Horse racing, casino gaming find a common ground
By JONATHAN SHIKES
SANTA ANITA -- When Santa Anita Park holds its richest race of the season Saturday, the lead sponsor will be part of horse racing's chief rivals in California.
With a purse of $1 million, the Santa Anita Handicap is being presented by the San Manuel Indian Bingo and Casino, a tribal gaming hall near San Bernardino.
In December, the casino signed a one-year deal with the track that includes the Handicap, two earlier races, as well as cross-promotions, TV advertising and other benefits, said Santa Anita marketing director Allen Gutterman. Financial terms weren't disclosed but Gutterman said San Manuel is now the track's largest sponsor.
The partnership stands out because the two competing industries have fought, sometimes bitterly, for a decade. Over that time, the state's horse-racing fortunes have plummeted while tribal gaming has grown into a $7 billion enterprise.
Their battle picks up again this month as five of the state's wealthiest tribes -- including the San Manuel Band of Mission Indians -- push for new state gaming compacts that would allow them to add 22,500 slot machines between them.
Horse-racing interests, led by the owner of Hollywood Park, plan to oppose the compacts, as they did last year. They will argue that by granting the tribes the exclusive right to operate slot machines, the state has severely damaged the tracks.
Santa Anita President Ron Charles hasn't revealed whether the track or its parent company, Canada's Magna Entertainment Corp., will join the opposition.
"There is a committee from the racing industry working to find an arrangement that will help horse racing in California and be beneficial to the tribes," he said in a statement. "Our marketing relationship with San Manuel is completely separate."
It's an awkward position for Santa Anita, and for the Del Mar Thoroughbred Club in San Diego County, which had a three-year marketing deal with the Barona Casino that ended in 2004 and now has an agreement with the Viejas Casino. But it won't stand in the way of business.
"We respect each other's political differences, but this is a business transaction," said Steve Lengel, executive director of operations for San Manuel. "We are both entertainment venues, and this makes great marketing sense to both of us."
Del Mar marketing director Josh Rubinstein said some people in the horse-racing industry asked him why the track would work with a competitor.
"The way we looked at it, the Indian casinos aren't going away, and the racetracks aren't going away. We weren't going to bury our head in the sand," Rubinstein said.
While San Manuel is the competition, both are in the gaming business, Santa Anita's Gutterman said. "They can introduce someone who plays slots to horseracing, or we can introduce ponies to someone who plays their games," he said.
It seems like a perfect fit to Jim Ahern, a professor at Cal Poly San Luis Obispo who specializes in horse racing and marketing.
"Del Mar and Santa Anita are making good decisions. It's a natural they might cooperate and develop coalitions. In the long run it makes the most sense," he said.
Betting the ponies is no longer as popular as it once was.
Horse racing dropped from a 28 percent share of the U.S. gambling market in 1982 to a 5.2 percent share in 2000, the "victim of shifts in consumer preference," according to a 2006 gaming study by the California Attorney General's office.
While total dollars bet on horse racing has increased, most of it is now done via satellite or online wagering. In California, racetrack attendance declined 35 percent between 1990 and 2004. On-track betting decreased 59 percent, the study said.
Less money for the tracks meant smaller purses for the winners, which has driven horse owners and breeders to other states, where the cost of living is lower and the winnings can be hundreds of thousands, or even millions, of dollars higher.
The reason for the discrepancy is because 14 states have allowed horse tracks to add slot machines or other forms or video gaming as a way to boost revenue. In California, only American Indian tribes are allowed to operate slots machines.
In 2004, the state's horse tracks and card rooms sponsored a ballot proposal that would have allowed them to operate slots as well. The initiative was vehemently opposed by the powerful gaming tribes, however, and was defeated.
Since then, California horse-racing interests have tried to convince elected officials the industry will die unless it is allowed to find another revenue source.
"Since the state has bargained away our ability to respond to competition, they should consider a way to mitigate that," said Joe Lang, lobbyist for Bay Meadows Land Co., which owns Hollywood Park and Bay Meadows Racetrack in San Mateo.
The industry needs an extra $300 million a year to survive and compete with other states, he said. Half of that would go to higher purses for race winners, the other half primarily to track improvements and advertising that would draw customers.
Marketing deals like Santa Anita's aren't enough, he added. "They are good, but they don't get to the level of what we need to really save the industry," Lang said.
The $1.5 million Barona deal was the largest marketing agreement in Del Mar's history, and included race sponsorship and radio and TV advertising.
The question is what form that would take. The tracks would still like to be able to offer some other form of gaming. If not, they want the money to come from tribal-casino profits, Lang said. The parties have been discussing options for months.
But the tribes will continue to resist more forms of gaming at the tracks.
"It has always been our position that expanded gaming in the state was rightfully addressed by the voting public," said San Manuel Band spokesman Jacob Coin.
Tribal gaming is intended to help tribal governments raise money for public improvements and services -- similar to the state lottery, he said.
"For-profit gaming exists to maximize the wealth of its private owners," Coin added.
On Saturday, however, those differences will be put aside as Santa Anita and San Manuel host a big party for the track's premier event.
"It's a great partnership," Lengel said. "It should be a lot of fun."
Reach Jonathan Shikes at 951-368-9552 or jshikes@PE.com.
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