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Tuesday, July 31, 2012

The Future of Ontario Horse Racing

I was shocked and stunned when hearing the news that the most successful public-private partnership in Ontario's history was ending, an unexpected and unexplainable decision that would likely cost at least 30,000 jobs in the Ontario horse racing industry. What was the rationale? It seemed the government had fallen victim to PR types who told them the optics of ending a subsidy to horse racing would be better than announcing cuts to schools and health care. Guess what? The Ontario Government has announced $1 billion in cuts to OHIP anyway and I am herein proposing a solution to reduce or eliminate those cuts via a renewed partnership with Ontario's horseman. The Slots At racing program currently contributes over $1.1 billion PER YEAR to the Ontario Government coffers, and the Liberal plan is to reduce that to zero by March, 2013. I take a longer view, so my plan involves increasing the number from $1.1 billion per year to over 1.6 billion per year by 1018, or over 4.2 billion if we can get Ottawa to let us open some Sports Books at Ontario racetracks. In summary, I am proposing EXPANDING the Slots At Racetracks program, as it has been a Godsend to Ontario from the moment it was created.

The Burgess submission to OMAFRA is a much clearer analysis of the current situation, and even though the proposals therein are too vague to implement, the general suggestions are valid (eg any new settlement must be tied to revenue from slots – the racino model). Anyone with a clear grasp of where we've been, understanding the magnitude of the successes achieved, would look for ways to expand Slots At Racing while also adding further casino and sports book facilities. We have a $15 billion annual deficit in our province, and if Ontario would like to rake in $10 billion or more from annual gambling profits, here are the venues:

Community Slots At Racing at all existing tracks incl restoration of Fort Erie, Windsor and Sarnia. $1.3 to 1.5 billion annually. Estimate 1.4 billion annually.

Sports Books at Woodbine, Georgian Downs, Rideau Carleton, Metro Convention Centre, Fort Erie, Windsor, Sarnia and Western. $3.2 to 4.8 bil ann
Estimate $4 billion annually.

Full casinos at Woodbine and Metro Convention Centre. $3.3 to 5.5 bill annually. Estimate $4.4 billion annually.

Total annual provincial revenue estimated from the proposed new Community Slots At Racing (CSAR), the Sports Books and Toronto Casinos: $9.8 billion

Even considering the Slots At Racing program by itself, horsemen should not be bargaining from a perceived position of weakness, as the program is valued by and crucial to Ontario and municipal treasuries. When Slots At Racetracks began, an obligation was placed on the OLG to consult with the horse racing industry (OHRIA specifically) and the ORC and develop benchmarks for monitoring the progress and success of the Program on an annual basis. As OHRIA abrogated this responsibility, and in fact has spoken of the partnership in glowing terms, the sudden cancellation of SAR is likely illegal in addition to being highly irrational and fiscally damaging to the Province of Ontario.

Proposal for modernizing Slots At Racetracks

2013-2014 extension: If a new agreement cannot be entered into before the end of 2012, we are proposing a 2-year extension to the existing agreement, as a way of protecting Ontario taxpayers from a drastically increased deficit, and also, as OLG and the Government of Ontario appears determined to wipe out racing in this province without any concrete plan to replace the revenue currently flowing into the provincial treasury. If there are going to be big changes that negatively affect human lives, the two year extension to allow for a transition is a way of ensuring fair and humane treatment for the Ontario horse racing industry, including both human and equine participants.

This extension will ensure that if a new tri-partite (OLG, municipalities, horsepeople) agreement cannot be worked out before the end of 2012, government and industry revenues will stay in place and Ontario will continue to receive over $1 billion annually from the horse racing industry.

Let's take a step back and realize that SAR is an extremely successful PARTNERSHIP (rivaled only by the LCBO as a major contributor to Ontario's treasury) and though the Ontario Government have been very poor partners in 2012 (because they listened to a PR firm rather than common sense), the partnership itself has been highly beneficial to both sides and has the potential to continue doing so for decades to come.

Here is my proposal for renewing our Slots At Racing Partnership for the ten year period from 2013-2022 (detailed Community Slots At Racetracks proposal click here):


2012 – 75% Province / 20% Track and Horsepeople / 5% Local Municipality

Proposed new 10 Year Agreement (contingent upon re-opening Fort Erie, Windsor and Sarnia, plus future two year notice of any planned closures):

All tracks:

2013 - 77 / 17 / 6

2014 - 78 / 16 / 6

Most tracks:

2015 - 79 / 15 / 6

2016 - 79 / 14 / 7

2017 - 80 / 13 / 7

Years 6-10:

2018-22 - 80 / 12 / 8


Woodbine / Mohawk / Georgian Downs / Western Fair / Flamboro
77 / 16 / 7

In the Standardbred horse racing world a decade ago, the Meadowlands in New Jersey was the top racing oval in the world. Now the Woodbine / Mohawk circuit is number one (for both speed and money), yet the Liberal government seems unaware of this world-beating success. Standardbred yearlings bred in Ontario fetch over $70 million annually.

New York State has recently found copying Ontario's model to be a lucrative new source of government revenues, raking in over $600 million last year in early stages of developing their program, a valuable new revenue source for the government. Pennsylvania, Ohio and other states also cite Ontario's industry-leading example in launching racino operations in their States.

For the Ontario horse racing industry to survive and thrive in the years and decades ahead, two steps are required:

  1. Negotiate a new 10-year agreement for us to host slots at our racetracks. There are no other reasonable locations in Ontario for these facilities, and as soon as we begin negotiating from our actual position of strength, the OLG and the Government will have to come to the table with open minds.

  1. Ensure that any launch of a sports book in Ontario involves horsemen and racetracks, as we have the ideal location for these revenue machines.

In summary, we need to first use any means necessary (including legal action against OLG and the Ontario Government, and including Direct Action such as “slow crawls” around Queen's Park and Casino Niagara, and slowing down the 401 with similar planned action) to bring the OLG and the Government to the table as honest business partners, and to conclude a new agreement that I believe should include a larger share of revenue for the local municipality.

Secondly, after the Community Slots At Racetracks agreement is in place, we must begin serious negotiations to be a valid and crucial partner in developing a viable and lucrative sports book for Ontario.

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