Wednesday, October 22, 2008

Minor: Slots are a Disease & I Will Not Infect Racing With Them

Halsey Minor, the former CNET founder and Internet entrepreneur who wants to buy tracks, might be a guy that can turn this business around. He says "slots do not belong in racing," and that if they are approved for a track he owns he would not implement them.

Minor, with the comptroller by his side, also told reporters that he wants to revive Maryland horse racing without slot machines.

"These things, they're cancer," Minor said at a news conference in the comptroller's reception room.

Minor also said he would consider building a new facility in Baltimore at Pimlico, which is home of the Preakness Stakes, the second leg of the Triple Crown. Minor said his plans to revive horse racing involve focusing on improving the track experience for fans.

"Slots do not belong in thoroughbred racing," Minor said


Slots are our drug. Like most subsidies that are given without benchmarks or penalties, they make us lazy and allow us to be second rate, ordinary, unremarkable. They have allowed us to completely ignore handles, and the horseplayer for a long, long time. I think Mr. Minor has a point, and it is amazing to see someone with the cajones to stand up and say it.

Over the last dozen years we as a business have received billions of dollars of slot money. Almost all of this money has gone into supply. It has been said by many that the slots boom has been a good one for drivers/jockeys and veterinarians and not many others. I do not disagree.

What is the result? Handles have gone down and fewer people watch racing today than ever before. What business do you know gets a $3,000,000,000 or $4,000,000,000 subsidy (enough money to pay for the purse for the Breeders Cup Classic for the next 800 years) and has their industry’s only measurable metric go down? None that I know of. Racing will be spoken about in MBA textbooks someday as a "what not to do" case study.

I don’t begrudge the slots boom and the business taking all the money for the supply side. After all, I am a horse owner and get to race for inflated purses, in front of almost no fans; but when I look at it, it really does me no good. My training bills are small compared to many others out there, yet they are 150%-200% higher than the bills from my family stable in the 1980's - how’s that for inflation. A vet bill then might be $1000 a year. Now for some stables, it can be $1000 a week. It has done us very little good as owners in microeconomic terms. We have just shuffled money from one hand to the other.

As for the players, they have been annihilated. Takeouts pre-slots were in the 17% range. Now they are about 21.8%. The business got billions and the players have received a giant kick in the ass. I don't blame them one bit for leaving our sport and feeling cheated.

The sad part is that many will disagree with Mr. Minor and will probably be angry with him. Each time we hear something from the business it usually has something to do with marching on a state house for more slots, or sports betting, or some kind of hand out that does nothing but hurt racing handles. It has become a cottage industry, like trial lawyer or oil company lobbying in Washington. We know it is bad, we know it will not help us in the long run, but we can not help ourselves from bowing to the elixir of free money. It’s crack cocaine and we are its users.

When I first heard of Mr. Minor, I wrote a post about it.

In a recent interview on the Paulick Report, I found out that I really like Halsey Minor. Minor is a founder of CNET, a very successful internet firm which sold for almost $2.0B and he wants to buy and restore Hialeah in Florida. Why does a guy who worked in the Internet where tomorrow happens today want a piece of the racing business where tomorrow happens a decade from now? I don't know, but he appears to like racing. And he handles things like many I know in the Internet business - with common sense and no nonsense.

That opinion has not changed. I sincerely hope he succeeds and helps our core business thrive with a much needed change of business model.

We need a leader. We might have found him.

6 comments:

SaratogaSpa said...

This post should be required reading. You sum, very concisely, ny feeling on slots at race tracks.

As for Minor, he is a breath of fresh air, not an apologist but a man with answers.

Anonymous said...

Slots(Delaware) vs No Slots(Laurel) on Saturday Oct 18th.
Del (8)races with 52 entries,6.5 per race.
Lau (10)races with 92 entries,9.2 per race.
Del purses 235k, 29.4k per race
Lau purses 178k, 17.8k per race
Included in Del's 235k was 75k for the Blue Helen Stk for 2yo which drew 5 entries and was won by an invader from Kee.
Del total handle was 633,582 or 79,198 per race.
Lau total handle was 1,303,507 or 130,351 per race.
I've compared these tracks at various times and the figures are comparable but because Laurel(Magna) doesn't like to publish their totals it is too time consuming to do with a calculator.
My opinion is that Delaware with slots presents a poorer product and gets less handle.. So slots=subsidy for horsemen and the racing fan gets the shaft.
RG

Anonymous said...

I do not know what the plan was with slots. Usually there is one, when money is subsidized. It seems they had some sort of view that if we sink cash into horses and making a track look better all would be fine and things would grow.

Most times when a company gets money they have to spend it on something that is mandated. I don't see that with racing. There was no plan from the start.

R

Allan said...

If Mr. Minor wants to try racing without slots, good for him. He will either be proven right or wrong.

Racing does need to do something so they don't depend on slots. One day the governing bodies will decide racing shouldn't be subsidized and the racinos will become a casino.

Anonymous said...

I notice on a tbred chat board that someone does not think too much of slots:

Good for Mr. Minor. I agreement with his sentiments about slot machines. All slot machines have done is to create a lot of addicted gamblers and the social problems that go with them. I'm guessing many of the addicted slot machine losers, are lower-income people that can least afford to lose at those %#$&@ machines!

When one walks into the slot machine area at our local racetrack, they have pictures all over the walls of the 'big winners' on their slot machines. What they don't show is pictures of the thousands of losers over the years. I wonder how many of the addicted slot machine players wind up begging for food for their family at local food banks? The racetracks usually have glamor, extravagant surroundings, and enticing promotions of the riches you can win at their slot machines. Yeah right! I may be dumb at some things, but I'm not stupid! You guessed it, I don't play slot machines or any kind of casino game.

Lots of people come up to me at our local track complaining about losing at the slot machines. I explain to them "Don't bet them...you can't beat them in the long run because of the house edge....the only people getting rich in the long run on slot machines or any casino game, are the casino owners and the provincial or state governments." If track management or slot machine supervisors saw me advising people like that in their facility, I'd probably get booted out, or banned for a year or more for speaking the truth!

In my opinion, the legal operation of those dang machines shouldn't have been let out of Las Vegas and Atlantic City. Now these machines all over Canada and the U.S. creating more social problems than benefits in my opinion.

I'm guessing in the old days at the tracks when they had mainly win, place and show betting with the odd daily double, many of the tracks did all right financially with just the track takeout from those kind of bets. Then things started to go downhill for bettors with the advent of a slew of high takeout gimmicks. Because of these high takeout gimmicks, that meant less churning of money being bet and created more losing bettors. Then governments all over Canada and the U.S. started allowing more and more casinos. Many people were lured away from the racetracks with the promise of instant riches, wealth, amd prosperity with yank of a slot machine handle, or the luck in many different types of other casino games. Racetracks suffered financially from the competition, so they begged for a form of welfare from the government for their own slot machines. In many cases, governments gave in and granted those requests. And here we are today. Many racetracks have slot machines now, and a few are without them.

Keep up the good work Mr. Minor. You got it right! I hope your kind of thinking starts a trend at many more racetracks.

Anonymous said...

I agree. Slot machines in suburbs is like opening whorehouses or opium dens. The worse is instead of take-out being eliminated or reduced, it's increased, even though the horsemen are getting what is in effect as state-provided WELFARE checks.