This was a Report given to The House of Representatives in October 1999 about and directly on Horse Racing. 11 Years Ago
CHALLENGES TO MICHIGAN’S HORSE RACING INDUSTRY
Prepared by: Craig Thiel, Fiscal Analyst October 1999
Mitchell E. Bean, Interim Director – HOUSE FISCAL AGENCY
HOUSE FISCAL AGENCY GOVERNING COMMITTEE
Representatives:
Terry Geiger
Chair Hubert Price, Jr.
Charles Perricone
Michael Hanley
Andrew Raczkowski
Kwame Kilpatrick
MICHIGAN HOUSE OF REPRESENTATIVES
APPROPRIATIONS COMMITTEE
Representatives:
Chair Judith Scranton
Jon Jellema
Vice Chair Tony Stamas
Minority Vice Chair
Sandra Caul
Cameron Brown
Laura M. Toy
William Byl Hubert Price, Jr.
Terry Geiger
Deborah Cherry
Patricia Godchaux
Hansen Clarke
Mark Jansen
A. T. Frank
Ron Jelinek
Thomas Kelly
Janet Kukuk
Lynne Martinez
Charles LaSata
Steve Pestka
David Mead
Michael A. Prusi
Mickey Mortimer
Keith Stallworth
John Pappageorge
Paul Tesanovich
I encourage all of these people who like to write on the Industry of Horse Racing in Michigan to at least educate yourselves before speaking or taking to the keyboards. This is a 37 page government document. I would think since one can write, one can read. And read it in its entirety. I will make ” Notes ” where needed “”” because of the year it was sent and received by the House.
October 1999
TO: Members of the House of Representatives
First thing I noticed was this one very big mistake on Page 2: Ladbroke-Detroit Race Course (DRC) ran its last day of live thoroughbred racing in November 1998, due primarily to continued operating losses. The track opened in 1985.
The Detroit Race Course opened in 1949 not 1985. Ladbroke bought DRC in 1984 and took over the operation in 1985. And DRC did not close because of operating loses. Ladbroke was not interested in Live Racing Period. This English group was and still is the biggest bookmaking parlor in the world, and when then Governor Engler laughed at them demanding further gaming at the track. DRC and its Thoroughbred Horsemen/Women became their unregarded casualty.
These are just excerpts of this Report.
IMPACTS OF HORSE RACING IN MICHIGAN
There were seven pari-mutuel horse racetracks in Michigan as of January 1, 1999. Five of these tracks (Hazel Park Harness Raceway, Jackson Harness Raceway, Northville Downs, Saginaw Harness Raceway, and Sports Creek (raceway) race standardbred horses. Great Lakes Downs in Muskegon is the only all-thoroughbred track in the state, following the closing of Ladbroke DRC on December 31, 1998. Mount Pleasant Meadows hosts mixed racing (including thoroughbreds, quarter horses, Arabians, and Appaloosas). These seven tracks, along with the race farm operations that supply horses for racing, represent the backbone of the horse racing industry in Michigan. ” Notes ” Pinnacle Race Course has been added, while Saginaw and Jackson no longer exist.
A 1995 report by Public Sector Consultants, Inc. concluded that the horse racing industry in Michigan contributes substantially to the state’s employment, income, and economic well-being. Taking into account both direct and indirect economic impacts, it is estimated that horse racing in Michigan is a $1.2 billion industry responsible for more than 42,000 jobs, $233 million in personal income, and total economic output of $439 million each year. Additionally, race tracks and race farm operations support capital facilities with an estimated value of $700 million.
Employment Impacts
3,200 jobs directly related to racetrack operations.
2,059 indirect jobs supported by the spending and wages generated at
race tracks.
28,370 jobs directly related to race farm operations (more than one half
are family members or owners of these operations).
8,677 indirect jobs supported by spending by race farm operations.
Income Impacts
$51.7 million in personal income generated directly and indirectly from
race track operations.
$181.5 million in personal income generated directly and indirectly
from race farm operations.
Output Impacts
$65.7 million in direct and indirect output generated by race track
operations.
373.0 million in direct and indirect output generated by race farm
operations.
Full-card simulcasting, authorized under the Horse Racing Law of 1995, is directly responsible for turning Michigan tracks into year-round operations and transforming previously part-time employment opportunities to full-time jobs for
track employees. Impacts of horse racing extend beyond the entrance gates of Michigan’s parimutuel tracks. The industry plays a role in state and local finances, contributing more than $31 million annually to state and local coffers primarily through taxes, uncashed tickets, and “breakage.
The equine industry employs a sizeable labor force. According to the 1996 Michigan Equine Survey, 6,500 people worked full time on equine operations — principally the family members and owners of those operations. In 1996, those
equine facility operators had 1,100 full-time paid employees and hired 4,400 part-time and seasonal workers. Other sectors of Michigan agriculture grow, store, and transport many of the agricultural products required by the equine industry.
INDUSTRY CHALLENGES
Casinos in Detroit, the approval of four new tribal-state gaming compacts authorizing four new Native American casinos, the introduction of slot machines at the Windsor Harness Raceway, the state’s participation in the multistate lottery The Big Game, and the introduction of nearly 50 new instant lottery games each year. Combined, these developments have cut into the horse racing market and placed the industry at a competitive disadvantage.
Some industry observers believe that a limited number of gambling dollars exist in the state, and, therefore, they view these developments as “cannibalization” of horse racing. Table 2, on page 24, lists existing and proposed casinos in Michigan and the number of slot machines and table games at each. Figure 9, on page 25 (casino numbers correspond with Table 2), shows the location of existing and proposed casinos and pari-mutuel tracks around the state. To complete the picture of the current gambling landscape in Michigan, add the presence of more than 9,300 licensed lottery retailers statewide.
OPTIONS TO AID HORSE RACING
Slots, Card Rooms, and Video Lottery Terminals (VLTs)
Some states permit other forms of gambling, in addition to pari-mutuel wagering, at horse racing tracks. Three states allow slots (Delaware, Iowa, and New Mexico), two allow card rooms (Florida and Minnesota), and three allow VLTs (Oregon, Rhode Island, and West Virginia). One state (Louisiana) permits both slot machines and VLTs at its pari-mutuel tracks. “” Note “” Understand this was a report in 1999, since there are even more States now that have implemented further gaming to even the playing field out with Horse Racing.
Slot operations opened at Windsor Raceway in Ontario, Canada in December 1998. Under the arrangement brokered between the industry and the Province of Ontario, 20 percent of the net win is split equally between the track and horsemen purse pools. Industry sources report that the addition of slots has had a positive affect on attendance, wagering, purses, and the number of live racing dates at the track.
Slot machines, card rooms, and VLTs could allow the tracks in Michigan to compete directly with Native American and Detroit casinos for the gambling dollars available in the state. Introducing these new forms of gambling at the tracks could attract new customers, which might increase total pari-mutuel wagering — both live and simulcast. While the increased wagering level would aid the industry, a portion of the revenue from slots, card rooms, and/or VLTs could be earmarked for breeders’ awards, purses, track improvements, and/or promotions — similar to the Windsor, Ontario model.
Off-Track Betting
By far the most popular option in other states, off-track betting (OTB) provides people with access to live racing and pari-mutuel wagering taking place in other parts of the state without having to attend a race track. For example, the surrounding states of Illinois, Indiana, and Ohio, and the province of Ontario, Canada, all permit off-track betting.
In Michigan, there are no pari-mutuel tracks in the upper half of the Lower Peninsula or in the Upper Peninsula. Mount Pleasant Meadows, a small, mixed-breed track, is the northernmost track in the state, but it is not readily accessible to people from the northern portion of the state. Off-track betting outlets strategically placed in the northern Lower Peninsula and the Upper Peninsula would provide an outlet for people in these parts of the state to wager on live horse racing in Michigan. Similarly, the state’s only allthoroughbred race track is located in Muskegon, a significant distance from the population that was accustomed to wagering on live thoroughbred racing at Ladbroke DRC in Livonia. ” Note ” Pinnacle Race Course in New Boston.
Off-track betting would increase live wagering levels and, therefore, help both the tracks and horsemen. Unlike simulcast wagering, live race wagering is not taxed by the state, thus it provides additional revenue for improvements at the tracks and for purses.
Revenue Sharing
Another option would be to share a portion of casino revenue with the tracks and the horsemen — similar to a revenue-sharing arrangement that exists between the riverboat casino industry and the horse racing industry in Indiana. The statute permitting riverboat gaming in Indiana earmarks 65 cents of the $3.00 riverboat admission tax to the pari-mutuel horse racing industry. These funds are distributed to various segments of the racing industry. Of the total distributed, 40 percent is earmarked for purses (divided equally between thoroughbred and standardbred), 30 percent is earmarked to Indiana’s only race track (Hoosier Park), 20 percent is earmarked for breed development (divided equally between thoroughbred and standardbred), and 10 percent is earmarked for promotion. In 1998, more than $22.2 million in riverboat admissions tax revenue was transferred to the horse racing industry in Indiana. Daily average purses for the 1999 racing meet will surpass $200,000.
The Indiana arrangement was recently used as the model for a similar revenue sharing agreement in Illinois. Under a new Illinois law permitting a riverboat to operate in Cook County, 15 percent of the adjusted gross revenues from the boat will be directed to the horse racing industry (divided equally between purses and the tracks). This agreement is designed to help
the industry reopen Arlington International Racecourse outside of Chicago, which closed in 1997 partially in response to competition from riverboats in Illinois and Indiana. Arlington will reopen in 2000, due in large part to the new revenue sharing agreement.
Another example of revenue-sharing exists in New Jersey where simulcast wagering is authorized in Atlantic City casinos. A portion of the revenue from casino simulcasting is distributed to assist racetracks and horsemen organizations which demonstrate that casino simulcasting has negatively affected their financial well-being. In 1998, nearly $2.1 million was
distributed directly to New Jersey tracks and to horsemen from casino simulcasting revenues. In Michigan, current law prohibits simulcast wagering in Detroit casinos. The casino industry in Michigan does not currently share revenue with the horse racing industry.
CONCLUSION
The economic impact of horse racing extends beyond the gates of Michigan’s parimutuel racetracks. The industry contributes substantially to the Michigan economy through its creation of jobs, income, and state revenue. The Horse
Racing Law of 1995 provided temporary assistance to the ailing industry; however, the horse racing industry is again in a precarious situation, primarily due to increases in other gambling outlets in the state (Native American casinos and
Detroit casinos). Industry observers believe that major changes to the horse racing industry are necessary for it to survive in the intensely competitive gambling/entertainment market that has developed since enactment of the law in 1996.
In an effort to promote the cooperation of all factions of the horse racing industry, the FY 1999-2000 Department of Agriculture budget requires that the Office of Racing Commissioner, in collaboration with the horse racing industry, develop a long-range plan for assuring the viability of the horse racing industry in Michigan. This plan is to include requisite statutory changes and potential revenue diversification options necessary to assure the survival of the horse racing industry in Michigan.
A forward-thinking business plan, with input from all factions of the horse racing industry, could identify the tools needed to address the challenges currently facing the industry. Crafting the Horse Racing Law of 1995 required the unprecedented cooperation of all involved with the horse racing industry. A similar level of cooperation will be needed to effectively address the challenges facing the industry today.
End
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Forward Thinking??? Governor Granholm Dissolved the ORC in 2009, and took us from our Governing Body of Agriculture and placed us under a 4 member panel called The Michigan Gaming Control Board. Now that might be an appropriate place IF other gaming had been implemented into Horse Racing Tracks. But it hasn’t. Reality is even if it was, Agriculture is where Horse Racing was from the start and should have remained.
My God, this was given to the House Of Representatives in OCTOBER of 1999. This is OCTOBER 2010. 11 Years later and what have they done in all this time concerning our Horse Racing Industry here? Not one damn productive thing. They have done ZERO.
It was also comical to me that Kwame Kilpatrick was on this HOUSE FISCAL AGENCY GOVERNING COMMITTEE as a Representative. Considering his was elected Mayor of Detroit in 2001. This referendum on Horse Racing would have been a joke considering the city he presided over or rather stole from had 3 Casino’s.
“”Taking into account both direct and indirect economic impacts, it is estimated that horse racing in Michigan is a $1.2 billion industry responsible for more than 42,000 jobs, $233 million in personal income, and total economic output of $439 million each year. And this figure in 2010 has not changed from this report of 1999″”.
Horse Racing Generates over $400 Million to Michigan but some want to say Horse Racing is not SELF SUPPORTED?
And some want to still state Michigan Subsidizes Horse Racing? Simulcast revenue produced from 3.5 tax for current fiscal year ending September 30, 2010. Current bal. Oct. 1, 2009 to Sept. 30, 2010 – $6,028,969 that goes to Michigan. Horse Racing cannot touch a dime of the money it generates. But Horse Racing isn’t self-supporting?
I want somebody in the Michigan Government to EXPLAIN exactly how they subsidize Horse Racing.
The State of Michigan and The House of Representatives wanted this FISCAL FOCUS Report done. And it was. Right down to detail by detail, chart after chart, explanation after explanation of what the needs are for Horse Racing in this State if to Survive.
1999 and in 11 long years our House has done Nothing. But the House of Representatives now along us have this report to look at and examine for ourselves. Idiots can keep writing article after article ranting and lying about our Industry. Lying about subsidies that don’t exist, and Lying that Horse Racing needs to be Self Supporting when you can look at these facts for yourself and see that we indeed are. And Read this Report that was put together for the sole purpose of explaining how they can in fact help Horse Racing in the State of Michigan.
Where in the House has this report remained? Toilet paper, Shredders, WHAT?
And there are people pointing fingers at Pinnacle Race Course, its Land Deals and anything and everything that surrounds this Thoroughbred Horse Racing Track.
If this States Representatives of ours would have did the jobs people elected them to do and reacted on this Report of 1999 of what was being suggested to them what the needs were on Horse Racings survival here. Pinnacle and its owner wouldn’t be constantly attacked with such scrutiny.
A forward-thinking business plan?????, with input from all factions of the horse racing industry, could identify the tools needed to address the challenges currently facing the industry. Crafting the Horse Racing Law of 1995 required the unprecedented cooperation of all involved with the horse racing industry. A similar level of cooperation will be needed to effectively address the challenges facing the industry today.
Governor Granholms forward plan was to Dissolve our Racing Commissioners Office. Some Forward-thinking plan. With input from all fractions of the Horse Industry? WE HAVE SCREAMED OUR INPUT. It has fallen on deaf ears.
I find this all incomprehensible. The irresponsibility of all in this State’s Government refusal to respond to our constant plea’s, yet we generate all this money for them. Even refusing to take a hard look at a report and the facts that came from it that they themselves requested only to turn their heads and look away.
And Liz Boyd out of Granholms office States Michigan Subsidizes Horse Racing $10 Million annually. They must be self supporting. Is she friggin demented? Is everyone in this State Demented? Lies, Lies and More Lies.
Here are your facts also compiled by a group out of this Government in Michigan. I suggest you read them.
Taking into account both direct and indirect economic impacts, it is estimated that horse racing in Michigan is a $1.2 billion industry responsible for more than 42,000 jobs, $233 million in personal income, and total economic output of $439 million each year. Additionally, race tracks and race farm operations support capital facilities with an estimated value of $700 million.
This Report is the truth. It is the likes of the Dan Adkin’s, Ed Boike’s, Bill Shea’s ( Crain’s Detroit ), Tom Gantert’s, Michael D. LaFaive ( Mackinac Center for Public Policy ) that are the Illusions and Delusions.
HOUSE FISCAL AGENCY
October 1999 CHALLENGES TO
MICHIGAN’S HORSE RACING INDUSTRY TO: Members of the House of Representatives.
And 11 years later in 2010. Not one Iota has been done. And here Horse Racing sits.
And WHY?
You read the report and then ask The Michigan House of Representatives the Why?
Instead of people writing what is the truth of the matter they seem to be writing on an agenda that seems to have many members not wanting them to gain an answer to the Why. Our Politicians have been bought off by the Casino’s. You see they already know the answer, so do we.
But then they can be bought off too to write their lies and misconceptions. The real reason Dan Adkins had no provisions protecting Live Racing, Simulcasting, Purse Revenues and Contractual agreements between the MHHA and HBPA is because Hazel Park did not want anything more to do with Horse Racing. They wanted what Detroit had solely. CASINO’S. But then Pinnacle sold some land.
Enter the War Dance. Boike – How Much? Not the land, how much to be bought to start the war dance?
Thus far no real news agency has asked it yet. Maybe this time somebody will.
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