More On Ontario Funding Model

Ontario Horse Racing (OHR) today released more details related to the $80 million annual funding under the Horse Racing Partnership Funding Program (HRPFP).

The details of the five-year government funding program were confirmed on February 13, 2014 following the government’s approval of the HRPFP Order in Council.

This announcement offers assurance to the racing industry that over the next five years, race dates (around 900 live dates per year) will be stable and purse levels guaranteed.

On October 11, 2013, the government released the five-year Horse Racing Partnership Plan to help Ontario’s horse racing industry build a sustainable future.

The government has committed to support the horse racing industry by:

• providing up to $400 million over five years ($80 million each year) to sustain a wide range of racing opportunities across the province;

• developing a new industry governance structure; and,

• integrating horse racing with the Ontario Lottery and Gaming Corporation's (OLG) modernization plan.

The HRPFP funds, combined with the other sources of industry revenue, will be used to support the industry as follows:

$80 million per year in HRPFP funding

Approximately 90% of the HRPFP funding (approximately $72 million) is intended for the support of live racing at the core racetracks and industry development programs such as provincial marketing, animal welfare and responsible gambling that benefit the entire industry. OHR, the new industry development division of the Ontario Racing Commission (ORC), will be responsible for the delivery of the HRPFP and for the development and implementation of industry programs.

The remaining share of the HRPFP funding – around 10% or approximately $8 million – is being explicitly directed to purse accounts at regional racetracks.

Overall, more than 96% of HRPFP funding will be dedicated to purses at racetracks across Ontario.

Pari-Mutuel Commissions

Pari-mutuel commissions will continue to be split between the horse people’s purse accounts and the racetracks. For greater clarity, the direction to allocate 100% of pari-mutuel commissions to the purse accounts, as happened last year, will no longer apply.

Sharing the commission keeps horse people’s revenue from purses tied to the market and keeps everyone’s focus on the customer. Linking their success to the growth of the pari-mutuel product will benefit both racetracks and horse people, and will promote alignment with the common goal of increasing the fan base and enhancing wagering revenues.

Conceptual changes to the operation of telephone account betting and teletheatre networks were also included in the Horse Racing Partnership Plan. Telephone account betting (TAB) will be operated within a single, province-wide home market area by a sole operator. Similarly, a competitive procurement process has been undertaken to consolidate the operation of teletheatres across the province to a single network. Net proceeds of TAB and teletheatre wagering will be directed to racing at the core tracks with future growth of revenues split between the core and regional tracks on a 90:10 basis.

Regional racing – track operators and purse accounts – will continue to benefit from all pari-mutuel commissions and other revenues generated on-track. These revenues will be kept by the track at which they are generated.

The costs of horse people’s benefits programs will also be funded from pari-mutuel commissions. The funding model targets approximately $2.5 million for the operation of a consolidated industry benefits and insurance program for all active industry participants across all breeds.

Future growth of pari-mutuel commissions will be allocated for reinvestment in racing through a blend of marketing, research and development, and capital expenditures, as well as for purses and racetrack operating costs related to additional race dates.

Other costs and sources of revenue

As noted above, ORC regulatory costs will continue to be funded through the PMTR, or “wagering levies” as they are sometimes called. In turn, the ORC has committed to reducing licence fees for both racetracks and individual participants. This mix of regulatory funding demonstrates the rationale that regulatory fees are tied to the pari-mutuel handle and racing activity – in other words, regulatory funding will reflect the size and needs of the industry.

The final sources of industry revenue are the OLG leases signed with the racetracks and any additional revenue that results from the re-integration of horse racing and gaming. Both of these sources will also be used to support the operations and capital improvement of racetrack facilities.

Growth potential for the Industry

Going forward, the HRPFP funding model also recognizes reasonable returns and the potential for profitability for all industry participants – racetracks, horse people and breeders. Similarly, there will be expectations for capital re investment where it makes business sense and the maintenance of a strong focus on meeting customer needs.

The Horse Racing Partnership Funding Program is part of the Ontario government's ongoing plan to foster a dynamic and innovative business environment.

Growth of the industry – for all stakeholders – will come from performing well in the marketplace and expanding the fan base (particularly the horse players). The Plan encourages the industry to grow wagering revenues and enhance its fan base by creating and offering products consumers want.

Steve Lehman
Executive Director

(ORC)