McNiven Comments On Ontario Racing Situation

Longtime Ontario standardbred breeder, owner and journalist Don McNiven has sat relatively quiet over the past few months as the Ontario Liberals' decision to pull the plug on the slots-at-racetracks agreement has thrown the provincial industry into upheaval. McNiven is quiet no longer, as he has penned an opinion piece on the situation.

McNiven's words appear below.

A GOVERNMENTAL GAMING CHALLENGE

Dear Folks:

May I preamble myself as a freelance journalist for the weekly Ingersoll Times, writing the column 'Horse Chatter' now for almost 50 years.

I’ve also been very closely involved with the great evolution of the standardbred horse breeding and racing industry once known as the 'Only Game In Town' offering legalized wagering since the 1950s.

We supported the inauguration of 'night harness racing' at London’s Western Fair Raceway in 1961, and with the expansion of racing under the lights throughout Ontario came a huge influx of millions of wagering tax dollars into the Queen’s Park coffers.

While the increased returns of wagering tax dollars augmented the purse structure at the provincial tracks, there were far more horse racing people losing than making money. As well, the breeding sectors were also stagnant.

It was in the late 1960s when a host of Ontario standardbred breeders had the opportunity to sit down with conservative bureaucrats to negotiate a badly needed sires-stakes program that would be funded by a further 'rebate' of a percentage of tax dollars earned at its race tracks. You must understand these were returns and not subsidies, an analogy that should be applied to the horsemen’s share of slot revenues.

The Ontario Sires Stakes were for real beginning in 1974 stimulating the rural economy while dramatically increasing the value of young trotters and pacers. There have been many OSS graduates who have emerged into the ranks of world champions, breeders, and crown winners, and Hall of Fame inductees.

Then it was time for the villains to creep into the horse racing domain. Outside influences such as the $3-billion Ontario lotteries in 1975; off-shore wagering and more recently, poker, sports betting and now a proposed expanded Bingo Hall gambling will continue to siphon millions of wagering dollars from the horse racing pot.

It was in the early 1990s when the Ontario horse-racing industry was experiencing many difficulties including a crusade by the NDP to build new casinos in metropolitan areas. Both racetrack and horsepeople were losing substantial amounts of money due to the loss of business at the betting windows. The saviour was Mike Harris’ Conservatives, who, following many consultations, approved the introduction of slot machines at Ontario racetracks beginning in 1998.

An excellent partnership was established when 20% of the net slot revenue was allocated and rebated back into the racing industry, split equally between the tracks and the horsemen’s sector.

The infusion from the rebates of slot revenues totally revitalized the industry. The standardbred accounts for over two thirds of Ontario’s racehorses. Purses offered by the racetracks more than doubled to $189 million by 2002, according to studies by the Department of Agriculture Economics and Business at the University of Guelph.

How about a few more assets created from the slot revenue at the tracks.

1. Employment rose by 48% for both owners and employees.
2. Value of sales of horses increased a whopping 239%, horse purchases and operating expenses increased to $18.66 million or 137%. New investments in land, facilities and equipment a 657% increase.
3. Share of expenditures spent in rural area and small communities increased to 80%, an economic boom in rural Ontario.

The Guelph report also revealed some interesting stats on the expected size and value of horse-related businesses by 2010; businesses would expected to be 89.7% the size and 101.4% the value compared to 28% in size and 26% in value if the slots revenue were terminated. Finally, you must be aware of this, but we’re going to review just the same.

The report concludes: The provision of the slots revenue to harness horse operations represents a sound fiscal decision for governments. In addition to generating substantial governmental revenue from the initial tax revenue derived from the slots activity, the shares returned and rebated to the standardbred horse operations generates additional tax revenue that nearly offsets the share of slot revenue allocated to these horse operations. This would not be true if they were 'subsidies!'

These additional tax revenues have annually produced around $70 million for federal, provincial and local governments combined. With all these assets it is unfathomable that a provincial minority government would cancel a partnership that generated billions for themselves while devastating an agri-based economic force which was a role model for all horse-racing jurisdictions throughout North America.

To have the audacity to scrap the multi-billion dollar slots at the track without prior consultation and compromise indicates the Liberals and the OLG culprits wished to drop the 'bombshell' without any warning while threatening some 40,000 direct employees.

May we close with a few personal observations.

Fifty-Million-Dollar Transition Fee: Please Finance Minister Duncan, don’t embarrass your government and disgrace the horse industry with such a paltry offering. Divided among the three breeds --- thoroughbred, quarter horse and standardbred --- spread over three years, this fee would perhaps pay the janitor at each facility and provide a few free small Tim Horton's coffees for all the unemployed horsemen.

Downsizing: Becoming smaller is inevitable, but should it not be an option? There are 12,000 to 15,000 standardbred racing and breeding stock aspiring to make a living in this province, approximately 6,000 of them are racing in Ontario annually. There is a multitude of training centres feeding the 15 harness tracks which are spread throughout the province.

The 'B' tracks are a vital component for the smaller communities as well as small horse operations while serving a 'farm' system for the larger tracks.

Let it be reminded, those gorgeous new facilities at Georgian Downs and Grand River as well as all the other tracks receiving major renovations which have Las Vegas-style casinos were built and generated to revitalize the horse breeding and racing industry and add billions to the Queens Park coffers.

Now for the bureaucratic misquotes.

“Horse racing should be self-sustaining and the taxpayers should not be paying horse people to race horses!” May we share this with you, because of cannibalization, wagering on horse racing in Ontario has been declining for the past several decades. According to the Canadian Pari-Mutuel Agency, during the 14-year slots agreement, the horse-racing industry received a peak of $237 million as their 19-cent share of the gross bet of $1,247 billion in 2001. In 2011, the gross bet on horse racing in Ontario declined to less than one billion dollars for the first time in over 20 years. The association (tracks) commission was down to $176.8 million or $60 million less than 10 years ago. Provincial taxes and levies from the gross bets amounted to just over $500 million during the slot period. The federal levy taken was over $126 million.

With the decline of wagering and the loss of ‘rebates’ earned during a very successful partnership, regretfully, many sectors in the horse racing and breeding industry in Ontario will be adversely affected or even extinct in some areas.

Expanded gambling and bingo halls will not replace the billions you’re losing from a vital urban and rural commerce. Hopefully, understanding and compromise are in order.