Illinois horseracing has been in a precipitous decline (hanging by a thread, really) since the first riverboat casinos were christened in 1991. But the horsemen refuse to quietly fade away. Invoking their supposedly rich tradition and incessantly warning of economic havoc should they be allowed to fail, they demand, arrogantly, more. More, that is, than the 3% they’re legally allowed to skim from the casinos. What they want is Video Lottery Terminals (VLTs) installed at the state’s five tracks so they can “properly compete” with the riverboats and neighboring racino states.

Without the racinos, many in Illinois predict catastrophe. Hawthorne president Tim Carey says (NBCChicago, 4/22/13) “it will be a slow, miserable death for racing.” And trainer Debbie Allison adds (WBEZ, 6/11/12), “If we don’t get the slots, we’re really just done.” Some, though, are less-than-sympathetic. Illinois politician Ed Schock (Chicago Tribune, 4/6/11): “If you can’t make it, then maybe it’s time to reconsider whether Illinois is a good place for horse racing. They’re already getting a subsidy. If people aren’t interested in going to horse racing in enough numbers, it would seem horse racing isn’t viable anymore.”

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Once introduced, racino revenue soon makes up the bulk of purse money, replacing what should (handle and attendance). According to the Chicago Tribune, since Indiana went to slots in 2007, purse money has nearly tripled, while handle has declined. In short, where slots exist, the horsemen laugh all the way to the bank. Yonkers publicity director Frank Drucker (Sun-Times, 2/26/11): “The slots are the engine that drives the operation. We’d be lying if we said racing had a fan base close to what it did in its heydey.” Forced to rely on product alone – like almost every other American business – much of racing would not survive. Even in venerable NY, slots prop the industry.

Once given, the subsidy morphs to entitlement, and attempts to wean are met with indignation from the horse people (“How dare you put our people out of work!”). It – racetracks with VLTs – becomes the new normal. Illinois State Rep. Lou Lang, a slots advocate, says that “the horse-racing industry is dying on the vine.” But “dying on the vine” implies a premature end, mostly due to lack of support. This does not describe horseracing. One, racing people have been earning off the backs of enslaved horses for well over a century. And two, it is the buying public that is not adequately supporting the industry. The market has spoken.

The New York Racing Association reports a half-year (ending June ’13) operating loss from racing operations of $10.3 million. But when the Resorts World Casino (at Aqueduct) slots money is factored in, that loss magically becomes an $8.2 million gain. With attendance and handle trending in the wrong direction (down 18% and 5% respectively from the same period last year), the state’s big three (Saratoga, Belmont, and Aqueduct) are growing more dependent on racino cash with each passing meet, a condition their harness counterparts know all too well. The following, posted last year, offers more insight into NY’s horseracing subsidy…

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Racinos, horseracing tracks with Video Lottery Terminals (VLTs), are New York’s answer to stabilizing (saving) a gravely ill industry, especially at the harness level. Currently, 9 of the 11 NY racetracks house VLTs: Saratoga (Harness), Finger Lakes, Buffalo, Monticello, Batavia, Tioga, Vernon, Yonkers, and Aqueduct. Each track is entitled to a 26-32% cut of net revenue, plus 8-10% for marketing, plus up to 4% for “capital improvements.” Since the program began in 2004, this translates to $1.023 billion for purses and $571 million for marketing and infrastructure. But has this government largess helped racing right its ship?

In July 2012, the NYS Comptroller’s office filed this report. It concludes:

“We found that, despite the influx of VLT monies since calendar year 2004, handle at their associated racetracks has continued to decrease. In fact, total handle on live racing in New York decreased from $53 million in 2004 to $46 million in 2010, a decrease of 13 percent. …we are unable to determine whether the millions of dollars that pay for increased purses, rather than for education, are having their intended effect.”

In response to the audit, Lottery Director Gordon Medenica:

“Anecdotally, we know from all our facility operators that there is almost no overlap or synergy between the casino patrons and the horse racing patrons at the facilities. Many of the facilities lose money on their horse racing operations…but consider it simply a cost of doing business for having the VLT license and operating the gaming facility.

In the past, one could characterize the facilities as horse racetracks with gaming machines, but now it is much more accurate to describe them as casinos (with a legally required track on the property). …As mentioned earlier, we share the Comptroller’s concern about the effectiveness of the horse racing subsidies generated by the Video Lottery program.”

(In Ontario, which ended its “Slots at Racetracks Program” earlier this year, racing was receiving 20% of slots revenue – $345 million in 2011, over $4 billion in just 15 years. In all, this nonracing booty eventually accounted for 63.6% of purses, with some of Ontario’s 17 tracks funding over 90% of their prize money with slots cash. Now, mostly being forced to subsist on actual product, the future of Ontario racing remains very much in doubt.)

Horseracing, of course, defends the VLT program as a successful “partnership” (for them, “subsidy” is a four-letter word) that has benefited taxpayers and industry alike. Inconveniently for the horse people, however, it is virtually certain that VLTs would succeed in a host of other public places – bars, restaurants, truck stops, etc. – and that these venues would not require anything close to the 40% or so currently gifted to racing. In other words, millions more could (should) be flowing to education.

Across the nation, states are growing weary of propping up “The Sport of Kings” by turning it into a collective casino “with a legally required track on the property.” Enough already. Kill the subsidy; let the market take its course.