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Agenda Set For 3rd Annual Racing & Gaming Conference At Saratoga

Pat Brown, the director of The Racing and Gaming Conference at Saratoga, knows what makes an agenda tick. He has seen his fair share of seemingly endless Power Points, glazed-over eyes and the attendees that surf the Internet in an attempt to multitask. The best way to combat the conference malaise? Just a healthy dose of fun.

“I've spent over 40 years of in and out of government, thinking about and writing about the gaming and horse racing industry,” said Brown, a former advisor to New York's Governor Mario Cuomo and an attorney that lives just south of Albany. “I want everyone to come away from this conference having learned something interesting, but most of all, I want them to have fun.”

As the director of the what will be the third installment of this hybrid conference that will be held at the Hilton in Saratoga Springs, New York from Aug. 14-16, Brown and his planning committee have put forth yet another stellar card. Once again, those in attendance will take in cutting-edge topics under the umbrella of racing and gaming with an ambitious schedule just out this week.

This year's slate runs the gambit when it comes to angles and there is something for everyone that is interested in the intersection between these two worlds. “We've got something for lawyers, thorny issues, where the little guy fits in and how technology shapes and impacts the racetrack and the casino,” said Brown.

After an opening reception at the Adelphi Hotel on Monday, Aug. 14, the conference shifts into high gear Tuesday with experts that will speak on the following topics:

New York Casino Expansion to New York City and Surrounding Counties: Is the Finish Line in Sight?
Consolidation of Gaming: Status and Implications
Tribal Digital Gaming: Has the Moment Finally Arrived?
Technology and Gaming: New Challenges, New Solutions
The Implications of Exclusion for Racetracks and Casinos
Consumer Protections and the Federalization of Gaming

Pat Brown | courtesy of Brown and Weintraub

“We want this conference to not be so New York-centric,” said Brown. “The way you do that is by thinking broadly and topics like tribal gaming, regulatory issues and legal questions like exclusion, are all applicable across state lines.”

Sandwiched within day one is a lunch lineup which includes an address by Stacie Clark Rogers of the Thoroughbred Aftercare Alliance and a keynote delivered by Joe Asher, President of IGT Sports Betting. “Joe's is coming to keep us energized, entertained because I think lunch needs to give everyone a break from the conference,” Brown said.

On day two, the conference concludes with four sessions that deal with aspects of racing and wagering, including:

Harness Racing: An Industry in Decline–or in Transformation?
Historical Horse Racing Machines: The Tail Wagging the Horse?
HISA–Legal Limbo and Regulatory Reluctance
Racing's Changing Customer Base, CRWs and the Future of Betting

Each of these hot-button issues draw from an arc of past precedent and are extremely significant to the future of the horse racing industry. “Not everything is about Thoroughbreds,” said Brown, who has also owned shares in racehorses. “We want to expand the vision to harness racing because it has much to teach us about statutory issues concerning aspects like the minimum number of race days.”

Brown knows that a panel concerning HISA is important, but he wanted to find a way to zero in on something specific. How state regulators are handling the current situation seemed appropriate. He also understands that conference attendees will be particularly keen to hear about the impact of Historical Horse Racing Machines and the power behind Computerized Robotic Wagering groups. “I have no doubt that those sessions will generate some interesting questions and debate, especially when everyone is talking about the impact on track handle,” said Brown.

Wrapping up the conference, some 50 attendees who purchase tickets will have the opportunity to take in the Saratoga meet along The Spa Veranda. Pat Brown's idea of fun, indeed.

Click here for more information concerning registration and hotel information for The Racing & Gaming Conference at Saratoga.

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Ron Winchell Talks Ky Downs, Gun Runner on Writer’s Room

One of the great success stories in American racing over the last decade or so has been the emergence of Kentucky Downs, which opens its 2021 six-day meet on Sunday. Much of that has to do with the stewardship on Ron Winchell, who, along with partner Marc Falcone, purchased the track in 2019.

Thanks in large part to Historical Horse Racing machines, Kentucky Downs was already making plenty of money when Winchell and Falcone took over, but they never grew complacent. Rather, they have continually looked to make Kentucky Downs an even greater success. Part of that has included an expansion of the gaming, entertainment and dining areas, but it has also meant growing the race meet.

During his interview on the TDN Writers' Room presented by Keeneland, Winchell explained why his team has never stopped trying to grow the race meet, which now includes 16 stakes worth $10 million and three $1 million races. With many tracks affiliated with gaming, racing is an afterthought.

“Obviously, I am heavily involved in horse racing,” said Winchell, the Green Group Guest of the Week. “You don't have an ownership here that is segregated from horse racing, which sometimes happens, especially in other states. Our meet is so unique, with six days and the purse levels, with 16 stakes races and three $1 million races. Really, it has turned into this cool, boutique meet, which is fun and we do well. We don't lose money, where with many locations it's not the same and they lose money and they don't have that tie to horse racing. They really try to make the racing as minimal as they can. We're the opposite. We are willing to spend money every year to grow this into something bigger and better all the time. That's the focus we have when it comes to racing.”

A short meet clearly works for Kentucky Downs, but Winchell said he'd like to see it grow to beyond six days. He said Kentucky Downs will apply for seven racing dates in 2022 and added that management is also interested in possibly running some days in May in the future.

“At some point, we might want to do a few days in May,” he said. “We'd like to do something that would, hopefully, attract some European horses. So, there is some potential to grow more going forward. But we don't want too many days. The short boutique-style meet is what makes it special. It's never just another day at Kentucky Downs.”

Winchell is also a prominent horse owner and he and his family have campaigned a number of stars, including super sire Tapit (Pulpit) and Gun Runner (Candy Ride {Arg}), who has gotten off to a fast start at stud.

“The Gun Runners are capable of winning races at six furlongs or shorter, and that's what we are seeing,” Winchell said. “But I think they all really want to go longer. We've shown everybody that these guys can really run, but I can't be more excited to see what the next phase will bring. He's going to have runners in the Hopeful, the Spinaway, the Sapling and I believe there are two that are going to run in the Del Mar Futurity. This weekend will be a pretty defining moment for him, to see if he can take the next step. I'm pretty excited. Gun Runner is my favorite subject right now.”

Elsewhere on the show, which is also sponsored by West Point Thoroughbreds, Spendthrift Farm, Legacy Bloodstock, the writers reviewed the GI Runhappy Travers day card at Saratoga, generally giving glowing reviews to a day of racing that was among the best offered anywhere and at any time this year.

Click here to watch the podcast; click here for the audio-only version or find it on Apple Podcasts or Spotify.

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Citing Need to ‘Chase Profitability,’ CDI Outlines Different Paths for IL, KY Tracks

An earnings conference call with investors Thursday morning underscored that Churchill Downs, Inc. (CDI), intends to sell Arlington International Racecourse near Chicago for “non-horse racing” purposes.

The gaming corporation with six Thoroughbred tracks in its portfolio also announced Feb. 25 that the previously halted reconstruction project at Turfway Park has resumed now that a Kentucky bill to legally redefine historical horse race [HHR] gaming has been signed into law.

But pandemic-delayed flagship property plans for a hotel, HHR facility, and track amenities expansion at Churchill Downs itself all remain on hold.

Bill Carstanjen, CDI's chief executive officer, said that the corporation will “revisit” and “reimagine” whether or not it wants to follow through with that Louisville project at its previously announced price tag of $300 million.

Those items were the Thoroughbred track-specific topics covered in Thursday's conference call. Per usual, the prepared remarks by CDI officials skewed heavily toward finances and gaming-specific initiatives, with a strong emphasis on CDI's desire to achieve corporate profitability.

Carstanjen said that “what we need to do for our company is demonstrate a very quick pathway to profitability. [That means] don't chase [market] share, and don't chase size–chase profitability. So everything we do in this company is built on a short time frame and a conservative time frame on when we think we can demonstrate profitability. And that'll be our model designed to keep us in the game long-term.”

Carstanjen kept his comments brief and in general when discussing Arlington being put up for sale for redevelopment. That announcement was made on Tuesday, but it was a decision that had been feared for several years by the racing community in light of CDI's ownership interest in one competing Chicago-area casino and plans to bid on a second, and potentially more lucrative, casino license in that region.

“We announced this week that we have initiated the sales process for the Arlington Park racetrack land,” Carstanjen said. “We will conduct racing in 2021 at the track while moving forward with the transaction to sell this highly desirable land for other non-horse racing, mixed-use options.

“It is our intention to work constructively with state and local authorities to find a solution to continue Thoroughbred operations in Illinois, and we look forward to further constructive dialogue as we explore alternatives,” Carstanjen said. “I am optimistic that state and local authorities are interested in finding a path forward with us.”

The news on CDI's two Thoroughbred properties in Kentucky came across as a split decision for racetrackers. The greenlighting of the Turfway build signaled welcome news that the torn-down grandstand and clubhouse won't linger in an unfinished state. But Carstanjen's hints at possibly scaling back the Churchill project came across as cryptic, with few specific details divulged.

“We have already restarted the construction process for our Turfway Park racing and [HHR] facility and are targeting a grand opening for the summer of 2022,” Carstanjen said. He added that CDI anticipated spending $145 million to finish the project, which CDI halted back in October when the legal status of HHR in Kentucky was unclear.

The Churchill construction pause is not new. It's been halted since April, just after the onset of the pandemic, when Carstanjen said in another CDI earnings call that the $300-million project would be on hold “until after we have completed” the 2021 GI Kentucky Derby.

On Thursday, Carstanjen gave the first update since October on that paused project, and it contained the new twist that it might not be built to the specifications that were originally outlined when CDI budgeted $300 million for it in October 2019.

“Before suspending activity when the pandemic hit, we had completed all of the underground utilities and a handful of site-prep projects,” Carstanjen said. “We spent approximately $15 million of the $300 million of capital that we had approved for this project. We are finalizing our revised plans that we believe will be just as impactful…. We believe that we can and should do the project more cost-effectively as we reimagine each of the three elements of the overall project–the hotel, and [HHR] facility, and expanded permanent seating and hospitality.”

Carstanjen continued, “There is really a fourth element to consider as well, which is the potential future expansion of Derby City Gaming. This facility has really performed well since opening…”

At a later point, when corporate investors were allowed to ask questions, Carstanjen was reluctant to directly answer to what extent a potential satellite outbuild of the Derby City Gaming HHR facility in Louisville might have on the overall Churchill Downs project.

“Derby City Gaming has just become this juggernaut,” Carstanjen said. “And we have to make sure we maximize that and make it everything that it can be. So watching its performance over the last year has really been, you know, fairly stunning. And we want to make sure that that property is everything in and of itself that it's supposed to be before we rush forward with an idea of what else we should do at the racetrack.”

Another corporate investor wanted to know additional details, like what factors CDI would be paying the most attention to as it reconsiders the Churchill Downs project.

Carstanjen again declined to provide specifics. But he did note that the impact of the COVID-19 pandemic on the hotel industry was one issue that CDI would be examining.

“There's not a lot more that we can say on today's call, because we're not ready to say it,” Carstanjen said. “But some of the factors we're looking at really go to the robustness of the [HHR] product and how best to deploy, here in Louisville; what the best hospitality offering is at the racetrack itself [and] how to think about the hotel with some of the disruption that we've seen in the hotel industry across the United States over the last 12 months. Those are all things we're looking at, and we have a really good handle around those things. We're just not ready right now on this call to get into them.”

As for the May 1 Derby, Carstanjen said ticketing plans are coming into focus but remain fluid because of COVID-19.

“We are currently planning to sell our seated areas at approximately 40 to 50% capacity, and may offer some amount of general admissions tickets when we are a little closer to the date,” Carstanjen said. “We may adjust our ticketing plans as we see further improvement in the circumstances surrounding the pandemic.”

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HHR Passes Kentucky Senate 22-15

The “emergency” bill to legalize historical horse race (HHR) gaming by defining “pari-mutuel wagering” to include previously run races passed the Kentucky State Senate late Tuesday afternoon 22-15, with one senator not casting a vote.

Proponents of the bill are aiming to align HHR in a way that they believe will make the slots-like form of gaming constitutionally legal so the machines can keep generating $2.2. billion in annual handle. The Kentucky Thoroughbred Development Fund's purse-money cut from HHR is three-quarters of 1% of that handle.

Senators speaking Feb. 9 in favor of SB 120 focused their arguments primarily on the economic advantages of maintaining HHR, whose operation has fueled what they described as a Kentucky Thoroughbred “renaissance” over the past decade. According to the state's constitution, only pari-mutuel wagering, the Kentucky Lottery, and charity-related gambling are considered legal.

Proponents also framed part of the debate as “class warfare,” and said keeping Kentucky's 3,625 HHR machines operational would be the commonwealth's best bet to protect its signature Thoroughbred racing and breeding industry.

Another “pro” argument was that keeping HHR legal and limited only to racetrack-related licensees would avoid any infiltration of big casinos in a state known for conservative opposition to expanding gambling.

Senate Majority Leader Damon Thayer (R-Georgetown) even made the dire prediction that “three or four” Kentucky racetracks could close within the next fiscal year if senators didn't advance the HHR bill.

Opponents hit repeatedly on what they described as the non-constitutionality of HHR, the perceived moral ills of gambling, and how the state's racing industry knew 10 years ago it was engaging in a dicey business gamble by building an HHR industry atop a murky legal premise that has repeatedly been questioned in the courts.

HHR was put into peril Jan. 21, when the Supreme Court of Kentucky denied a petition for rehearing an earlier judgment that called into question the legality of HHR because it didn't amount to “pari-mutuel wagering.” The question over that legal definition, led by anti-gambling activists, has worked its way through the court system ever since HHR was first allowed by the state in 2012.

Senator John Schickel (R-Union), who introduced SB 120 on Feb. 2 and also chairs the Senate Licensing and Occupations Committee that reported it favorably Feb. 4, championed his measure on the grounds that “what this bill does, is simply clarify [the pari-mutuel definition] issue once and for all” so that Kentucky can remain “the horse capital of the world.”

But when the Senate opened up its floor to questions, Schickel surprisingly couldn't come up with even basic answers when Sen. Whitney Westerfield (R-Crofton) asked him how many HHR machines currently operate in Kentucky and how much money they generate.

At a later point in the nearly 90 minutes of debate, Schickel returned to the floor armed with what he said were his favorite racetrack indulgences–a sugary Kentucky-made confection known as a MoonPie and a “stinky cigar”–in a difficult-to-follow attempt to illustrate “the role of virtue and vice in our society.” Schickel then asked rhetorically, “Is it really our role to tell poor people that we need to protect them from themselves?”

Westerfield spoke first among the opposition, launching into detailed arguments centering on what he believed was the non-constitutionality of HHR. He then segued into a soliloquy based around his moral perceptions of gambling, during which he lamented how some “white trash” consumers disproportionally bear Kentucky's societal costs related to gambling.

Westerfield wrapped up his remarks by terming SB120 as a “bailout” to the racing industry, whose tracks over the past decade invested “hundreds of millions of dollars in HHR-related expansions” even as the very legality of the machines was being appealed all the way up to the Supreme Court.

Westerfield continued, “The surest bet [the tracks] ever made was that if they were ever called out on the legality or the illegality of these machines, that they'd be quickly able to claim the very real economic harm from suddenly having to close…. This legal defeat was not some out-of-the-blue ruling by a rogue judge. This wasn't an unexpected risk that couldn't be planned for and mitigated. The tracks knowingly built their houses on quicksand.”

Speaking next, Thayer lambasted the opposition's attempts to derail HHR as being laden with “all kinds of ruses and red herrings and smokescreens to try and divert our attention from the matter at hand.”

That matter, Thayer said, “is simply [that] the signature industry of Kentucky, the home of the [GI] Kentucky Derby, the home of the market-leading horse-breeding business that exports our stock around the world…is under threat.”

Thayer continued, “I respect people who are morally and religiously opposed to gambling. But I'm not going to stand idly by while pejoratives are made about people who participate in this sport,” alluding to Westerfield's remarks.

Even senators who expressed neutrality on embracing the new pari-mutuel definition of HHR had strong opinions related to the measure.

Urging fellow lawmakers to “vote your conscience” on HHR, Sen. Stephen Meredith (R-Leitchfield) said what bothers him is Kentucky's trend of bills being presented to legislators under the premise that if they don't vote in favor, they'll be responsible “for killing so many jobs” in the commonwealth.

“I know this is their signature industry. I know it's important to us,” Meredith said. “But I feel like I'm almost being blackmailed, [as in] 'We need money in this state, and if we kill this industry we're going to lose all this money.' We spend a lot of time treating the symptoms of this state, but never curing the disease.”

Sen. Morgan McGarvey (D-Louisville) argued that judging “constitutionally” is not the job of senators. The judicial branch of government gets to decide that, he said, “and what the Supreme Court has said in this instance is that they are going to allow HHR if we make some legislative changes.”

McGarvey continued, “And when we talk about what's going to happen if we allow HHR, let's reframe this debate. We've had HHR for 10 years. We have not seen the problems that have been forecast here on the floor. We're not deciding whether we want HHR in Kentucky. It's here. We're deciding whether we want to keep HHR in Kentucky, and all of the jobs, and all of the help in the industry that goes along with it.”

That said, McGarvey added that even though he supports this particular bill, he “doesn't think the tax structure is fair” and will be seeking ways “to generate more revenue from it than is currently being generated.”

SB120 now advances to the Kentucky House of Representatives.

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