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Thursday, May 10, 2007

Franchise Delay No Surprise At All

- There have been some unexpected twists and turns in the New York franchise situation to be sure, but many events have been as predictable as was the result of the Derby....to some of us, anyway. The only surprise about the news that the new (or old) franchise holder won't be selected by the time the state legislature adjourns on June 21, is the fact that it's considered to be news at all. There could be a special session convened in the fall to deal with the issue.

But I think that once the lawmakers actually sit down and consider all that has to be done in addition to actually selecting a winner - changes in the law to accommodate a for-profit company (if one is selected), permit slots at Belmont, and to enact long overdue common sense changes to the structure of the OTBs that will entail the undoing of decades of political patronage - they will punt, and extend NYRA's franchise until the end of 2008. And that will give us a whole extra year of observing the fun and games. However, after 12 more months of increased competition and, perhaps, more slots horror stories like those from Monticello and Gulfstream (see below), the idea of racinos at Aqueduct and Belmont may not seem as promising as they once did.

- Noisy demonstrators in Bangor, Maine converged on the state capitol to protest a legislative proposal to add an additional 1% tax on the gross slot machine income (or "coin in") in order to balance the budget. A parade of horse trailers, dump trucks and other vehicles circled the capitol complex as about 200 harness racing men and women, construction workers and other racino supporters rallied on the steps of the State House. [Associated Press]

Whatsmore, Penn National has literally brought construction of its permanent slots facility to a dead halt in protest of the legislation.

"We have halted construction as of today," Penn National spokesman Eric Schippers confirmed Tuesday.

"Given the [political] landscape as it currently stands now, our confidence is shaken in the state’s willingness to keep its word," he said.
......
According to Schippers, an additional 1 percent tax on gross revenues would increase the company's tax burden from 51 percent of each dollar of net revenue to 61 percent, which he said makes the Bangor project "unprofitable."
[Bangor Daily News]
Whether Penn National is serious about walking away remains to be seen - if, that is, the legislature seeks to call their possible bluff and passes the bill. Dennis Bailey, the director of the persistent CasinosNO! group, doesn't believe that the company will follow through, and added:
"The state is getting fleeced just like the players at Hollywood Slots....Apparently, Penn National would rather see taxes increased on homeowners and the elderly rather than giving up a tiny slice of their billions in return for their risk-free monopoly."
Funny, Bailey fought tooth and nail against the slots and the money they have produced, and now he suddenly cares about homeowners and the elderly?

- Magna has reported that the net-win per machine at Gulfstream has dropped from an initial high of $415 to an anemic $74 in April! Oh man!
[CEO Michael] Neuman blamed some of the problems on Florida laws that prohibit check-cashing and ATMs in slots parlors, but added that Gulfstream’s gaming venture was poorly marketed almost from the beginning.

“We didn’t have a sustaining marketing campaign,” Neuman said. “Gulfstream Park has been a pretty well-kept secret.” [Bloodhorse]
Gulfstream is a secret? No one in Broward County that would care about slots knows about the racino there? And whatsmore, the competition is not even all in place. Pompano Park just opened its racino last month, and the one at Dania Jai-Alai is still over a year away!

Though revenue grew slightly and the company sold off assets such as the Meadows racetrack, Magna is still buried in a half-billion dollars in debt, and more land sales are in the cards.
Included in the will-sell inventory of what is termed “non-strategic” assets are San Luis Downs training center in California, the Bowie Training Center in Maryland, Great Lakes Downs in Michigan, the land for the proposed Dixon Downs racetrack in California, and excess land near Gulfstream and Golden Gates, among others noted.

8 Comments:

Kevin said...

It looks like Indiana will get their slots just in time for all of these issues to really hit the forefront.

It's too bad. Indiana Downs is a nice facility with the state's only turf course and, although the level of competition is bottom-of-the-barrel, it's a good trip to catch some live racing without having to make the trek to Churchill or Arlington Park. I'd hate to see the slots take over and push the horse players out of the very nice downstairs simulcast center or the upstairs area.

Anonymous said...

it may be fun and games for some to watch the franchise process, but 12 more months of nyra means deteriorating living conditions and barns to others. Still others yet will go without employee contracts or raises for another year while nyra continues to promote members of management just like they announced today!!!

JLDecker said...

The whole no ATM / no check-cashing stipulation really hurt Gulfstream's chances of getting any sort of draw from people interested in just playing slots and poker. The majority of Broward County would still rather go to the Seminole Hard Rock where they can have their cake and spend it, too.

I had no idea about that particular law until I headed out for the Donn and didn't bother to hit the bank first because every time I'd been there pre-slots I'd just pulled $40 out of the ATM. Imagine my irritation when not only were there none on the grounds, but I had to go back to the parking lot, give up my spot to drive around the corner, then find another parking spot when I got back... //eyeroll// What a mess.

alan said...

Anon - That's a fair point; thanks for bringing it to my attention. I guess it's easy to be snarky from the sidelines when you're not directly affected. I wonder if the governor is even aware of the conditions on the backstretch, and what effect a delay would have.

jl - Do you think that the ATM thing would be the cause of such a decline? That blows about your Donn day. Why should us horseplayers be penalized for the addictions of others?

Anonymous said...

I attributed the drop in AGR at Gulfstream to the same thing that happens to all businesses in Florida. A HUGE chunk of the people that have been there since the slots opened (Oct ?) have gone home up north. Those people are the ones with the disposable income.

JLDecker said...

I don't think the removal of ATMs from the grounds was the only source for blame, but it was certainly more of an issue than the snowbirds heading north for the summer. The decline was an issue throughout the winter season, which is traditionally prime time for northern invaders with cash to burn. ^-^

It's almost as if MEC blinded themselves to the existence of the Hard Rock, or took for granted that the horseplayers would carry them through. Unfortunately, the no ATM / no check-cashing law that came with the slots has seriously put out the bread-and-butter bettors.

The other gut punch (as I understand it) was the fact they preemptively raised purses based on the grievously overestimated increased revenue they were so certain the slots would bring in. They were hoping to stimulate a record-setting winter season by, in effect, spending money they didn't exactly have on reserve. And in that, Magna shot them selves in the foot-- because the slots didn't pan out.

I just ... and I might soapbox a moment here, so forgive me ... I lived there long enough to know. People who just want to gamble will go to the Seminole. People who want to play the horses won't. MEC tried to integrate Gulfstream Park into the Hard Rock market with slots and poker when nobody was complaining about there being nowhere else to go, and in doing so they penalized the people who supported the sport that made Gulfstream in the first place. It's just ... sad.

Anonymous said...

Well at least NYRA is allowed to have ATM's. Now all they have to do is remember to stock them with money for opening day.

Every machine in the place was without cash, when added to the steam room debacle and back yard tote boards being out of order for the hundredth consecutive opening day, was a complete joke.

But yeah, go ahead and give every executive a promotion and a raise, good jobs guys!

30for60 said...

Gulfstream is a mess. I ran into the same ATM issue on FOY Day and it is proposterous. Beyond the ATM how about lousy parking situation, complete frustration in finding a good spot to watch the races outside (it is south florida afterall), still not enough betting windows, walking ring and viewing area is too small, AV is terrible, service is marginal, and getting in and out of the place is impossible. On Fountain of Youth Day they actually ran out of Forms by the 4th race. The most mismanaged racing operation I have ever come across.