in betting on slot machines - earning a profit of about $39 million after state taxes.

Changes in the horse racing industry over the past several years have meant that much of the handle for a track comes from broadcasting their races at other tracks, or simulcasting, than from betting on live races. However, tracks get to keep a much smaller percentage of that wagering, typically about 3 percent compared with 20 percent for bets on live races.

Furthermore, simulcast wagering is down, too. In Delaware, simulcasting boosted betting revenue in the '90s, but it has declined at roughly the same pace as live wagering over the past five years. Since 2002, all horse betting has dropped by 20 percent in Delaware.

Since slots came to Philadelphia Park, simulcast betting also dropped, from $29 million in the first four months of 2006 to $25 million in the same period this year.

Tommy Tomlinson, a Republican state senator who helped draft Pennsylvania's slots legislation and whose district includes Philadelphia Park, said he's confident that his state's horse racing industry will pick up as the slots program is fully phased in.

"You haven't had the impact yet of the purses kicking in, and you've had to go through an industry in transition," he said. "When Delaware did it, it really impacted on the quality of racing in Philadelphia Park, and I think that we'll have better purses than Delaware and we'll attract a lot of the horses back."

Dedicated horse bettors in Delaware, where slots have been subsidizing purses for more than a decade, said there's no question that state is attracting better horses than it used to. But they say this hasn't drawn new people to betting and doesn't make much difference to them.

"If a $1 million horse is in a race, it doesn't mean I'm going to get [$1 million]," said Jim Delligatti of Middletown, Del. "A $4,000 horse is the same to me."

Delligatti, 68, a retired IRS agent who has been coming to the track for years, said it gets crowded the day of the Kentucky Derby, but that's about it. Last week, he was able to set up in peace in a small cubicle in Delaware Park's simulcast betting room with a Dunkin' Donuts bagel, coffee and a racing sheet. A few others were scattered around.

Delligatti said he knows most of the other people there, at least enough to say hi. The slots players mostly stay in their dimly lighted rooms, rarely venturing through the wide glass doors that open out onto the track or down the hall to the betting windows.

"My guess, they're playing slots and not so much in here," Delligatti said, gesturing around the nearly empty room. "When I was coming years ago, there were so many people in here, you had to get right back in line after you made a bet. You had, what, 35, 40 minutes to the next race, and you wouldn't get back to the window in time if you didn't."

Just then, a group of men wandered into the room.

"Are those slots in there?" one man said.

"I don't know," another replied, and they stepped back to the flashing, clanging, reeling world below.

andy.green@baltsun.com

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