Historical Horse Racing Trends: Proposed Additional Machines Could Earn CDI $3.4 Billion Per Year

Historical horse racing (HHR) machines have made a strong contribution to the horse racing industry in several states over the last five years or so, thanks to the fact that HHR revenues have been used by various racetracks to supplement purses for races.

In Kentucky, HHR machines have recently been classified by the legislature as a form of pari-mutuel wagering after a court ruling questioned their legitimacy from a state constitutional perspective. The reclassification allows HHR machines to continue to operate and racetracks and gaming centers across the state plan to expand the number of machines.

Using Kentucky Horse Racing Commission reports of monthly revenues from 2016 to 2021, the graph below shows the trend in the contributions in gross revenues – or handle – per month for all HHR machines in the state. The upward-sloping trend line reflects gross revenues per day per machine.

According to this data, each machine contributes an average of $143,000 per month to total gross revenues. Payouts to customers usually are at least 90 percent of gross revenues, leaving $14,300 profit per machine per month.

With the low labor and maintenance costs that accompany HHR machines, it is easy to see why racetracks and gaming centers in the state want to add more of these machines.

According to recent press reports, Turfway Park in Florence, Ky., and Derby City Gaming in Louisville plan to add approximately 2,000 machines combined over the next several years. According to the information above and holding all else constant, such machines could earn Churchill Downs (the owner of Turfway Park and Derby City Gaming) around $286 million more per month or $3.4 billion per year. At a tax rate of 1.5 percent, this increase could produce around $51 million in tax revenues for the commonwealth per year.

All data is adjusted for and accounts for reduced operating hours in 2020 due to COVID-19 restrictions and precautions.

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Arlington: Former President’s Racing Preservation Bid Reported To Be One Of Three Finalists

Mike Campbell, president of the Illinois Thoroughbred Horsemen's Association, told the Chicago Daily-Herald that former Arlington president Roy Arnold's bid to purchase the iconic racetrack from Churchill Downs is one of three finalists under consideration. He added that the Chicago Bears and another group seeking to preserve racing are the other two finalists, but Churchill Downs has not confirmed the information.

Campbell helped organize the consortium led by Arnold, and revealed that there have been three rounds of bidding since Churchill's initial June 15 deadline. Arnold has increased his offer several times, Campbell said.

“They have the ability to close immediately, which nobody else does. And they have a plan for the future of racing in Illinois that I think is just remarkable,” Campbell said during the ITHA's annual general membership meeting, held virtually on Saturday. “We think it's nice now. Just wait. If we can get Churchill Downs to say yes, you will have a world-class venue for horse racing like no other.”

Read more at the Chicago Daily-Herald.

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CDI Releases Statement About Arlington Press Box Incident

Two and a half weeks after it occurred, Churchill Downs, Inc. has finally released a statement about the press box debacle at Arlington Park on the eve of the track's annual feature race, the $600,000 Mister D. Stakes, reports the Chicago Daily Herald.

Arlington president Tony Petrillo, buoyed by members of the security staff, cleared out the press box less than two hours after the feature race, while writers and photographers were trying to finish their assignments and send their stories and pictures to their respective publications. Petrillo even told one photographer, who happened to be on assignment for a Churchill Downs Inc. subsidiary, that she was “banned for life” from Arlington Park.

CDI's statement blames the incident on an unspecified issue of “safety” and a “miscommunication,” but media members present at the time call that excuse “disingenuous.”

Tonya Abeln, a media relations spokesperson on the staff of CDI CEO Bill Carstanjen, sent the following statement to the Daily Herald:

“Following the running of the Mr. D. at Arlington Park, we are aware that there was behavior in the press box that was in direct violation of our Media Guidelines. The Media Guidelines ensure safe and responsible operations and help maintain decorum for all journalists to complete their job in a healthy, safe and respectful environment.

“Because this behavior compromised the safety of track personnel, a security team was dispatched to de-escalate the interaction. Part of the planned response was to reduce the number of people in the immediate area.

“During this fluid situation, in the early moments, the goal to have all credentialed media relocated to an alternative location at the track to finish their work was clearly miscommunicated. We regret this incident impacted several journalists' work, even as we appreciate that the security team did what they felt was in the best interest of safety for those in the room.

“We share with Mr. Petrillo a deep admiration and appreciation for the work of journalists who chronicle, document and transfer the excitement of horse racing through their talents. This isolated incident is not a reflection of the values we place on that work and the relationships we share with those professionals.”

Read more at the Chicago Daily Herald.

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Letter To The Editor: Something Rotten In Illinois, But It’s Not Arlington Park Or Its Employees

And so it went that last Saturday my partner and I found ourselves boarding a plane for our first trip out of town since coronavirus became a thing. The destination and sole purpose of the trip – to see Arlington Park now or never. Like Ray Paulick wrote and I'm sure countless others this summer felt, I knew the experience would be bittersweet.

Even so I was not prepared for both the depth of bitterness and overwhelming sweetness we would find ourselves wrapped in.

The first pangs of bitterness came long before we even got to the track. From work colleagues to our flight attendants, restaurant server, and Uber driver – every single Chicagoan whom we told of our trip immediately responded with “It's so beautiful there!” and proceeded to share a memory of a happy day spent there with a son, mother, best friends, or siblings. How could a beautiful place that holds such cherished memories for so many Chicagoans, be going away for good?

The second pangs of bitterness came as we drove around Arlington Heights on our way to the track. Having grown up near Toronto in Canada, I had a certain idea of what to expect from the high-density suburbs surrounding a mega city. But, to my surprise, Arlington Heights had nary a towering condominium, high-rise apartment, or multistory office building in sight. Instead, it was block after block of single-family homes, parks, and big box stores with giant parking lots. In other words, it was a lovely and relatively spacious place for Chicagoans to live. But just as surely it was a place that could not possibly be enhanced by destroying a historic pillar of the community simply to re- purpose the land for development by the highest bidder. Especially when there appears to be no lack of under-utilized space already.

Mercifully these painful, bitter thoughts quickly faded into the background as soon as Arlington's giant wrought iron gates opened and we descended upon the historic grounds with the sugary sweet mixture of anticipation and excitement that accompanies a race fan for whom a lovely summer's day at the races awaits. And yet for every bit of anticipation and excitement we carried with us all the way from Ohio, I can assure you Arlington did not for one second disappoint.

Words may not do it justice, but the following are just some of my favorite moments and memories I'll take with me for a lifetime.

First and foremost, all the horses and jocks got home safe. Second, the track is truly a visual masterpiece; there's not a bad view in the whole house. Third, the crowd was large, enthusiastic, and notably friendly; at times it seemed you couldn't make it more than a few steps without sharing a joke, a compliment or some sort of witty banter with a complete stranger.

And then there's the politeness. As a Canadian I like to imagine I know a thing or two about the art of politeness, but the Arlington crowd that day left nothing wanting. In fact, I think it may actually be forbidden to open your own door at Arlington, because no matter where you go someone has already stopped to hold it open for whatever crowd of people happens to be traveling through at the time.

The staff were consummately wonderful as well. For as much as the upper echelons of management may be choosing to approach the end days with their heads up their arses, the people that actually do the work around there appear to be trying as hard as humanly possible to make these last days count. From the ticket takers to the horsemen's office staff to the bartenders to the mutuel tellers and pony outriders, every single employee we encountered always seemed happy to take a few extra moments to smile, chat, recommend, facilitate, or educate.

There was the talented bugler curating each perfectly tuned Call to the Post with the addition of a few bars of a classic rock song or catchy pop hit. And the meet's winningest jockey – in the midst of a beastly three wins, two places, seven mounts day – grinning as he took the time to high-five every kid that had gathered around the winner's circle, before heading back to the jocks room to do the whole exhilarating dance all over again.

And finally, the storm clouds threatened but stayed away, and like a true fairy tale we were treated to a stunning full rainbow over the homestretch for the last race.

It may have been a fairy tale ending to the day, but you'd be hard-pressed to find anyone at Arlington who still believes in a happily ever after. When posited with the unavoidable question de jour – their opinion on Arlington's fate – most people we spoke with estimated that their hearts and guts were at 90% melancholic resignation of marching towards an inevitable terminal end. About 10% were holding out hope for a miracle.

My least favorite response of the day was the friendly woman who told us she was certain they would “pull a Daley” and have the bulldozers there by sunset on closing day, à la Meigs Field, the former lakefront airport near downtown Chicago. This came in stark contrast to what was easily my favorite answer of the day, from a grizzled veteran fan who'd been a regular at the track for 40 years. He felt certain this was all nothing but an elaborate show of bluffing between Churchill Downs Inc. and the Illinois politicians, who all just want to maximize their piece of the pie before swooping in to save the day.

I admit I loved that answer. I tried desperately to hold on to it and carry it with me. But I'm a scientist by trade and a logical realist at heart. And so it wasn't long after the last race of the day, as the sun was getting low in the sky and we gazed around at our gorgeous surroundings one final time, I felt the unmistakable and final pangs of bitterness setting in once again. And to be honest those pangs still haven't left; they've lingered over me deeply ever since. From the pristine paddock to the lush infield to the modern architecture of the still new-looking grandstand, I wondered: How could anyone take in the entirety of this gorgeous world-class venue … and envision tearing it all down?

There are those who will argue that we're living in a different era, that racing needs to contract in order to survive. Sure, businesses contract and downsize all the time. But as far as I can tell they don't cannibalize their flagships to do it! The Great Race Place, the Twin Spires, the Big Sandy, and the Spa. Keeneland, Woodbine, Del Mar and, without a doubt, Arlington. These are our flagships, our world-class headquarters, our history-making, game-changing franchises. If we allow them to die off then it's only a matter of time before racing does, too. And for what?

Another ugly low-density “upscale” housing complex, big box store, chain restaurant and multi entertainment destination with a giant parking lot? Exactly zero people in the world actually want or will benefit from this type of development for a few ultra-rich developers.

I don't believe in miracles, but I do believe in the strength of the human-equine connection, and the once-in-a-lifetime gem that is Arlington Park. Surely there's still a way to change Arlington's fate. Logically, legally, financially, emotionally. We have to exhaust all the options. Please, what can we do?

– Amanda P. Waller, PhD, Columbus, Ohio

If you would like to submit a letter to the editor, please write to info at paulickreport.com and include contact information where you may be reached if editorial staff have any questions.

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