The road to recovery for Ohio’s seven long-suffering racetracks seems to be lined with thousands of flashing video lottery terminals.
Wagering on horse races was up substantially at Scioto Downs Casino & Racetrack last year, good news for the state’s other racetracks. Each has bet heavily that similar slot-machine operations scheduled to open this year and next will turn around their declining fortunes.
“We’ve been in the doldrums, but things are looking up, and the future looks great,” said Bob Schmitz, chairman of the Ohio State Racing Commission.
His enthusiasm comes from the numbers at Scioto Downs, which indicate that adding video lottery terminals, or VLTs, attracts more people, many of whom make their way to the track to wager on the horses.
The amount of money wagered at the Scioto Downs racetrack in 2012 was $23 million, an increase of 26.3 percent from 2011, according to the racing commission.
The commission also received $3.4 million from the state’s casino tax to use to bolster the horse-racing and breeding industries in Ohio.
Overall, despite the revenue gains at Scioto Downs, racetrack wagering fell 7.4 percent last year to $212.3 million. From the late 1990s through 2001, wagering topped $600 million annually.
“I think we had a lot of people come to play the [video slots], and they also came over here and were introduced to the sport,” said Stacy Cahill, general manager of racing operations at Scioto Downs.
“We’re seeing people go back and forth. They’ll play the VLTs for a while and then check out a few races,” she said.
Boost in attendance
Cahill said admission to Scioto Downs is free, so there is no way to calculate the number of patrons.
“My guess is attendance was up 40 percent,” she said.
The VLT operations at Scioto Downs didn’t open until June 1, well into the harness-racing season, which runs from May to September. And this year, Scioto Downs will increase the number of race days to 75, up from 57 in 2012.
These combination racetracks and casinos are called “racinos,” and the other six are all well on the way to opening.
The VLT operation at Thistledown, near Cleveland, is scheduled to open in the spring.
The $88 million project will add 1,150 VLTs and upgrade the racetrack’s building and grounds. Thistledown is owned by Rock Ohio Caesars, which also owns Horseshoe Casino Cleveland, which opened in May, and Horseshoe Casino Cincinnati, scheduled to open March 4.
Northfield Park, which is in Summit County, is expected to open its new operation in December. It will be called Hard Rock Rocksino Northfield Park and will have more than 2,300 slots and a Hard Rock Cafe. It also will feature a variety of musical acts.
Racetracks to relocate
Beulah Park in Grove City and Raceway Park near Toledo will both operate in 2013 only as racetracks in their current locations. They will then close, move, and reopen at new tracks with VLT operations in the second quarter of 2014 as Hollywood at Mahoning Valley Race Course near Youngstown and Hollywood at Dayton Raceway, respectively.
Both of these racetracks are owned by Penn National Gaming, which also owns Hollywood Casino Columbus and Hollywood Casino Toledo.
“You don’t want to build a VLT facility a few miles from your own casino,” said Bob Tannenbaum, spokesman for the Hollywood casinos and racinos. “And both of these markets [Dayton and Mahoning Valley] were underserved.”
Tannenbaum believes there are enough casino gamblers and horse racing fans in the state to support the four Las Vegas-style casinos and seven racinos.
“We’ve studied the market and think it can, or wouldn’t be doing what we are doing,” he said, adding in past years many Ohio gamblers have had to travel to casinos and racetracks in Pennsylvania, West Virginia and Indiana.
“More than a billion dollars was leaving the state every year,” Tannenbaum said.
For example, he said the Mahoning Valley racetrack will attract gamblers who previously traveled to Mountaineer Casino Racetrack & Resort in West Virginia and Presque Isle Downs & Casino in Erie, Pa.
More options next year
The VLT facilities at River Downs near Cincinnati and Lebanon Raceway, located between Cincinnati and Dayton, are also scheduled to open in the first half of 2014.
Moving its two racetracks will cost Penn National $150 million in relocation fees to the state, Schmitz said.
If Thistledown elects to move to the Akron/Canton area in the future, it would pay a $25 million relocation fee.
Lebanon Valley is moving about 20 miles closer to I-75 but does not have to pay a relocation fee to the state, Schmitz said.
The state’s casinos are required to pay a 33 percent tax to the state, which goes to a variety of funding streams. Three percent of this total goes to the racing commission to increase purses, improve breeding programs and pay for a portion of operations at the racinos.
This equaled $3.4 million in 2012, including $1.6 million in the fourth quarter, the first in which three were open.
“This is good for the breeding business, it’s good for agriculture in the state,” Schmitz said of the casino revenue, adding that increased purses will attract breeders to Ohio and reinvigorate the industry.
However, it will take several years to get the industry back to where it was 10 or 12 years ago.
“You don’t just take a horse out of the field and race it,” Schmitz said.