The Panel

• Pat Day
  Hall of Fame jockey

• Arthur L. "Arch" Gleason Jr.

President and CEO of the Kentucky Lottery Corp.

• William C. Greely

President and CEO of Keeneland

• Brereton C. Jones

Former Kentucky governor and owner of Airdrie Stud in Midway

• Walt Robertson

President of Fasig-Tipton Company, Inc.

• Tim Smith

Commissioner and CEO of the National Thoroughbred Racing Association (NTRA)

• David L. Switzer

Executive director of the Kentucky Thoroughbred Association

• Richard "Smitty" Taylor

Chair of the Kentucky State Racing Commission

• Robert Vincent

Vice president of business development for Dreamport, a subsidiary of lottery giant GTECH

 

If Kentucky Thoroughbred racing purists began to get that queasy feeling way back when Keeneland installed a public address announcer, by now they might be doubling over in disbelief. In a sport in which quality and superior performance rest on the purest of bloodlines, the rest of the lines are blurring: between live parimutuel clerks and one-armed slot machines, between the spin of the wheel and the final turn, between sport and entertainment.

This spring dawned with more promise than usual for the partners in the newly blossomed triumvirate that will run Turfway Park. By unaminous vote, the Kentucky Racing Commission approved the license for Turfway LLC -- the new corporation formed by Keeneland, Harrah's and GTECH -- to operate the race course.

Churchill Downs has expanded too, adding more race courses and opening off-track betting facilities. Both Turfway and Churchill are battling for the gambling dollar with the growing flotilla of casino riverboats forming up and down the Ohio River. In 1995, Kentucky's six race tracks alone accounted for over $19 million in tax revenues to the Commonwealth.

Of course, it's not only the racetracks that are moving and shaking. Scores of Kentucky companies and individuals have a stake in the future of this multi-billion dollar industry: breeders, bloodstock agents, exercise riders, accountants, grooms, trainers, jockeys and lawyers, to name a few. Not to mention the revenues generated through yearling sales, which normally represent over two-thirds of all dollars spent on yearlings in the country. In 1994, receipts for horses and mules (including stud fees) totalled $489 million, or over 15 percent of the state's entire farming revenue.

The new Turfway partners have stated that, given voter approval of legalized gambling in the state, they will indeed proceed to build a casino on the 200-acre Turfway property. Legislators and church groups have preached caution regarding the alleged inevitability of legalized gambling, citing the failed initiatives in 1994 and 1996.

With an equine economy teetering on legislative outcome, different sectors of the industry and the populace are making their voices heard. The Lane Report asked an assortment of industry and community leaders to share their impressions, hopes and fears about the sport, and to offer their assessment of its future direction in a state whose very heritage is shaped by the distilled bloodlines of fast horses.

What first attracted you to Thoroughbred racing? Does it still hold that same attraction for you?

Day: I guess the things that drew me to racing was the competition and the horses. I've been in love with animals all my life, especially horses.

Gleason: Not applicable.

Greely: My grandfather was a Thoroughbred horse trainer as was my father, and I was exposed to the industry at a very early age. The sport still holds a special place for me. It is a beautiful spectator event that has been a part of my life as long as I can remember. It has given me the opportunity to meet people from all walks of life.

Jones: Being raised on a farm, I was always around many kinds of animals and I developed a strong love for horses at an early age. From the time that I was a small child on that West Virginia farm, my goal was to have a horse farm in Kentucky. My love for horses is just as strong today as it was then.

Robertson: I grew up in the show horse business and I still like to sell a nice horse, regardless of the breed.

Smith: I have been attracted all my life in different ways. Growing up in the '50s and '60s in the Washington, D.C. area, I was attracted to racing because it was covered as a major sport. More recently, after I left the PGA Tour and was starting a couple of businesses of my own in California with young kids, we would go to Santa Anita and Del Mar. I was attracted to it in those different ways as a fan. About two years ago, I was asked to look at it as a business, as a sport in search of some different organizational models. It was obvious to me that greater central coordination, at the minimum, was needed to compete successfully, both in other sports and with other forms of wagering.

Switzer: The thrill and excitement of watching a 1200-pound athlete compete.

Taylor: I like animals, and it was fun to go to the races with friends and bet on the horses -- the country club atmosphere was kind of fun. So, I got interested and decided that I'd like to be a part of that business.

Vincent: We're a gaming and entertainment company. We're part owner of Suffolk Downs in Boston, and our parent company used to own AMTOTE. So our involvement in racing is not new. I was involved in the company's initial acquisition of Suffolk Downs, as part of the due diligence team. We've been very active in looking at potential tracks throughout the country. I don't have a lot of experience specifically in Thoroughbred racing, but I do have the marketing experience in looking at and evaluating these enterprises.

In what direction would you like to see the sport head in the next five years? What changes would you like to see happen?

Day: I see that there is fierce competition for the entertainment dollar, and I think racing is a great sport. I would like to see more exposure. Certainly the major events are getting some play now, but I'd like to see broader promotions.

Gleason: The Kentucky Lottery realizes that Thoroughbred racing is our state's flagship and signature industry. We hope the sport is able to thrive for the good of racing and the good of Kentucky.

Greely: We would like to see racing position itself to better compete for the entertainment dollar. To accomplish this, we must utilize emerging technology to broaden the distribution of our product; evaluate and improve our facilities for live racing and simulcasting; train front-line employees to improve customer service; seek, educate and grow a new fan base; track and reward current customers; invest in the development of safer racing surfaces; stimulate the quest for a more durable breed and return a share of our profits to the community and to the well-being of the horse.

Jones: The industry must always strive to put the care and safety of the horse first, and then aggressively share the fun and majesty of this great sport with the rest of the world. Through aggressive advertising and smart/sincere public relations, we can increase our share of the leisure dollar expenditures and improve our chances for greater future success. A racing channel on television will do wonders.

Robertson: Simulcasting has been fantastic for the game, so I hope that it will continue to expand. At first I feared it would result in a need for fewer horses, but that has not been the case.

Smith: It's a combination of doing more of the programs we initiated in our first year. In other words, growing the size of our co-op advertising program and adding additional sponsored, televised racing series linked to the major racing divisions. In the marketing area, we will shortly be implementing eight or 10 non-advertising marketing initiatives -- everything from database marketing to product enhancement steps, customer service training and simulcast coordination. Beyond that, I think there are some completely new areas that, as we grow, we're going to need to tackle. Technology is probably a pretty obvious omission from our initial business plan, which was largely targeted at television and marketing issues. We've got to look at how we get closer to the customer through technology and do so pretty fast.

Switzer: I want to change our demographics, so we are of more interest to younger people, the 25- to 35-year-old group. I'd like to see us become more of a family-type entertainment sport. I think we have a lot to offer families with young children.

Taylor: The sport is headed in the right direction, especially with the NTRA. I think you are going to see a lot more television exposure, a lot more publicity about racing.

Having said that, I think we can do the whole national marketing thing much better. We need to find a mechanism to reach younger people, because you'll find that the current demographics are generally older males. I think we need to get women involved more and younger people involved a little bit more. We need to find out what is attractive for them.

Vincent: I think that it has to become more of a spectator sport than it is today. It's at a similar place to where some of the professional leagues, like baseball, have been, with declining attendance. What you see the NTRA doing in trying to establish it as a national sport is critical for its future. I firmly believe it can compete with other forms of gaming and entertainment. No one has the spectacle and pageantry that racing does.

Do you favor Video Lottery Terminals (VLTs) at racetracks?

Day: Given my Christian beliefs, I have a hard time endorsing gambling -- speaking out on that aspect of our business. I understand that racing wouldn't be what it is without the gambling, but I look at myself and the other riders as athletes, the trainers as coaches, the grooms and hot walkers as trainers, athletic trainers. I see us as a sporting event, not as a gambling entity. I've never been in favor of casino-type gambling of any kind getting in bed with Thoroughbred racing. I know that it has been a savior in some areas, but my personal opinion is that it's not the answer to the problems facing racing. But, there are a lot more knowledgeable people who are at the helm of this thing other than myself that see it differently, or there wouldn't be this push to embrace casino gambling.

Gleason: The Kentucky Lottery is neither an advocate nor an opponent of Video Lottery Terminals at racetracks, but it is capable, ready and willing to work with the racing industry to operate VLTs at tracks if the policy makers in Frankfort decide this is a course they wish to pursue. We believe that, at a minimum, it would require a change in the lottery statute to make VLTs legal. We will wait to see what the policy makers determine is best to do.

Greely: As we have stated previously, we would consider the expansion of gambling to include Video Lottery Terminals at racetracks only with the approval of the people of our state. It is critical that any law enabling VLTs to be structured to ultimately strengthen and protect the Thoroughbred industry.

Jones: Tracks should be allowed to compete with other forms of gambling as long as they maintain their current number of live races and a fixed percentage of the handle goes to purses. Video Lottery Terminals are nothing more than slot machines. If they are placed at the Kentucky tracks, they must be approved by a vote of the people (constitutional amendment).

Robertson: There are arguments on both sides, and I don't know what the answer is.

Smith: It's somewhat of a political response I suppose, but what our policy is, is to not have one (a policy) at the national level because it is so dependent on local competitive conditions. If there is a consensus in a local market or a state that this is necessary to the survival of the Thoroughbred racing business, we would not be opposed. But since there is a pretty significant split within our dues-paying members, it's one of those issues where we leave it to the local jurisdictions and industry groups.

Switzer: Only if they will benefit the entertainment that our industry currently provides.

Taylor: My boss (Kentucky Governor Paul Patton) said the other day he favored it by a constitutional amendment. So, if that's what he says, I guess that's what I say. Generally, I would say this -- I support VLTs.

Should Thoroughbred racing stop fighting casino gambling and collaborate instead? Is it better marketing for Thoroughbred racing to set itself up as the alternative to casino gambling, or as its ally?

Day: I don't know the answer. I think it's open to speculation. Obviously, everybody's trying to look into their crystal ball and see what they need to do to keep the ship afloat. I don't think just as a gambling entity that Thoroughbred racing can compete with casino gambling. You've got an [gambling] opportunity here every 20 or 25 minutes, whereas the tables are quick, the slot machines are quick.

Just as a gambling entity, I don't think we can compete with it. But, I'm not an endorser or proponent for the gambling aspect anyway. I think racing is a great sport, the horses are beautiful animals and it's full of pageantry, excitement and drama. Thatis what we need to market.

Greely: That's a question racetrack operators probably ask themselves every day. The answer may depend on whether or not they face direct competition from casinos in or near their market.

Jones: Racing must always sell itself as the exciting family-oriented sport that it is. There is a regal air that surrounds the majestic Thoroughbred that sets it apart from slot machines, roulette wheels and crap tables.

Smith: That kind of links to the previous question. I don't think we would have a national position about whether racetracks ought to collaborate with casinos. It may work well from the revenue point of view, but politically, that's up to each jurisdiction to determine. I tell you what we must do, in any case, is be more competitive with casinos in their marketing sophistication. They do a far better job than our industry does with database marketing. They are very strong, obviously, on customer service and increasingly they are competitors in more and more localities.

Switzer: We are in the entertainment business. We deal with discretionary income. We are a highly regulated industry with gambling involved through the pari-mutuel wager. Again, if we can provide an enhanced benefit for our patrons by doing joint ventures with the casinos (they stand-alone, we stand-alone), if cross-marketing opportunities are possible then yes, we should certainly look into that. I think that alternative forms of gaming industry, that being the casino-type industries, we can learn a lot from them from a marketing standpoint.

Taylor: I think that we have to see what impact the riverboats have on the racetracks. Ellis Park has sort of held its own, as a matter of fact, they've increased their live racing a little bit. I don't think that Caesar's has hurt Churchill Downs as much as they thought it would, but they (Caesar's) do not have their whole facility built yet either. That remains to be seen. In Northern Kentucky, you've got the situation where Ohio did not have a simulcasting statute, and they enacted a simulcasting statute. A lot of those players went from Turfway to Lebanon and to River Downs. I think we have to look at all of those things. I think this is something that's just going to have to work itself out. Whether it works out in competition with one another, or if it works out in more of a joint venture.

How can Kentucky farms and tracks retain their heritage while simultaneously opening up to new [marketing] opportunities?

Day: There are some very intelligent people that are involved in our industry that are probably brainstorming that very problem, and I'm sure they have given it a lot more thought than I have and can come up with a much better solution to the problem than myself.

Greely: One of the greatest challenges we have faced at Keeneland through the years has been to balance tradition and change. It hasn't always been easy but history tells us, for the most part, we've been successful.

In the years ahead, we will continue to face that challenge and will continue to react to it as best we know how. One thing is certain, though, the health and security of the Thoroughbred industry will always be paramount.

Jones: We can retain our horse heritage by constantly fighting to keep the care, safety and majesty of the horse foremost in our decision-making process. At the same time, we must be realistic enough to know that if we are to survive we must live in the world as it is, and not as we would like it to be. Lotteries and casinos are bad bets. They are programmed so that if you play long enough you will lose all that you have. I wish they didn't exist, but they do. Many people enjoy them and will play them in the adjoining states even if they are not available in Kentucky. If we allow them to destroy the horse industry in Kentucky, it would be both sad and foolish.

Robertson: A Kentucky farm cannot be successful unless it reflects what its clients value in Thoroughbred breeding, and much of that is heritage and tradition. Communication is the door to new opportunities and a computer looks better in a pretty farm setting than it does sitting in a carton.

Smith: I think of an outfit like Vinery, or a farm that has embraced the Internet. I don't think that they have given up any of their heritage or roots, they are just embracing change instead of fighting it and more and more farms are doing the same thing. I actually see very little danger, the heritage is so rich and deep, that I don't think its going to be harmed by new marketing initiatives. New marketing initiatives will enhance the prosperity of the industry in Kentucky. Our job is to utilize those more modern marketing techniques, increase revenues and growth at all levels of this business, and then there'll be a heckuva a lot better chance for the next generations to stay in this business and keep the unique heritage.

Switzer: Anything that will expand our fan base at the races will have a indirect benefit on the breeding industry. If we increase our fan base, and if the fans are wagering on the races, that will increase purse dollars. When the purse dollars increase, the folks that are buying those racehorses can see that they are getting a return on their investment more readily than they can today, or could yesterday. That will spin-off into the sales market which, of course, will help the manufacturer of the horse, which is our horse farms.

The economic impact of the Thoroughbred industry to the Commonwealth of Kentucky is very unique, and the Thoroughbred industry itself is the one entity in our state that separates us from any other place in the world. By having that uniqueness, one of the things that we need to do is to protect this industry so that we can continue to grow and we can continue make Kentucky, particularly Central Kentucky, the Thoroughbred capital of the world.

Taylor: My answer to that is simply to grow our business. As far as the horse sales are concerned, the sales are probably stronger than they've been since the early 1980s, and they've seemed to prosper each year. Our purses have increased, and we're right at the top as far as average daily purses in the country. The longer we can maintain this standard, the stronger our business is going to be. People are going to bring their horses where the money is, and they are going to sell them where the money is. Right now, it's Kentucky tracks.

Vincent: There are many examples around the world of jurisdictions that have expanded gaming and done so in a controlled fashion. It comes down to this: understand why you're trying to do it, and be clear in your goals. If the goal is to help Thoroughbred racing compete, you have to do it in a way that doesn't destroy the traditions. Do it in a very controlled fashion. Other places might do it for economic development.

When you look at racing in Kentucky, it's dependent on the traditions, businesses and farms that supply the basic product. If in some way you put in gaming in a way that erodes those cultural traditions, it will be self-defeating.

Technology and other forms of gambling

"The first thing the racing industry needs to do is to begin to pay attention to what the broader gaming industry is doing," Robert Vincent told the Herald-Leader earlier this winter. "It has failed to embrace the technology and advances made in the casino and lottery industries."

There's just the rub for many Thoroughbred people -- are gamblers really fans? Does racing need the glare of neon and marquees, when the sheen and steam off a winner's coat in the afternoon sun has been just fine up to now?

Concern about the integrity of an industry is certainly not the exclusive domain of the Thoroughbred world in these times of undreamt-of alliances and far-reaching conglomerates. It's all part of giving the consumer the ultimate "one-stop shopping" experience. The gamble is that the easy flow of the consumer from one venue to another, one product to another, will translate into a smooth transition of more cash from that consumer's pocket.

The Dreamport website alludes to the company's success in saving "the dying sport" of racing with its Delaware gaming operation. Does racing in Kentucky need to be saved as well? Will high-tech marketing savvy and even more opportunities to bet on something mean success for the Thoroughbred industry and ever more enjoyment for the dependable Kentucky gambler?

To answer those questions may eventually require a citizen vote. And unlike the parimutuel window or the high financier's windows of opportunity, the polling booth allows no hedging.

Editor's Note: Arch Gleason did not respond to questions 4, 5 and 6. Walt Robertson was not asked question 4, and Robert Vincent was not asked questions 2 and 3.

Adam Bruns is a staff writer for The Lane Report. John Gaver is editorial director of The Lane Report.