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TVO Covers Racing Announcement

Published: March 11, 2013 10:35 am ET

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On Monday, March 11, John Snobelen and Dennis Mills sat down with Steve Paikin during a webcast segment for TVO's The Agenda to discuss Ontario Premier Kathleen Wynne's recent announcement pertaining to the provincial horse-racing industry. Paikin asked the duo questions that were emailed in from viewers, and both Snobelen and Mills were more than willing to get right to the nitty gritty of the massive topic.

Very quickly going on the record regarding the Ontario Liberal's decision to scrap the highly-successful slots-at-racetracks program, Snobelen referred to the Sadinsky Report, saying, "Sadinsky advised some things," and that his report "kind of sat on a shelf for four years." Snobelen said that Don Drummond came along and said, "This (the slots-at-racetracks program) needs to be reviewed. There are some problems with it." Snobelen then went on the record as presuming that the Ontario Liberal Government decided to scrap SARP because it needed or wanted Ontario horse-racing $345 million annual cut from the agreement. "I would assume that the need and want for $345 million probably had a lot to do with that (terminating SARP)," said Snobelen.

Mills took the opportunity to say that for some reason the focus has been on racing's fair share of the deal, and not what the Province of Ontario got out of the arrangement. "The focus is on the $345 million that came out of the 17 tracks around Ontario, but there is not enough emphasis on the $14 billion that the provincial treasury received over the 14 years. This is one of the most successful partnerships in the history of our province… the way it was dismantled was very tough --- devastating on the industry."

Paikin got to one of the many contentious issues right off the bat, delving into the partnership versus the subsidy language that has been manipulated by the government and the media since early in 2012. Mills stated that "the media --- and others --- have characterized this as a 'subsidy,' when, in fact, in any business terms, this is defined as a partnership and not a subsidy because both parties brought something to the table."

Trying to calm the waters to an extent regarding the characterization of the revenue-sharing agreement, Snobelen said, "You know, a lot of people have really gotten hung up on what really is semantics in this. Look, in our report we said that there is one thing that is really clear around the world, in that horse racing requires some form of public assistance. Whether that is access to some gaming revenues that are other than the commissions from pari-mutuel wagering; whether it is a direct government injection of cash, the industry itself depends on that around the world, wherever it is robust, and so some measure of public support has to be in there."

At that point, Paikin called Snobelen out for being rather ambiguous regarding the partnership/subsidy issue. "Well, you know, it's been a hot-button word for people --- 'subsidy' is a hot-button word for people," Snobelen said, adding "I don't think it's worth pressing that button."

Moving on to more current matters, Mills praised Premier Wynne and the OMAFRA Panel for making an informed decision on Ontario horse racing, and took the opportunity to say that the Ontario Lottery and Gaming Corp. has not used horse raing to its fullest extend in regard to evolution or broad distribution of the product. An excerpt from Mills appears below.

"Well, I think the biggest applause to the Premier and her team is the fact that after 15 days in the Legislature, with the help of the panel --- and I salute the panel, I can't say that enough, I'm totally on side with this --- but the fact that she said that horse racing now will be part of the province's overall gaming strategy is a very solid commitment to stabilizing and revitalizing the horse-racing industry in Ontario, because in the past OLG has basically treated horse racing like an orphan, even though the biggest amount of money that comes into the treasury of OLG comes from horse racing and the partnership with slots, they have other instruments that they have failed to use to support. They have 12,000 distribution outlets. There is no reason why they couldn't use those 12,000 outlets to put a horse-racing game in there so that any time anyone goes to their general store or buys a lottery ticket that they could have the choice or the option to buy the 'Race of the Week' at Woodbine or Flamboro or wherever. So I think her commitment to integrate horse racing into the overall strategy of gaming is to be applauded."

Paikin delivered another viewer's question to Snobelen, which essentially asked how the Transitional Panel can justify the Liberal plan to end SARP and essentially kill the standardbred industry?

"OLG has entered into a rental agreement with all of the racetracks that are operating now, so the slots will continue to be at those racetracks," Snobelen said. "What has happened is that the revenue does not directly flow directly back to the racing industry now, it goes to OLG. So, from the government's point of view, their revenue is, likely, enhanced a little… Frankly, the government's billion dollars is really not at risk now. The question is: How do we put enough funds --- enough assistance --- into the racing industry to keep it robust in the province, and that is a big challenge."

During the interview, Mills interjected when he believed topics were getting neglected or glazed over. One thing that Mills piped up about was that, contrary to the panel and Premier Wynne, who he is in agreeance with on some of the topics, was the necessary size of the Ontario horse-racing industry going forward. The panel and Premier Wynne believe that the industry has to be smaller in order to be sustainable, but Mills doesn't agree.

"I do not accept that the racing industry has to be smaller going forward," Mills said. "I agree that there has got to be accountability. I agree with renewal and adding new features to bring a bigger fan base, but there is no reason --- using John Snobelen's words --- that the business can't be more 'robust.' Smaller doesn't turn me on, but I think we have got to struggle to get to that point. I think as horse-racing people we have done not only a very poor job of communicating how many jobs are in this business, but the amount of money to the overall treasury --- the spinoffs, direct and indirect. The Canadian Auto Workers are masters and do a great job of explaining what they contribute to the economy. If they are a '10' in explaining their contribution, we're less than a '1,' and we have to improve on that. But I think now that we have some time, and we have a good working relationship with the panel, I am confident that we can not only sustain, but grow the industry, not only on the thoroughbred side, but on the standardbred side as well."

Snobelen was asked if he thought there was a future for the Ontario breeding industry even though only three-year deals have been struck between the Ontario Government and provincial racetracks in terms of funding.

"Yeah, I think there is very clearly a future for breeding horses in Ontario," Snobelen said. "Yeah, there is a future for it. The government announced two or three weeks ago that they will support the Horse Improvement Program to the level of $30 million a year. That means some direct government funds going into the base of breeding. Breeding is also supported by a forgiveness of tax on pari-mutuel wagering, and that will continue into the future. So there [are] funds there to help support a very vibrant horse-breeding industry in Ontario. I don't think there is a reason why we wouldn't want to have that."

Snobelen was then asked a variant of the question, but more specifically regarding how the province will be able to instill confidence in breeders and maintain the province's stature among competing breeding jurisdictions just from three-year agreements?

"Yeah, tough question…. It's tough, it's a tough business," Snobelen said. "The most a government can commit is really three years. I mean, that is the practical limit of a government being able to budget." It was at this point where Paikin stated that, realistically, in that line of thinking, the Wynne Government cannot guarantee much beyond the coming six weeks, realistically. "The certainty of the industry is really based on a couple of things: Goodwill between the government and the industry, and I think we're trying to build that; and an understanding and an appreciation for the economic factors that the industry brings," said Snobelen. "The better that is understood, the better the long-term stability of the industry."

Mills was asked what he thought about opposition parties supporting Ontario horse racing if an election is ultimately called and if either the New Democratic Party or the Progressive Conservatives get voted in.

"Well, the New Democratic Party has made a categorical commitment, and they have actually asked questions in the house on this, and they are the only other party," said Mills. "We haven't heard anything from Mr. Hudak and the Progressive Conservative Party yet, but the New Democratic Party has committed that they would actually stall the decision (OLG modernization) until a full cost/benefit analysis is done. I have talked with several New Democrats, and three in particular have said to me, 'Dennis, this is the only time, politically, that we have ever agreed with you.' They are solidly behind maintaining and growing the horse industry in Ontario. In terms of the Progressive Conservative Party, if you wanted me to be political, I don't think Mr. Hudak could win a minority --- certainly not a majority --- but even a minority unless he stood four-square behind the horse industry. He hasn't stated clearly yet what his position is. He hasn't asked any questions in the house or anything, but I'm quite confident that there is a good chance he'd be supportive.""

Paikin then pointed out an obvious point to Snobelen, stating that most of the seats where Ontario horse racing is an issue are currently held by conservative MPPs.

"I think there are a number of Conservative MPPs that are very concerned about the file, and who we have been able to talk to and brief on the subject," said Snobelen. "Here's the bottom line: We now have measures on the impact of the horse-racing industry on Ontario that would make if difficult for a government to make an unwise choice on this file in the future, regardless of the political stripe, and I think that is what is really important. We haven't got the metrics that we would like to have going forward, but we had to at least acknowledge that this industry does generate jobs, does generate economic churn and that a public investment is necessary."

Mills then tackled the topic of racing needing to present a sound business plan in order to get public funding. Although Paikin thought Mills would be against the idea, the former Liberal was only in support of it.

"In his opening remarks, John (Snobelen) mentioned the Sadinsky Report and a business plan and accountability," Mills said. "I am four-square behind having a business plan with full transparent, disclosure and accountability. This (SARP) was a great piece of public policy when it was announced 14 years ago by the Conservative Government, no doubt about it. What happened over the years was a lack of accountability created 'legal leakage' and millions and millions of dollars went outside the industry that should've stayed inside the industry. And this is where the government's decision to sort of do a total review of this business was correct. The way they did it was awful --- awful, awful --- but I think that there would have to be a proper business plan is right on the money."

When asked how deals with the government would work with for-profit racetracks, Mills said that they should be dealt with in the same fashion a giant like the Ford Motor Company or a not-for-profit racetrack would be dealt with: on the basis of a sound business model. He said that just like big public companies or not-for-profits tracks, the entity would to have a clear business plan before support is given. 'I don't think the for-profit racetracks should be treated any different than any other sector of the economy that gets support," said Mills.

Touching on what is going to happen with purse monies that are currently sitting dormant in various purse pools in the province, Snobelen said that the panel has "had some discussions with the Ontario Racing Commission over the course of the last couple of months on how to deal with what we call 'stranded funds,' which are purse accounts which haven't been run out yet."

Snobelen explained that that money will go into purses. "The government is not going to repatriate that money. The government is not looking to take that money away from horsemen, but to ensure that it stays in purses. The question that remains though is, 'What happens when a track decides not to run, not to accept transition assistance for this year and there is a stranded account of purse money there?' We'll have to make an arrangement that the horsemen in that area have particular access to those funds, because really, it's their purses."

Regarding one of the most controversial stories to come up in the past couple of weeks --- Snobelen's 180 degree shift regarding the SARP --- the veteran politician addressed it for a millisecond, but dodged the heart of the question.

"Well, I, you know I, I am publicly out there on my feelings. I let my feelings be known particularly last year, particularly about the manner in which this program was cancelled," Snobelen said. "I think it needed to be reviewed. We have a consensus opinion from the panel that SARP was 'bad public policy' that needed to be replaced by something better, but the suddenness of this was difficult for an industry to respond to. I think that was predicated on that the government just didn't know what the impacts would be. The government had information, we now know, that suggested that the industry would be fine without this money and that it would carry on regardless, and that was just bad information… That's the analytics they got. They got it from the Ministry of Finance and from other people. In fairness to them --- not to apologize for that, I don't have to --- but some of the information around this industry, the measures for this industry and the marks for this industry, in terms of benchmarks or whatever they are coined, have just been badly done in Ontario. We recommended that OMAFRA, the Ministry of Agriculture, take on a responsibility for measuring the equine industry in the province as a whole and the racehorse industry as part of that so there are better measures of performance and better measures of success."

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