The marriage between casino and horse racetrack was first introduced in 1990 as an experiment run by the West Virginia Lottery Commission when it permitted Mountaineer Park to install video lottery terminals (VLT’s) on its grounds. The horse racing community viewed it as a last-ditch effort by a cheap claiming track on the brink of extinction. Heck, there wasn’t even a law in the books for such a thing…yet. When that “experiment” proved profitable, the California-based Excalibur Holding Company purchased Mountaineer Park for $4 million cash and another $2.7 million in stocks. In 1993 the West Virginia Supreme Court ruled that state law didn’t allow for VLT’s and the law needed to be changed. It did allow Mountaineer to continue operating VLT’s up until the proper legislation – The Racetrack Video Lottery Act of 1994 – was passed. Today, thanks to the addition of 3500 spinning wheel slot machines, Mountaineer Racetrack has gone from a rundown racetrack to an entertainment complex with a hotel, golf course, spa, and theater.
Mountaineer may have been the first racino but it was the beleaguered Prairie Meadows racetrack in Iowa that became its biggest Cinderella story. After opening with much fanfare in 1989, Prairie Meadows started losing money right out of the gate. By November 1991, the long-suffering track had filed for bankruptcy. Live racing was suspended in 1992 but was brought back the next year thanks to revenue generated from simulcast wagering. Still, it seemed that it was only a matter of time until the hatchet fell on the Iowa track. Obviously, the next step was to dig an even deeper hole by spending $26 million to convert the clubhouse into a casino and install 1100 slot machines. It was the craziest of bets on the longest of longshots and yet, it paid off. Handsomely. On April 1, 1995, Prairie Meadows reopened with its shiny new slot machines and 150,000 gamblers flooded its gates. In its first year as a racino, Prairie Meadows earned $119.3 million. Its success didn’t stop there – the larger revenue meant bigger purses which in turn attracted higher quality horses and more fans. And it wasn’t just the racetrack that profited – Iowa’s Thoroughbred breeding industry became the fastest growing of any state, going from twenty-eight to twelve in the number of foals bred within two years. Today, Prairie Meadows contributes an average of $27 million per year to the county’s healthcare, arts, culture, education and infrastructure.
The racino gravy train wasn’t limited to just Prairie Meadows and Mountaineer Racetrack, however. After adding slot machines in 1996, Charlestown racetrack saw its purses increase from $27,000 to $166,000 per day. A 2008 study of seventeen North American racinos showed that gross purses jumped from $135.3 million to $295.2 million after slot machines were installed – an increase of 118%. A cry went out across the land – racino’s were the future of horse racing! The sport was saved! Or was it? The cold truth is that when slot machines are introduced at any racetrack, pari-mutuel wagering falls by twenty to forty percent. While slots do increase racino attendance, they also decrease its live-racing handle. Interestingly, slot machine revenue increases when live or simulcast racing is being conducted. In other words, it is horse racing that attracts patrons to go to a racino but once they arrive, slot hypnosis takes over and not even the second coming of Man O’War will pry them from their machines. Instead of being something to keep gamblers busy between races, slot machines have become their primary focus.
An excellent example of the effect of slot machines on simulcasting and live racing is Delaware Park. Before Delaware Park installed slot machines in 1994, 51% of wagering came from simulcasting from other tracks, 30.5% was from live racing and 18% was from Delaware’s exported simulcast signal. In 2008, 70% of wagering came from Delaware’s exported simulcast signal, 25% from imported simulcast signal from other tracks, and only 5% from live racing. While wagering on live racing has plummeted since the addition of slot machines, their revenue has caused Delaware’s purses to jump from $650,000 to $35 million annually. Now with the legalization of sports betting and the addition of table games, horse racing may fade even further into the background. While these gambling alternatives provide more revenue for purses, they do nothing to attract new fans to the sport. If anything, they distract them from it. Betting on horse racing requires skill, analysis and time whereas pressing a button on a slot machine does not. Plus, the payoffs are quicker.
Still, it’s hard to deny that the benefits of installing slot machines, even if they come at a cost to live horse racing. Larger purse monies, better quality horses and upgraded backstretch facilities are just a few of the bonuses derived when racetracks transform into racinos. Racinos involve a lot less red tape than traditional casinos since the public already accepts them as gambling sites, already have gambling permits, no land needs to be acquired, and they can be constructed within months as opposed to years. Slot machines used to be viewed as the last desperate measure for struggling racetracks until January 28, 2004 when the renowned Saratoga Racetrack added 1,323 VLTs, 2 restaurants and a food court. Today racinos are legal in eleven states – Delaware, Florida, Iowa, Louisiana, Maine, New Mexico, New York, Oklahoma, Pennsylvania, Rhode Island and West Virginia – with many more hoping to jump on the bandwagon. Like it or not, racinos are here to stay – hopefully not at the cost of live horse racing.
Photo: Mountaineer casino