Tracks Struggle as Casinos Make Inroads

By Fred Faust Of The Post-Dispatch | St Louis Post-Dispatch (MO), July 22, 1996 | Go to article overview
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Tracks Struggle as Casinos Make Inroads

Fred Faust Of The Post-Dispatch, St Louis Post-Dispatch (MO)

The spread of casinos may have hit a plateau, but in five years it's already done plenty of damage to many of the country's racetracks. Particularly in the Midwest, track owners are desperately lobbying for the right to compete by adding slot machines to their parimutuel action.

"Most tracks are now looking at a nearby casino, or if not, they're looking at a bus full of people going toward a casino," said Eric Jackson, general manager of Oaklawn Park in Hot Springs, Ark. "We never had to compete against anything like this in the past."

Oaklawn Park has been owned by the family of St. Louisan Charles Cella since it opened in 1904. In the last three years, Cella has subsidized his track, kicking in $2.5 million to keep the purses high enough to attract the owners of top race horses.

In that time, Tunica, Miss., 200 miles east of Hot Springs, has emerged as a major casino center.

Business leaders in Hot Springs lobbied successfully to get a referendum on the November ballot that would give Hot Springs voters a local option on casinos. If state, and then local, voters approve, Oaklawn could add a casino.

But the law also would permit two other casinos in Hot Springs, so Cella's track still could be in a competitive situation.

Brian Zander, general manager of Fairmount Park in Collinsville, is a registered lobbyist in Illinois. He's hoping that the 1997 session of the Legislature will finally give track owners a shot at casino gambling.

Zander knows about competing against casinos. Fairmount is seven miles from the Casino Queen, nine miles from the Admiral and 30 miles from the Alton Belle.

"If this number of casinos were this close to the Chicago tracks," he said, "maybe they'd make more noise."

The owners of one Chicago area track, Arlington International Racecourse, have been fighting for changes since Illinois legislators first approved riverboat gambling in 1990. Richard and Craig Duchoissois have waged an often bitter struggle to ease the tax burdens on track owners and to permit them to have slot machines.

"Without the creation of a level playing field, horse racing will die in Illinois," Craig Duchoissois said. His family has invested more than $200 million in Arlington, one of North America's premier tracks.

The track's total operating losses since it reopened in 1989 after a fire have reached almost $70 million, said General Manager Scott Mordell.

A Taxing Situation

Tracks in Illinois pay a hodgepodge of gambling taxes that makes comparison difficult with the taxes on riverboat casinos. But Mordell said that, based on all wagering activity, tracks pay about 4.4 percent and casinos 2.3 percent.

In addition, tracks occupy far more acres of real estate. So their property brings higher real estate taxes than the land that supports riverboat casinos.

Duchoissois said Arlington pays $5.7 million a year in property tax. The Empress Casino in Joliet - one of the country's most profitable riverboats - pays about $500,000 in property tax, he said.

Duchoissois and Zander said the taxes and regulations of tracks in Illinois are left over from the days when they had a monopoly on legal betting. But after the legalization of bingo, and then the lottery and then riverboat gambling, the monopoly days are long gone.

Changing any laws dealing with gambling in Illinois is complicated by powerful and often competing interests. Many Chicago political leaders want some form of casino gambling in their city, while the boat owners and their local allies want to be free of the requirement that all boats cruise.

Since mid-June, three floating casinos have opened on the Indiana side of metropolitan Chicago. Zander hopes that the siphoning of Chicago gambling dollars to Indiana will spur Illinois legislators to change many of the rules, including those for tracks.

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