Revving Up Racing Revenue Print E-mail

Daily Local News
December 11, 2006

When hundreds of patrons charge through the doors this winter to pull the first levers on Philadelphia Park's slot machines, it will be a welcome sight to thoroughbred horsemen in Chester County and throughout the state.

The revenue produced by the Las Vegas-style slots will allow the Bensalem facility to increase purses for winning races and attract owners of some of the country's top thoroughbreds. Twelve percent of each dollar stuffed into the slots will be earmarked for horsemen.

"It's going to take some time to come to maturity, but it's a win-win for the people who make their living with horses in this community," noted Larry Ensor, owner of Gumtree Stables in Cochranville. "Purses will climb significantly and the (Pennsylvania-bred) bonus checks will be quite generous."

As of mid-November, Philadelphia Park purses averaged $144,000 a day. When the slots are activated, daily purses are projected to increase to $175,000, and could jump to $300,000 by next summer. When the maximum of 5,000 machines are up and running in roughly four years, overnight purses could soar to $500,000 a day. That would stamp Philadelphia Park as a national powerhouse.

Originally called Keystone Racetrack, it opened in November of 1974. In 1990, the racetrack was purchased by Greenwood Racing Inc., a corporation founded in 1989 by British bookmaking veterans Bob Green and Bill Hogwood.

Philadelphia Park, which paid a $50 million fee to operate a slots casino, is projected to bring in the most revenue out of any Pennsylvania tracks. With an estimated 10 million people living within an hour's drive of the track, Greenwood Racing is banking on a spectacular return. Track officials have pegged a win per day, or average daily revenue per machine, at $375.

An initial 2,000 gaming machines will be housed on the first two floors of the renovated grandstand. A permanent $400-million casino, slated to open in 2008 with up to 5,000 machines, will be built on what is now a parking lot in front of the racetrack. Future plans could include a convention center, retail outlets, hotel, spa and perhaps a golf course.

Philadelphia Park is one of 14 eventual slots locations across the state. When the full compliment of 61,000 machines are operational, Pennsylvania will rank as the second-biggest slots state behind Nevada, not counting Indian casinos.

Ultimately, state officials expect Pennsylvania's slots to pull in $3 billion a year, with most of the state's share (more than $1 billion) to be used to help cut local taxes and boost the state's share of spending on public schools.

In mid-November the first Pennsylvania slots parlor opened at Mohegan Sun at Pocono Downs, a harness track near Wilkes-Barre.

Called "racinos," the combination of slot machines and horse racing is growing nationally, especially as states look for ways to collect taxes and fight massive budget deficits. Already Delaware, West Virginia, Rhode Island, Maine, Iowa, New Mexico, Louisiana and Florida have legalized slot machines at racetracks, making them formidable challengers to the nation's other gambling outlets.

Eyes in the racing industry will be on Philadelphia Park next year, just as it was thrust into the limelight in 2004, when Smarty Jones was housed at the track. The spirited chestnut colt won the Kentucky Derby and Preakness Stakes but came up a length short in the Belmont Stakes, denying him the famed Triple Crown.

Just when "Smarty Jones Mania" was hitting full throttle the state legislature was preparing to vote on the slot machines legislation. It had been bottled up on Pennsylvania's docket for over seven years. But that all changed when Governor Ed Rendell signed the Race Horse Development and Gaming Act in Philadelphia Park's winner circle that July.

A member of the state's Horse Racing Commission and owner of Charlton Bloodstock, a Cochranville thoroughbred farm, Rick Abbott noted that Smarty Jones wasn't the reason the bill passed, but the colt sure helped.

"Smarty Jones made it easier for the legislators who were on the fence to topple over in favor of it," Abbott said. "John Servis (his trainer) put a human face on an industry that's often looked at as a bunch of rich guys trading money. The legislators saw people who had real lives."

Under the Gaming Act gross revenues will be awarded as follows: 45 percent to casino operators, 34 percent to the state, 12 percent for purses and breed development, 5 percent for state economic development and 4 percent for local government. Horsemen and breeders will also reel in up to 5 percent from non-track slot casinos.

The slots legislation mandated seven racetrack casinos, five stand-alone slot parlors and two resort-hotel casinos. Five casino development groups are battling for two stand-alone slot parlor licenses in Philadelphia. Permanent licenses could be awarded on December 20.

Slots money will rejuvenate what has been a languishing equine industry, said Ann Swinker, a professor at Penn State University's dairy and animal science department.

A Penn State study found that the state's equine owners devote 1.2 million acres of land for horse-related purposes. That generates assets totaling nearly $8.3 billion. In addition, Pennsylvania's horse farms preserve "green space" and hold the line on overdevelopment.

The equine industry generates nearly $350 million annually for the state's economy.

"The racing industry will be the engine driving the whole train," Swinker explained. "Land will stay in agricultural use and we'll be getting better equine genetics, so there should be a ripple effect on the hunters, jumpers and pleasure horses. The upswing in breeding will strengthen the whole horse and agriculture industry."

Harvey Chase has been cutting and baling hay for local horse farms and equine training centers for two decades. He owns Chase Meadows Farm in New London.

"Business has been steadily increasing over the past few years," said Chase. "There are more racehorses, sport horses and pleasure horses coming here. On the racing side, I guess they want to take advantage of the bonus money paid to Pa.-breds."

Pennsylvania is recognized as a state where horsemen breed to race. Awards (bonuses) through the state's breed development program could soar from the current $10 million to $25 million when slots are fully online.

One of the early out-of-state arrivals in Chester County was Ensor. A bloodstock agent in Kentucky, two years ago Ensor bought Gumtree Stables that sits across the road from Abbott's Charlton Farm.

The farm dates back to a William Penn land grant from 1680 and its 110-acres are home to 25 broodmares, yearlings and foals. Ensor and his wife Laura scouted farms in Kentucky, Maryland and Virginia.

"The anticipated windfall (from slots) was important, but we also wanted a place that wouldn't be developed 20 years from now," he explained. "We're breeders that fit the mid-Atlantic market. Here, we can be a bigger fish in a smaller pond."

Ensor believes it may take three years to get the awards program for breeders up at the top level. "Once it does it will make up a reasonable part of a horseman's revenues."

 
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