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Sunday, April 9, 2000

Nationwide, racing faces threats from legislation, other gaming

By Ruth Cochran-Escamilla
Caller-Times
After some difficult early years, the Texas racing industry is riding a wave of popularity that analysts say is fueled by a robust economy and expansion of simulcasting.
   But the racing industry here, and across the country, still faces challenges from other forms of gambling such as casinos, Internet wagering and even state-run lotteries. And the greatest threat to horse and dog racing may lie in Congress.
   Legislation that would ban Internet wagering but offer exemptions for the pari-mutuel industry has been challenged by the Christian Coalition, which opposes the exemptions.
   In addition, the Department of Justice has begun a study of the federal Wire Act and has stated that interstate simulcasting could be illegal.
   That could have potentially devastating consequences on the racing industry, which handles 80 percent of its money through simulcasting, said Rob Werstler, director of racing for the Texas Quarter Horse Association.
   "If this outlaws simulcasting," Werstler said, "our industry will be finished."
   Racing's lifeline
   Simulcasting has become the lifeblood of most tracks trying to compete with a vast array of entertainment and gambling choices:

The Corpus Christi Greyhound Race Track was losing $1 million a year until 1997, when it began importing signals from other horse and dog tracks and exporting signals of its races to tracks across the country.
   The track now operates in the black.

Across the state on-track handle, or the amount of money bet, increased from a low of $507.2 million in 1996 to $624.3 million last year.

Sam Houston Race Park saw a 26.2 percent surge in the amount of money bet on its races from 1998 to 1999. It experienced a $50 million increase alone in export handle, or money bet on Sam Houston races at other tracks.
   Bob Pollock, general manager for Retama Park in San Antonio, said simulcasting is what draws in fans. And draws their money to the tracks.
   "For the month of January, we were up 23 percent over last year, and in 1999 we were up 16 percent over the year before," Pollock said. "The same is true with February. Simulcasting is the difference."
   Economic boom
   Werstler, however, said that if the Texas economy were not so robust, not even simulcasting would save the racing industry.
   "Don't let anybody fool you. The reason racing is doing well right now is because the economy is doing well," Werstler said. "Racing goes with the economy. If the economy slows, or worse, we go into a recession, then the racing industry is going to slow."
   Werstler said Texas must shore up the $11 billion industry in preparation for an economic downturn. Racing already faces competition from the state-run lottery and could ill afford to compete with the types of casinos and riverboats available in Louisiana.
   "Off-shore wagering also is killing us," Werstler said. "A place in, say, Aruba is either taking signals or pirating signals. So now you've got guys sitting at tracks betting on cell phones through their account set up in Aruba. So Sam Houston Race Park is getting no money. The horsemen are getting nothing.
   "That money needs to go through the windows or there needs to be a big push nationally to legalize account wagering," he said.
   Other options
   Any expansion of casino-type gambling needs to be carefully regulated, too, Werstler said. The Fair Grounds, a racetrack near New Orleans suffered a 4 percent decrease in attendance and on-track handle after an 88-day racing period that ended in March. Track officials blamed competition from Harrah's Casino in New Orleans.
   Arlington International, a horse track in Illinois, closed for several years after competition from riverboat gambling caused it to suffer deep losses. The track is set to reopen in May after gaining tax breaks from the Illinois Legislature. It also expects to receive subsidies from a casino investors are planning to build near the track.
   Some Texas tracks are finding other means of making racing more readily available.
   Lone Star Park and Retama Park have purchased inactive pari-mutuel markets to open smaller tracks for live and simulcast racing.
   Sam Houston purchased the Valley Greyhound Track near Harlingen and began simulcasting March 17. The track had closed in 1995 after officials were unsuccessful in winning legislative approval for off-track wagering.
   Jim Frey, executive director of the Texas Greyhound Association, said that eventually, the Legislature will have to expand gambling opportunities to keep the racing industry healthy.
   "I think it will fall to the Legislature to decide how important the agriculture-related horse and greyhound industry is to the state," Frey said. "I think down the road, it's a possibility that we may have something like off-track betting, maybe even start with a pilot program of account wagering or limited slot machines. Those things may be the savior of the industry."


Staff writer Ruth Cochran-Escamilla can be reached by email at escamillar@caller.com

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