Horseracing industry battered by card rooms, casinos, lotteries, Web

Ladies in white gloves peaked over their date’s shoulders to understand the
racing forms. They held on to their big hats as the wind blew from the bay.
Older men smoked cigars and commented on the muscles of Horse No. 8. First
timers placed small wagers on horses with their daughter’s name or on the
jockey who wore their favorite color. People drank together in the shade of
the clubhouse, gossiped about local events and shared entire days at the
racetrack.

There was a time when Golden Gate Fields, located just across the Bay from
San Francisco, was a major center for social. But now, one of California’s
five surviving thoroughbred race tracks is facing increased competition from
tribal casinos, online gaming and the resurgence of card clubs–and is
struggling for its very survival.

Last week, when the racing season opened, the stands were almost empty. The
average age of those who came out to see the races was well over 50. The
pomp and circumstance of dressing to be seen had evaporated. The clubhouse
was nearly empty with a few old souls sipping beers instead of martinis.

Track owners around the country have been wrestling with how to increase
interest in horse racing. California Horse Racing Board Chairman Richard
Shapiro formed a committee called Bring Back the Fans. The fix mentioned
most often is trying to get slot machines at racetracks, an effort that Gov.
Schwarzenegger, and California voters, have forcefully opposed.

The CHRB refuses to take a stand on the idea. However, spokesperson for
Golden Gate Fields Sam Spear, who declined to say whether the track would
take advantage of such a notion, said he supported the idea for California
tracks as a whole.

“It would just be California leveling the playing field because it’s allowed
in so many other states,” Spear said. “Really it would just be another
element that got people in the door.”

The tracks pushed a statewide referendum in 2004, Proposition 68, to allow
slot machines in the facilities, but Gov Schwarzenegger and tribal
governments helped seal the measure’s demise. The referendum failed with
just 16 percent of voters offering their support.

Without the silver bullet of slot machines, racetracks are struggling for
survival. Golden Gate Fields has been in the news more lately for the battle
between Magna Corporation, which leases the land for the track and runs the
facility, and the City of Albany over the future of the valuable waterfront
property where the track is located, than for any of its races or horses.

Magna asked to be able to sell one of its parking lots in order to develop a
large retail and possibly hotel space. And there is speculation that the
company will close Golden Gate Fields sometime in the near future.

Bay Meadows is not the only track that is struggling. The Stockbridge
Capital Partners, the owner of Bay Meadows in San Mateo, has said that it
will give that track three years to turn a higher profit before it will
close the facility and sell to land interests. They have specifically said
that the addition of slot machines would be the only economic boost large
enough to keep their interest. The racetrack closing would be the first in
more than three decades.

According to Michael Marten, spokesman for the California Horse Racing
Board, the economic problems that face racing are a little more complicated
than saying attendance is down.

“Horse racing for the most part has been drawing higher handle every year
throughout its history in California. It’s now at a leveling off point,”
said Marten. “The problem is not with wagers placed, the problem is how you
distribute the money generated by those wagers.”

Marten explained that an increasing amount of wagers placed on races in
California are placed at outside facilities either in other states or other
countries. These bets do not yield the same profits for the individual
tracks, the horse owners or the state.

The percentage return from wagers is divided among three entities, the state
and municipality, the track, and the purse or the prize for which the
jockeys are competing. When bets are placed in a facility where the race is
being run, the return is between 15 and 20 percent depending on the race.

When the wagers are placed outside of the facility, the return can be as low
as 4 or 5 percent. According to Spear, the trend of outside betting is
lowering the expected and average purses for California races, which causes
another problem.

“It definitely makes it harder to draw larger fields (more jockeys and
horses per race) when the purse is lowered,” he said.

As one of the many measures being looked at to increase profits and
attendance, Golden Gate Fields is raising the purse for the upcoming San
Francisco Mile. The Mile has been held at Bay Meadows field for the past
five years for a purse of $150,000. Golden Gate is raising the guaranteed
purse for the April 29 race to $400,000, the largest purse ever offered in
Northern California. The hope is that the larger field of entries and the
high stakes will create a signature event and therefore a larger draw.

The event is part of an aggressive marketing plan that Hartman has begun to
institute since he arrived at the racetrack earlier this year. Golden Gate
has also invested in a series of commercials that picture a jockey in
several scenarios including inside of a Claw machine grabbing at stuffed
animals. The jockey hands the claw the toys and the tagline of “We want you
to win.”

“We’re trying to re-brand ourselves in the Bay Area,” said Hartman. “We’re
trying to get our name out there as an alternative entertainment option.”

Some of the other specific promotions include keeping track of patrons with
a thoroughbred card they present at each visit and at each counter inside
the track, and offering specific promotions to individuals based on that
information. Hartman also said the track will try to standardize the opening
day of the fields as well as the first turf (grass) race of the season,
making those signature events as well.