With the economy flying south in 2008, horseplayers across America have been betting less money.
It seemed that whenever meets ended last year, race track leaders announced handle declines. And, because tracks make money by holding a percentage of the betting dollars, the situation has led to lower purses for owners, and smaller commission checks for jockeys and trainers.
Some horsemen — like Jeff Mullins in Southern California — opted to ship some of their stock to racinos like those in Santa Fe, N.M. that pay better purses for claiming races.
Furthermore, leading track operator Magna Entertainment is up to its eyeballs in debt and in 2007 company leaders even announced the possibility of selling Santa Anita to help pay the bills.
So, with the racing game obviously struggling, track operators should stick to trying to find new revenue sources rather than cutting off their old ones.
But on Wednesday, Magna and Churchill Downs, negotiating under the name TrackNet Media Group, plan to pull the plug on pari-mutuel racing to 80 Nevada Casinos — unless a last-minute deal can be struck, according to BloodHorse.com. The racetrack companies believe casinos should pay a drastically higher percentage to them for pari-mutuel wagering than the current agreement calls for.
If the tracks do stop pari-mutuel wagering, bettors in Nevada will still be able to bet. Plans are for betting windows at casino race parlors to stay open, as Nevada operators plan to book the action themselves. But that means that some multi-race bets like pick sixes and pick fours will not be offered.
Figures released on Tuesday show that thoroughbred pari-mutuel wagering in the United States, dropped 20.3 percent in December compared with the same month in 2007, while betting declined 7.2 percent in the full year of 2007 to 2008 — to it’s lowest total since 1998. Horse bettors wagered $13.67 billion in 2008 after betting $14.72 billion in 2007, according to information released by Equibase and published on BloodHorse.com.
Pari-mutuel history in Nevada goes back to 1990 when the state linked to the tracks, allowing betting money to be co-mingled in track pools. In 1998 statewide handle peaked at $619 million, but betting began to tail off shortly afterward. Nevada’s betting total slipped to $472 million in 2002, but steadily increased up until 2007.
One cause of the decline was that in 1997 Nevada outlawed rebates to horseplayers, so many of them began wagering on the telephone to rebate shops in St. Kitts and other offshore locations. Hollywood Park management believed their customers were moving to Las Vegas to get rebates, so in 1997 it blacked out Southern California races until rebating was prohibited.
Looking at today’s poor economy in general and Magna’s situation in particular, clearly, now seems like the wrong time for track operators to shut out Nevada bettors from pari-mutuel pools at Santa Anita, Gulfstream Park, Golden Gate and the Fairgrounds.
These are very lean times for Magna, which according to its third quarter earnings report ending Sept. 30. 2008, has lost $105 million, $87 million and $113 million in 2005, 2006 and 2007 respectively. And for the nine months ending Sept. 30, 2008, Magna lost $116 million.
On Monday, Magna’s stock price closed at just 82 cents a share.
“The company’s ability to continue as a going concern is in substantial doubt,” said the report, which tallied the company’s accumulated debt at $626 million.
In light of this, race track leaders should make the rational choice of agreeing to keep the pari-mutual system operating in Nevada uninterrupted. And as the hours dwindle down to the first race at Gulfstream Park on Wednesday, one can only hope that sensibilities by TrackNet leaders will prevail.