Slot machines may stop the decline of Maryland?s horse racing industry, but won?t necessarily make it profitable.
Doing that requires marketing the sport to a generation used to a quick gaming fix ? one that doesn?t go to the track.
“Historically, when you bring slots into horse racing, it will tend tostem any losses,” said Jeff Hooke, a Chevy Chase-based investment banker who examined Gov. Robert Ehrlich?s slots proposal.
“You don?t see a huge increase in breeding or the number of racing days or people going to the track ? attendance is stagnant,” said Hooke, who also heads the Maryland Tax Education Foundation. “If you?re pumping all this money into the sport, wouldn?t you think more people would show up? But it doesn?t happen.”
Gov. Martin O?Malley backs a referendum allowing residents to vote on placing 15,000 slot machines at five locations statewide in November 2008. But slot revenue may only make Maryland?s tracks competitive again, not instantly profitable.
“Slot machine revenue, for good or bad, has been tied to horse racing in other states, and because of that we lose competitiveness with other states,” said Rob Burk, executive director of the Maryland Horse Industry Board. “Every day our horsemen operate at a competitive disadvantage is another day for infrastructure to be lost here and gained with our competitors.”
Attendance at Maryland?s six Thoroughbred and harness tracks fell to 1,854,497, down 3.3 percent from 1,917,841 in 2005 and more than 28 percent from 2,578,512 in 2004, according to the Maryland Racing Commission?s 2006 annual report.
Meanwhile, the report put total betting on the races at $474,998,270 last year, down 5.9 percent from $505,256,563 in 2005.
While slots might bring people to the tracks, they may not boost interest in horse racing. Hooke said a study done by his foundation found the crossover between those playing slots and those playing the horses is only about 10 to 20 percent. Slots accounted for 90 percent of those tracks? revenues, with horse racing making up the difference.
“It [slots] doesn?t rehabilitate the horse business, it turns it into a sideshow that breaks even or becomes slightly profitable,” Hooke said. “It?s sort ofa sideshow. ?Look, we have 2,000 slot machines, and hey, if you get bored, we have some horses running around out there.? ”
But Mike Hopkins, executive director of the Maryland Racing Commission said horse racing simply must get better at marketing itself.
“You?re always competing for the entertainment dollar,” he said. “At one point years ago, horse racing was the only game in town. The introduction of the lottery, the sports networks ? it?s consumed it, is what it?s done.”
