The Inside Agenda Blog

Agenda Plus: Q&A on Horse Racing Industry

by Daniel Kitts Tuesday March 12, 2013
 

On Monday, Steve Paikin put questions from viewers to two experts about the Ontario horse racing industry. People involved in the breeding and racing of horses in Ontario have been in a state of crisis since the government announced last spring that it was ending the Slots At Racetracks Program (SARP), which had been a major revenue generator for tracks. Without that money, many predicted the industry would wither away and cost the province tens of thousands of jobs. 

We asked John Snobelen of the Transition of Ontario Horse Racing Industry panel and Dennis Mills of Racing Future to respond to a new agreement between the government and several racetracks that promised to restore at least some of the revenue that would disappear with the end of SARP. Steve asked some questions of his own, and then posed several questions sent in by you, our viewers. You can watch that conversation above. 

One More Answer to a Question

One viewer was particularly upset that we didn't get a chance to put her questions to Snobelen and Mills. So I decided to follow up with the two of them to see what their answer would have been. 

The person's questions were: 

The previous revenue-sharing agreement was not a "subsidy." The future transitional funding most assuredly IS. From where will this unspecified funding be drawn? The racing industry had been falsely accused previously of taking money that should have gone into health care and education (when in fact it was funded by the discretionary gambling money put into slot machines). How does it defend itself now against similar claims? And what assurances does the racing industry have that this transitional funding won't be yanked out from under it just as easily as SARP was?

I sent the above paragraph to both Mills and Snobelen. Here's what both e-mailed back. 

Dennis Mills: 

It is not a subsidy as the slots are staying at the race tracks. The race tracks will continue to support the treasury by allowing the use of all the race track assets. Gaming approved lands, physical infrastructure, i.e., parking buildings, brand location, sharing of promotion, etc. OLG cannot produce another business model that is as lucrative to the treasury as this one. Its flaw was lack of transparency, therefore accountability. This is easy to fix. Bottom line, the best partnership in the province. Better than casinos!!!!

John Snobelen: 

Was SARP a subsidy? You tell me.

Ontario owns the slot business. Therefore every dollar in slot revenue net of direct operating costs goes to the Ontario treasury.

If racing is a direct operating cost then subtracting purse money and track supports from the public revenue does not constitute a subsidy. Given that the racetracks have all entered into slot rental agreements without live racing supports would seem to indicate racing is not a direct operating cost.

The panel believes this is largely a moot point. Racing needs public support and the source of that funding is largely immaterial. The critical issue for racing is building a globally competitive racing product and building a local fan base.

The funding is from general revenues subject to a Treasury Board order. The fund will run for three years. The premier announced that horse racing will be reintegrated with the gaming strategy for long-term funding. Any government can cancel any agreement at any time (witness the SARP cancellation). The best way to avoid cancellation is a rigorous cost benefit analysis and regular reporting. Both will be a feature of the new racing model.