Slots, other venues help prop Louisiana horse racing
“Without alternative gambling, the tracks would have been closed a long time ago...” Charles Ashy Sr., former general manager of Evangeline Downs
LAFAYETTE — Thomas Sam found his life’s passion at a very young age.
“I was 7 years old, 56 pounds, when I ran my first race on the bush track,” Sam said.
He doesn’t remember the horse’s name or any other details except one: “I won it.”
Sam is now 61, with several jobs in the racing world behind him: exercise boy, jockey, groom, jockey agent. Currently, the Opelousas resident is a trainer of 18 horses and owns four of his own.
Over the past 54 years, he said, he’s never considered work outside the industry, even during the ’90s when the introduction of casino gambling in Louisiana nearly killed the state’s racing industry.
“Back then, a $10,000 race was a big purse,” Sam said. “Now, $10,000 is a small race.”
Race industry insiders credit that rebound to “racinos.” Ten years ago, racetracks began adding slot machines, and the revenues generated are helping the industry thrive, attracting quality horses with larger purses and incentives for breeders.
“Without alternative gambling, the tracks would have been closed a long time ago, especially when they introduced casino gambling in the state. That just killed the racing industry,” said Charles Ashy Sr., a former general manager of Evangeline Downs Racetrack and 30-year veteran of the industry.
It’s an industry with a sizeable impact in Louisiana.
More than 120,000 horses are owned in Louisiana for racing, show or competition, and recreational purposes, and the horse industry as a whole has a $2 billion economic impact in the state, with horse racing alone employing about 3,000 people and generating expenditures of $1 billion, according to a 2011 report on the horse industry from the LSU AgCenter.
The inventory of both thoroughbred and quarter horses in the state helps tracks keep a large number of horses per race, which the betting public likes, said Steve Darbonne, racing director of Evangeline Downs Racetrack and Casino.
Nevertheless, the “handle,” or money, wagered on live Louisiana races has dropped by about 25 percent, or $212,569,752, from the 2008 to 2011 fiscal years.
Racing insiders say several factors have led to the decline: competition from other gambling options, distrust in the sport, even the economy.
Slot revenues, coupled with video poker proceeds from off-track betting parlors, helped boost race purses and incentives for Louisiana racing horse breeders, but the slot revenues are the “dominate source” in the state’s “layered Band-aid” approach to funding race purses, said Charles Gardiner III, executive director of the Louisiana Racing Commission. Money wagered on races at the track, off-track betting parlors and via racing simulcasts also contribute to the race purse.
The slots legislation dedicated 15 percent of the slots revenues to race purses. Another 2 percent is earmarked for the Louisiana Thoroughbred Breeders Association and 1 percent to the Louisiana Quarter Horse Breeders Association. After those supplemental payments are deducted, the racinos pay the state 18.5 percent in taxes on the net slot revenues.
Last fiscal year, $3.5 million of the net video poker revenues at off-track betting parlors and about $58.5 million in racino slots revenue supplemented race purses, according to data from the Louisiana Gaming Control Board.
About $9.7 million supported the breeder incentive programs last fiscal year, according to the gaming control data. Both breeders associations offer incentives to Louisiana breeders of top-three finishers of each race and for owners of stallions who sire top-race finishers.
The breeders’ award program is the “envy of the racing world,” said Roger Heitzmann III, director of the Louisiana Thoroughbred Breeders Association.
Louisiana thoroughbred breeders whose horses finish in the top three in any race in the state receive a breeder’s award of 20 percent of what the horse earned in the race, Heitzmann said.
The association also sets aside money for incentives for Louisiana breeders whose horses finish in the top three in races outside of Louisiana.
Among the four tracks in Louisiana, live racing is available every month.
The slot revenues also helped increase the number of racing days for quarter horses, which typically ran about 10 days per racing season at Evangeline Downs before the slots legislation, said Darbonne, the track’s racing director.
“Now, we’re running 46 days of quarter horses,” he said.
Though the handle has declined, the racing industry in Louisiana is still healthy, based on its sustained higher purses and the flourishing breeding industry, said Eric Halstrom, general manager at the Fair Grounds Race Course.
The New Orleans racino is home of the $1 million Louisiana Derby, which typically fields Triple Crown race contenders.
Last month, the track announced purse increases for the stakes races in the 2012-13 racing season, which begins in November, with average stakes purses worth $132,768 and with 28 of 56 stakes races offering six-figure amounts.
“That’s how you attract the best horses, the best jockeys and the best trainers,” Halstrom said.
While foal crops have declined nationally, in Louisiana birth rates of foals have been “remarkably steady,” Halstrom said.
In August, more than 500 quarter horse yearlings will be part of the Louisiana Quarter Horse Breeders Association sale in Kinder, making it one of the largest yearling sales in the country, said Laverne Perry, executive director of the Louisiana Quarter Horse Breeders Association.
For the first time, the association is fielding a $1 million futurity race of 2-year-old Louisiana-bred quarter horses at Evangeline Downs this fall. In a futurity race, the majority of the purse is contributed by horse owners in periodic payments.
Also this fall, Delta Downs will field its $1 million thoroughbred race, now in its sixth year, said Steve Kuypers, general manager of Delta Downs in Vinton. The location draws the largest slot revenues of the four racinos.
Legislation paving the way for the race tracks to introduce slot gaming passed in 1997 for Calcasieu, Bossier and St. Landry parishes, with Delta Downs in Calcasieu opening the first racino in 2002. Harrah’s Louisiana Downs in Bossier City and Evangeline Downs both followed in 2003. Legislation enacted in 2003 authorized limited slot machines at the Fair Grounds, and slots were added in September 2007.
“That was the salvation of the industry,” Ashy said of the slots legislation. “If we didn’t pass the slot machine bill, nobody could survive racing. The race tracks couldn’t have stayed in business. It couldn’t generate enough revenue competing against casinos.”
Evangeline Downs, located in Lafayette from 1966 to 2003, felt the financial strains of the industry, with owners filing bankruptcy at least twice.
Had the racino legislation failed, the track was prepared to close its doors for good, Ashy said.
Evangeline Downs moved its operations to Opelousas and opened its casino in 2003. The new track opened in 2004.
Grass isn’t greener
The racing industry in neighboring Texas, meanwhile, is faltering without alternative gambling.
Racing days have been reduced in Texas, and some tracks there have closed, said Gardiner, of the Louisiana Racing Commission.
Efforts to pass slots legislation have failed in Texas, but there’s a renewed push coordinated for the legislative session in January, said David Hooper, executive director of the Texas Thoroughbred Breeders Association.
Without slots or some other infusion of revenue, the industry remains on shaky ground, Hooper said.
The industry in Texas can’t compete with the purses and incentives offered to Louisiana-bred winners, he said.
“The purses being offered at Louisiana tracks compared to Texas in some instances are three times larger and the incentive money to breed horses in Louisiana is 10 times more than it is here in Texas,” Hooper said. “As a result, we’ve lost half of our breeding stock.”
The four Louisiana racinos, between July 1 of last year and May 31, paid $66.2 million of their revenue to supplement purses and for breeder incentive programs, according to the Louisiana Gaming Control Board.
Nationwide, the industry has seen a reduction in money wagered, said Richard Thalheimer, an economist and consultant for the horse racing and casino gambling industries. With the advent of more widespread casino gambling, horse racing handles declined at first by as much as 30 percent to 40 percent, Thalheimer said.
“It appears when you put the slots at the track, the existing racetrack customers switch part of their gambling money to the slots,” Thalheimer said. “That’s been found to be a result in about a 20 percent decline in handle at the tracks.”
State lotteries also contribute to handle decline, as much as 15 to 30 percent in some states, he said.
The challenge is attracting more fans to the sport, Thalheimer said.
The majority of bets on Louisiana horse races are placed by out-of-state bettors.
“Our signal goes out to over 800 locations across the country,” Evangeline Downs’ Darbonne said of the track’s live racing simulcasts of its races.
More than a year ago, Delta Downs added California to its simulcast lineup, which has boosted the handle, said Kuypers.
Casinos, off-track betting parlors, even online options via advance deposit wagering or online debit accounts for wagering offer bettors more race options, Gardiner said.
“Eighty-five to 90 cents on every dollar wagered (in Louisiana) on horse racing is wagered on an out-of-state race,” Gardiner said. “Racing has become a buffet or smorgasbord because you can walk into any off-track-betting parlor or race track and see a menu of options to wager on.”
“I think the future of horse racing in Louisiana is basically the same as horse racing nationally: it faces very significant challenges,”Gardiner said.
Among them, from the fan perspective, is that “horse racing needs to clean up its act and focus on the safety of the animal and its rider,” Gardiner said.
The New York Times reported this spring that more than 3,000 horses died during racing or training from 2009-2011, based on its survey of 29 states: California’s tracks led the survey in the number of horse fatalities at 635 horses, followed by New York at 366 and New Mexico at 349. In Louisiana, 268 horses died, the newspaper reported.
For the same time period, the newspaper found that the frequency of breakdowns or injuries at 62 tracks across the country averaged 5.2 per 1,000 starts. Louisiana’s incidence rate was lower, with Evangeline Downs at 4.2, Delta Downs at 3.3, the Fair Grounds at 3.2 and Louisiana Downs at 3.1.
Fielding more horses at the gate has contributed to an increased injury rate, Gardiner said.
“You have horses running more often and getting injured more,” Gardiner said. “The foal crop has been dropping every year, so that puts a strain on field size issues as well.”
In Louisiana, catastrophic breakdowns are on the decline, he said.
“We at the racing commission instituted a program of pre-race inspections of all horses to race, and we seek to take out the entry of those horses that show any physical problems,” Gardiner said. “Since we’ve done that, our breakdown rates have come down drastically and we’re competitive with national rankings.”
Random pre-race drug testing is conducted at one track daily, he said. As new drugs are discovered, new tests are developed to weed them out, he said. The most recently detected drug — dermorphin — is a painkiller derived from South American frogs. Horses in Louisiana first tested positive for the painkiller last month. To date, nine trainers have been accused of doping related to 11 positive tests for dermorphin in Louisiana, Gardiner said. The commission will hold hearings related to the charges on July 31.
The recent horse doping reports sullies an already tattered image of the sport. Gardiner said studies have shown that racing handle has dipped, in part, because fans have lost faith in the sport.
“That’s why racing has been on a reform movement for many years to try to bring back those fans that believe it is corrupt,” he said.
Federal legislation has been proposed to create national standards for the medication and doping of animals.
The “prevailing attitude” about the federal legislation is that states can more effectively and efficiently provide oversight, Gardiner said.
“I believe it’s a call to racing to get its house in order,” he said of the proposed legislation. “As long as commissions across the country continue to move in a direction for the safety and the ethical treatment of our equine athletes and the human athletes that ride them, then the conventional wisdom is it’s good for the animal, good for the rider, good for the betting public and good for the state.”
The racing industry also must draw more fans to the track, particularly as advance deposit wagering means people don’t have to leave their homes to place a bet on a race, Gardiner said.
“The ability to wager online has been both good and bad,” he said. “What it’s done is allowed more people to have access even from their couches, but what it’s done is taken the fan away from the track.”
Horse tracks attempt to appeal to singles and families alike with theme nights, live music, drink specials and meal discounts.
“We want the grandfathers and grandmothers here with the kids,” said Darbonne, the Evangeline Downs racing director.
Editor’s note: This story was modified on July 16, 2012, to clarify that the purse increases noted for the New Orleans Fair Grounds Race Course relate to stakes races, not to overall races.