Race industry transition panel lays out new funding model
There’s little to cheer in Fort Erie following the release of the horse racing industry transition panel’s final report.
In its report released Tuesday, the panel unveiled the new plan for the future of the sport, called the Sustainable Horse Racing Model.
The new model is designed to keep racetracks alive after the recent dismantling of the slots-at-tracks revenue sharing program, by chopping the number of race dates in half and opening up new streams for wagering.
The bulk of the new revenue — about $100 million annually — is projected to come from two key forms of wagering which could be implemented at tracks.
The first is sports books, which are currently outlawed, but pending legislation could change that. It involves legalizing wagering on single sporting events, meaning tracks would be permitted to accept bets on NFL games, boxing matches, and other sporting events.
The panel recommends giving horse racing tracks the exclusive rights to this form of betting, which it projects would provide about $50 million in extra revenue annually.
The second new revenue stream essentially amounts to a video game version of horse racing, installed in terminals at tracks. The machines, dubbed ‘historical horse racing’, would recreate horse races using data collected from more than 60,000 previous races, and allow users to place bets based only on the info which would be disclosed prior the race, such as the trainers win percentage. The video game-style machines have been a big hit in the United States according to the panel, and could generate about $50 million annually for tracks in Ontario.
Alongside the extra $100 million in new wagering revenue, the panel also recommends a stricter set of rules tracks must use to apply for race dates.
Both the number of race dates, and the purses offered for each race will decline under the new business model.
The panel recommended cutting the number of race dates in half, from about 1,600 down to 800, and lowering the total purse money by about 45 per cent, down to $133 million per season.
Field sizes for races have been slipping over the last few years — Fort Erie alone has dropped from an average of eight to seven horses in just one year — which the panel said was a result of over funding from the slots-at-tracks program. The industry’s new model is focused on returning to full race cards with at least 10 horses per race.
Pari-mutuel wagering, which is the primary funding source under the new model, has dropped by $200 million over the last decade since the introduction of the slots-at-tracks program.
By having fewer race dates with full race cards, the panel believes it can increase the rate of pari-mutuel wagering.
Under the new model, tracks will also need to open their books to allow auditors a peek inside before any race dates are handed out.
Each track’s financial situation will be subject to an open-book external review by an auditor with race track experience.
The panel produced a much tighter schedule of race dates for next season, including a limit on the number of races of each type of racing, and a cap on the average amount of purse money handed out for each race card.
Fort Erie is listed under the ‘Thoroughbred B’ category, and under the new model, race dates for this category would be reduced from the current 78 race dates, down to just 30.
Purse money for this category is also taking a 50-per-cent cut, from $6 million down to $3 million, or about $100,000 per race card.
The local track may be able to snag itself a few extra race dates, following its expansion into quarter-horse racing this year.
The Ontario Racing Commission (ORC) controls the quarter-horse program, run only at Fort Erie and Ajax, and with the help of $8 million in the quarter-horse reserve fund, is proposed to stick around next year under a reduced schedule of 30 race dates.
The panel stated that, “recent financial difficulties have culminated in an announcement that the (Fort Erie) track will close,” and noted efforts are underway to find an investor to keep the track alive.
In the event the historic border oval doesn’t find a buyer, the panel suggested using a different track, Ajax Downs, as the primary location for ‘thoroughbred B’ and quarter-horse races.
The other key recommendation to come from the report is the proposal for a major shake-up at the administrative level of the horse racing industry.
The new model would see the role of ORC reduced to a purely regulatory role, with all administrative duties handed down to an industry-run panel.
The shake up would also see the Minister of Agriculture, Food and Rural Affairs, Ted McMeekin, appointed as the new top-dog of the industry. The Minister would become responsible for both the oversight of the industry and the ongoing monitoring of the new racing model.