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Saturday, November 3, 2012

Highlights of OMAFRA Report on Ontario Horse Racing

As a way of avoiding a profanity-laced rant, I am going to begin my dissertation by offering up some bright lights contained within the wholly misguided and overwhelmingly disappointing Final Report of the Ontario Horse Racing Industry Transition Panel.

Amid a plethora of misunderstandings and assaults on taxpayer reason, one ray of hope emerges:

The panel recommends that the horse racing industry be permitted to offer new gaming products.  Options include:  a racing-specific lottery; sports book (betting on single sporting events, which could be legalized if pending federal legislation is enacted); and a new pari-mutuel product called historical horse racing (which involves betting through an electronic terminal on the outcome of past races, which are not identified to the player).   

These new products could potentially generate revenue that could be used to offset the need for direct public funding, enhance live racing in Ontario and return revenue to the treasury.

First, racing does NOT receive "direct public funding", but rather has always provided revenue to the government from the beginnings of the industry. The SAR Program being discussed is the second-most economically successful public-private partnership in Ontario's history, after only the LCBO.

In any case the point of promoting these "new products" is that essentially, OMAFRA believes we can develop gambling options in concert with OLG for the benefit of both, which we have a tremendous precedent for. It's called Slots-At-Racing, and the program has provided over $10 billion to the public treasury of our province, while at the same time vaulting Ontario's Standardbred horse racing industry to a position of world dominance.

Here's another section worth discussing:

It is important to note that, due to modern technology, horse racing now operates in a global market.  Nearly two thirds of pari-mutuel wagering in Ontario is on foreign product.  Ontario tracks net about $20 million a year from bets placed on Ontario races by horseplayers outside the province.  Many of today’s horseplayers closely follow and wager on racing in international markets that provide a quality racing product on a consistent basis.  Growing Ontario’s share of this competitive world market is crucial to achieving long-term sustainability. 

Ontario’s gross pari-mutuel handle has been slipping in recent years.  It reached $1.2 billion in 2001 and was approximately $1 billion in 2011.  The future of horse racing in Ontario depends on maintaining and expanding the pari-mutuel pool.  Without a strong take-up of Ontario product by horseplayers, the industry will require unsustainable levels of public support.

Agreeing with the above, one must understand that while the handle is flat to down over the past decade at most tracks, we have also allowed intense competition in the form of slot machines directly on our premises. Considering the appeal of online poker and expanding global sports betting, we have held our own and have a strong foundation to build upon, if we are not assaulted by self-motivated OLG bureaucrats.

One must also respect that the highly competitive nature of both Ontario's Thoroughbred and Standardbred racehorses is a socially beneficial offshoot of the highly rewarding SARP business agreement. The biggest problem with most if not all of the horse racing industry arguments has been the focus on the damage ending SARP will do to horse racing, when that is just the obvious outcome of a terribly short-sighted and faulty decision. 

The focus needs to be on the massive losses to taxpayers that WILL RESULT from ending SARP prematurely. OLG has ZERO concrete plans to replace this $1.1 billion in annual funding that horse racing currently provides to the government, yet the program is slated to end in FOUR MONTHS! Ending SARP now will add $1.1 billion dollars to Ontario's yearly deficit. Add to that the costs of unemployment insurance, welfare, bankruptcies, lost tax revenue and retraining of horse people and the costs of this error will approach $2.5 to 3 billion annually.

Additionally, the local communities that lose $75 million annually by ending Slots-At-Racing will also bear the brunt of increasing unemployment and declining tourist dollars.

Okay, now here's the bullshit "solution" offered in the OMAFRA Report:

the panel proposes a racing schedule with a total of 800 race days, about half the current total.

The 744 race dates they would like to cut are 91.7% Standardbred racing days (682) proposed for elimination, and this massacre is based on a faulty premise:

Currently, more than 60 per cent of purse money awarded in Ontario horse races comes from SARP – a source unrelated to the horse racing customer.

Oh really... I remember a fiscal crisis in Ontario during the 1990s when the Government needed money and had no place to put its slot machines. We offered them our parking lots and facilities and instant access to the most dedicated gamblers... so to say that Slots-At-Racing is "unrelated to the horse racing customer" is disingenuous at best and fraudulent in reality.

I know of more than a few couples where the man bets on the horses and the woman plays the slots, and they arrive in one car. So is ALL that slots money actually unrelated to horse racing? Of course not, statements like that are in the report as an attempt to justify a boneheaded decision by government ministers based on faulty strategy from OLG executives. They closed profitable SARP locations in Fort Erie, Windsor and Hiawatha precisely to cover up significant casino losses in Niagara Falls, Windsor and Sarnia, and now they propose ending SARP so they can venture further into operating casinos. Yikes; taxpayers take shelter!!!

I have a plan to expand and renew SARP so that within five years it provides over $2 billion annually to provincial and local governments, while continuing to re-invest in local communities and farms that support our world-class horse racing product.

I ask for a one or two year extension to SARP so that the Ontario deficit and unemployment situation will not worsen, and to provide time for me to prepare and present my plan. We will attempt to maintain our Standardbred industry at the top of the planet, while working to improve our Thoroughbred product for the international market, expanding both industries so that total employment by 2018 will be in the 75,000 to 80,000 range, up from the current 55,000 to 60,000. Supporting and promoting local tracks and rural communities also boosts Ontario tourism, while closing tracks decimates local restaurants and lodging facilities.

Within ten years my plan to build upon the Slots-At-Racing Program will see employment in the 85,000 range and horse race tracks annual contribution to the provincial treasury will exceed $3 billion annually, through a combination of pari-mutuel, slots, sports betting and new methods of playing horses directly from your corner store.

As part of my request for a two-year extension to Slots-At-Racing, I am proposing a single ticket that can be used to play Woodbine, Mohawk, Flamboro or Georgian Downs multi-race Pick 4 wagers, and this ticket will be purchasable and processable through regular OLG terminals. A portion of these revenues will be allocated to each racetrack and community that participates in SARP, as a way of continuing to grow the racing / OLG partnership with modern technology, and providing ongoing support to small-town Ontario and rural agricultural communities.

Please suggest to your local Mayor or MPP that a two-year extension to SARP should be enacted, and I ensure you that my plan to grow Ontario's horse racing industry will then gain traction, and sanity will return to Ontario's fiscal planning.

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