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An Open Letter To Premier Wynne

Published: February 28, 2013 8:37 am ET

Last Comment: March 3, 2013 6:16 pm ET | 12 Comment(s) | Jump to Comments

"Premier Wynne, your transition panel is designing a model for the horse racing industry that is unsustainable and will result in an industry that is represented by three to five racetracks attached to casinos and basically zero rural or economic benefits to the Province of Ontario."

In an open letter to Premier Kathleen Wynne, standardbred owner Glenn Bechtel breaks down how he feels the Horse Racing Industry Transition Panel's sustainability efforts applied in concert with the Ontario Lottery & Gaming Corp.'s modernization strategy would decimate and cripple Ontario's racing and breeding industry - not right-size it.

Bechtel's letter appears in its entirety below.


As I sit here stewing over the predicament of the standardbred horse breeding industry in Ontario after talking to one of the principal owners of Seelster Farms I decided to put pen to paper with the hope that you might actually read my comments.

This person spent yesterday being briefed on the 30 million dollar Horse Improvement Program (HIP) and its implementation for this year. She said her jaw dropped when the details were given by Mr. Snobelen and Ms Hoogeveen of the Ontario Racing Commission (ORC) as all she could think of is how this was just enough to insure that the standardbred breeding industry in Ontario will be dead in 3 years.

Premier Wynne, your transition panel is designing a model for the horse racing industry that is unsustainable and will result in an industry that is represented by three to five racetracks attached to casinos and basically zero rural or economic benefits to the Province of Ontario.

Here are a number of things that your transition panel either don’t know or feel too handcuffed by Finance to solve.

1) New Jersey is in the early stages of restructuring the racing industry to a pari mutuel driven model. This restructuring is approximately 3 years old. Since your transition panel either don’t know or don’t want you to know, let me give you an update and the history of how they got there and how it is working.

In New Jersey around 2005 the government mediated a settlement between racetracks and Atlantic City casinos. The result was an annual payment I believe of 150 million from the Atlantic City casinos to the racing industry for use in the purse account. In exchange both racetracks and horsemen would agree to not apply for slots or table games. Move the clock ahead 5 years and Atlantic City casinos who aggressively fund the new Governor of New Jersey suggest that the racing industry is the weak link and is not worth the “subsidy” that the casinos are paying the racing industry. Whether knowingly or not Governor Christie agrees and openly attacks the racing industry by saying it needs to become accountable to its customers, become smaller, downsized, pick your phrase and eliminates the payment and makes the industry fully funded on the revenue generated by pari-mutuel wagering.

Today the following statistics and facts are undeniable. In the last year both Meadowlands and Monmouth racetracks have both increased their pari-mutuel in a dramatic fashion with the following results:

  • Standardbred yearling averages for New Jersey breds 2012 – $28,251, 2011 – $30,282, 2010 – $32,265, 2009 – $41,353. Conclusion: 31% decline in yearling prices since 2009.
  • Perretti Farms moves all of their stallions to a leased farm in Pennsylvania in 2013. Why would the top breeder in New Jersey be leasing a farm in PA while having as they describe 900 acres of rolling hills and pastures in Southern N.J.?
  • In 2013 there are only 3 commercial stallions in New Jersey compared to 16 in 2008.
  • Although unable to get exact numbers the perception by the breeders and farm owners I have talked to in N.J. the broodmare numbers have declined by in excess of 50%.
  • Having a pari-mutuel model as your transitional panel is recommending, will probably create the following racing industry in Ontario within 3 years. A) 3-4 race tracks in large cities where there is enough population. (London, Toronto, Ottawa) B) Somewhere between 0-5 standardbred stallions depending on how optimistic stallion owners are that something will change. In both Kentucky and N.J. the standardbred stallion numbers have declined to less than 5 as breeders have become lured to jurisdictions where legislators have allowed race track owners to earn commissions from other gaming products other than pari mutuel wagering in exchange for promoting racing. C) Thousands of acres of unused farm land in rural Ontario because every mare has been enticed to NY, PA and Ohio.

2) It is a fact that thoroughbred racing represents more than 70% of wagering dollars in Ontario. It is also a fact that the standardbred industry when measured in economic impact, (number of industry participants, farmland use, number of stallions, number of foals, number of broodmares), using any criteria it represents more than 70% of the economic benefit to Ontario. And even more important as the Agricultural Minister it represents rural Ontario benefit. There is a very simple reason these two facts make your panel's solution for the racing industry totally wrong for the Province of Ontario. “You are solving a small city problem with a big city solution.” The only places in Ontario that have enough population to sustain racing on a pari-mutuel basis are Toronto and maybe London and Ottawa. The only part of the province where breeding, training and raising horses can be done is in rural communities.

3) Another thing that your transitional panel and the OLG are missing is the present community nature of the Casinos. The perception that exists in Clinton, Woodstock and many of the other communities is that even though casinos suck money out of people’s pockets at least a large portion is staying in the community. Prior to the Liberal mistake of 2012 most people had no idea how much of the money was going to purses municipalities or the OLG head office but they did believe that a bunch was staying because everyone knows somebody who either owns, trains, or breeds horses. When the OLG closes these racetracks and these stand alone Casinos start sucking the money out of these communities the 5% you give the municipalities will not be enough to overcome the feeling of peoples hard earned money going to the suits at the OLG in Toronto. What I believe is that both the OLG and yourself will find out that 75% of last year is a lot more than 95% of not as much next year. In fact there have been studies that have shown that revenue from slot machines increases by as much as 20% when there is live racing occurring at the facility.

4) Why is the OLG so adamant about framing these myths with buzz words such as subsidies, self sustaining, and customer driven? The OLG knows one simple fact. That horse racing as a gambling product will never be able to compete with other forms of gaming products because of two words “CHURN and CAPITAL”. Horse racing as a gambling product takes a tremendous amount of capital and preparation time to generate the same amount of churn or win for the house. Slots, lotteries, card games, sports betting all exceed horse racing when it comes to the cost versus revenues. Have you ever wondered why there is no racetrack in Las Vegas? Then the question is “Why horse racing?” Answer – Economic Rural Benefit. In order to put on a horse racing program at a racetrack hundreds of thousands of dollars must be spent and hundreds of hours committed to breeding, raising, training the equine athletes to put on a racing program. The OLG sees this time and money spent as ridiculous as any good gambling experts knows you get a much better bang for your buck by building a room full of machines and tables turn up the music and watch the money come in.

5) The benefits of horse racing is a matter of public policy and the only ray of hope that the industry is hanging onto is that as a Premier you will stop listening to the gambling gods and start listening to your rural roots. Slot machines were put in race tracks 12 years ago because in order to balance the playing field the racetracks needed to establish a partnership where the higher churn products be allowed in tracks in order to create the large rural and economic benefits to the Province of Ontario which are provided by horse racing and breeding. I am sure your gambling consultants have told you that horse racing is not competitive and customer-focused. Let me translate. Horse racing takes a lot more capital invested and time spent (labor, employment) then a one armed bandit.

6) Let me give you another bizarre argument that your transition panel and OLG have floated for distraction purposes. “The industry will need to develop additional revenue sources such as V75 (horse lottery), sports betting or Instant Racing (racing replays) as a way to be more sustainable.”

Premier Wynne let me translate again. Your experts are suggesting that the solution for horse racing is that we will allow them to introduce higher churn OLG controlled gambling products into your racetracks as a way to generate revenue in order to replace the higher churn OLG controlled slots that we took away because they were a “subsidy”. That is almost as absurd as the justification of slot like machines at Bingo Halls. The only difference between slots and these other gaming products is that the OLG hasn’t had to paint these with the subsidy brush yet.

If you ask your transition panel or OLG what is the difference between the slots as a revenue for racing and the other high churn products that are being floated as “replacements” don’t accept the horse connection because I will personally go to every racetrack in Ontario and paint horses on each slot machine to meet the horsey criteria.

CONCLUSION

Premier Wynne you have a chance to right a wrong. I will not attempt to convince you that racing is not too large but I will emphatically tell you that the approach that your transition panel and finance department are taking will destroy every economic and rural benefit that exists because of horse racing in Ontario.

There is no economic benefit to gambling on a horse race or pushing a button on a slot machine but there is a huge economic rural benefit to breeding, raising, and racing a horse in Ontario. If you don’t change your transitional panel and Finance Department’s direction with the horse racing file Ontarians will be buying both slot machines and race horses from American suppliers.

Premier McGuinty and Mr. Duncan suggested that the reason for cutting this program was to eliminate the transfer of wealth to all the rich horse owners. As with all poorly conceived policies the target was missed and the casualties are the hard working rural participants in the racing industry. I listened to sound bites of Mr. Leal, Mr. Sousa and yourself prior to the Liberal convention and dreamt that if only you could win that this absurd mandate taken by the OLG regarding horse racing would be reversed. Happily you won but whatever happens to politicians after they win appears to have inflicted you and your cabinet. Such catch phrases as “hit the pause button” have been replaced by “modernization” and smaller racing industry. Unfortunately for yourself and the Liberal party the rural communities of Ontario will reward you for what you do and not for what you say. I also believe they will be a lot tougher critics of your performance than the delegates who elected you at Maple Leaf Gardens.

P.S. I own parts of 21 broodmares and I moved all but three of them to NY and PA so I will be happy to supply Woodbine and Western Fair with racehorses from my new plant locations where governments understand the benefits of the rural community but my preference would be to send a bunch of them back to where they were and start paying the farms and stallion owners in Ontario. Fortunately for me I invested no capital in a farm and have the flexibility to move. The Seelster’s and Tara Hills of the world don’t have the same flexibility.

Sincerely,
Glenn Bechtel

March 3, 2013 - 6:16 pmYes I would agree another

Yes I would agree another nice letter trouble is all the letters, emails etc. in the world aren't going to change what has happened. I still talk to horsepeople who are in a state of denial they think come March 31st the biggest miracle since the rise of Jesus from the grave will take place and everything will go back to the way it was. OHRIA wants to become "more aggressive" now and people are showing their frustrations by wanting to execute some form of extreme action. I even posted on my twitter feed maybe a blockade of all racinos on a Saturday in March for a 2 hour period should be tried. In hindsight it's a stupid idea, any day of action should have taken place long ago when McGuinty was still at the helm. This new premier has a deaf ear to the plight that her government has inflicted on a great Ontario industry with a rich tradition. The only thing to be done now is to observe a moment's silence when the lights finally go out.

March 1, 2013 - 10:48 amIt is never my intention to

Dave Nicol SAID...

It is never my intention to try and fill the comments page to the detriment of others, however the more I read in this news the more thoughts arise. If we look back in Ontario history and look at the amount of commisions made up of former politicians who are given large per diem money plus expenses to make suggestions about some changes to help the economy. Most of their findings are then ignored. Unfortunately the so called transition panel have been paid taxpayer dollars to read a SCRIPT written by someone in the Liberal government to kill this industry. Their findings and actions are anything but transparent and ethical! All three of them should be ashamed of themselves!

March 1, 2013 - 12:02 amDown sizing the industry

max cordon SAID...

Down sizing the industry until there are one or two tracks means there will be hundreds of horses that will not be able to make enough money to pay for their stall rent. Who will pay for their keep. Will Ms Wynne or Mr Godfry? Should the horse people send the stall rent, feed, Vet and blacksmith bills to them? Maybe ownership should be signed over to the government. The adoption societies will not be able to take them all. If they are given away they will simply end up at slaughter.
Lynn and Max

February 28, 2013 - 8:09 pmThank you Glenn. It takes

robert budd SAID...

Thank you Glenn. It takes courage and dedication to defend a complicated truth. Wish I felt those driving this gov't were interested in truth.
Can't believe how badly they are willing to hurt people to achieve a plan that couldn't stand public scrutiny, or an election.
Rural areas better soon realize they are all in this fight together.

February 28, 2013 - 3:43 pmThis extremely well written

Amber Orser SAID...

This extremely well written letter, unfortunately is being sent to a new premier who has no conscience just like the previous leader. It is hard to imagine how these people sleep at night. I wish I could pick up my small training center and horses and move from Ontario but how many of us can really do this? All we can do is stop breeding our mares and stop buying colts unless this decision can be reversed. Our SARP contract was not to expire until 2015. At least reinstate the original and give the entire industry the time and opportunity to save rural Ontario as we once knew it .Show us you have some integrity and give us the respect we deserve.

February 28, 2013 - 3:33 pmSeems that the Liberals are

Seems that the Liberals are determined to cut loose rural Ontario and throw it to the wolves. They don't need those votes because they will easily make them up in their urban strongholds by lying to the city dwellers about the economic benefits of their modernized bingo halls (47 % subsidy to a few rich bingo hall owners, sound familiar?) and their successful (???) casinos in Niagara and Windsor. Why those casinos are so good that after shutting down Fort Erie and Windsor raceways the casinos are still "downsizing". Ms Wynne and the OLG are generating more Horse S%#t than the rest of Ontario ever will.

February 28, 2013 - 2:57 pmPlease add my name to those

Dave Nicol SAID...

Please add my name to those in congratulations to you on a well written and documented, facts filled missive. Like most of us some of these same thoughts have been swirling around in my head but writing them so eloquently wouldn*t line up properly for me. My focus has always been about jobs, without which there begins a bevy of unecessary increases in crime, violence and hopelessness. If anyone takes the time to read your monthly statement it*s very easy to put this tragedy in perspective! Training- supports a trainer, a groom, a stall in a training center, a farrier, a tack shop, truck sales, trailer sales, fuel sales a veterinarian, tack and even the person growing sprouts for the horses! Expand these items to manufacturers of the assorted products and the devestation magnifies to a mind boggling number of people affected, including ourselves! Something else should also be included, All horse people, through our associations have access to extended health care, RRSP contributions provided and even living accomodations in some cases. Unfortunately these are all based on a number of starts per year and if this criteria is not met these benefits cease! Will welfare treat those of us forced into unemployment as well, I think and know they will not. Rural Ontario deserves better! Thanks again Glenn!

February 28, 2013 - 1:25 pmExcellent letter Glenn. If I

Lynne Magee SAID...

Excellent letter Glenn. If I could just correct one small point in regards to "thousands of acres of unused farmland". In southwestern Ontario, farmland is rising in value so quickly that it makes little sense to retain the "family farm" anymore. Corporate farming is taking over small farms and turning them into factory farms. Great for anyone who wants to retire and put a nice sum of money away for remaining years and for the small number of us who are still hanging on, there is always that possiblilty. However, "factory" or "corporate" farming takes families out of our communities. Many of the farm houses are demolished. We are seeing fewer kids getting on school buses. Small communities have lost their local schools. Hockey and ball and other traditional rural sports for youth, are experiencing smaller enrollments. The rich and usually foreign corporate farm owners might visit the area once a year but likely not. The once pastural rural scene is disappearing along with the families. Move over, city folk. Your over-crowded, polluted cities are going to have to make room for the country mice who can't afford to stay on the farm anymore.

February 28, 2013 - 12:00 pmExcellent message....hoping

Excellent message....hoping it sinks in once and for all!

February 28, 2013 - 9:26 amThis letter makes too much

This letter makes too much sense. The Liberal Government has been blinded by the dollars being flashed in front of them by American casinos. They don't seem able to see logic such as this. They simply refuse to pay attention.

February 28, 2013 - 9:17 amAbsolutely "Dead On". If a

Absolutely "Dead On". If a major change isn't made BEFORE April 1st, I am sure horse racing in Ontario will be gone. And to think, Ontario was the ENVY of every state in the United States before Godfrey and his Hitmen came on board and convinced McGuinty and his staff of their ideas. Only the future will tell us the truth of exactly what these people will receive as a gift for ruining a perfectly positive program.

February 28, 2013 - 9:08 amLike Glenn I have invested in

Like Glenn I have invested in high end broodmares since 2009 when the Ontario Mare Residency program was established. Have bred to world class sire Kadabra every year since. As a Member at Large on the Hip program became well versed on how the program works. What is paramount going forward is to have communication to owners, customers, gamblers, breeders, horseman who are invested in this industry on how the HIP program will work going forward.

Chris Alexander
Breeder/Owner


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