Busloads of horsemen will arrive at Queen's Park in Toronto Wednesday afternoon to challenge an Ontario government review of what it calls a $345-million "subsidy" of the horse racing industry.
The buses will file in from around the province to meet on the front lawn and try to convince the government that the racing industry does not take one penny of taxpayers' money.
Sue Leslie, president of the Ontario Horse Racing Industry Association, calls the money a "revenue-sharing agreement" negotiated by both government and the industry years ago. Under the deal, 20 per cent of the money generated at slots at Ontario racetracks goes back to the racetrack operators and horsemen. The other 80 per cent goes to government coffers, with 5 per cent to municipalities.
Nick Eaves, chief executive officer of Woodbine Entertainment Group, the largest racetrack owner in Canada, says if the government is looking to find value for money in Ontario programs, then the deal between racing and the government delivers it in spades.
Eaves said Woodbine and Mohawk have spent "significant" amounts of money to create the slots parlours at the two tracks, from which the government gleans $1.5-billion a year. On the other hand, the government finances 100 per cent of the costs of its resort casinos (an estimated $3-billion to build). Those casinos show a $45-million loss in the last available annual report in 2009-10.
Slots at the Woodbine and Mohawk tracks alone have returned double the money to the government than do the resort casinos, Eaves said. The government share of revenues from track slots has increased by 27 per cent in the past decade, Leslie said.
In addition, the money from slots and from racetracks drives Ontario's rural economy, Leslie added. The horse racing industry, which is very labour intensive, has become the second largest sector of the agricultural economy, ranking ahead of wheat, eggs, poultry and hogs combined.
A disruption of the system, adopted about 15 years ago, would devastate the rural economy, she said. For every horse at the racetrack, there are three at a farm. Horsemen spend money on hay, straw, saddleries, accountants, equipment. Leslie said mom-and-pop restaurant owners and gas station operators would all feel the loss. According to a 2010 economic survey, the industry employs 60,000 people in the province.
Leslie said the history of the deal is significant: When governments were looking for ways to boost revenues through gaming, it floated several ideas of placing gaming opportunities in restaurants, airport and corner stores or in a series of 40 mini-casinos. Leslie said public opinion accepted slots only at racetracks, because they were already well secured gaming locations.
"The province basically asked us to let competition come into our existing racetracks with our existing customers that had been built up over a long time," Leslie said. To offset the cannibalization of racetrack customers, Leslie said the 20 per cent deal was born to reflect the average provincial takeout on each dollar wagered at a racetrack.
"Everyone has lost view of that now," Leslie said. "And our customers have been cannibalized."
The province sees it differently. Liberal MPP Jeff Leal, whose riding borders on Kawartha Downs near Peterborough, Ont., calls the agreement "a support program" rather than a subsidy.
"The $345-million is more than what we spend on water protection and road safety in Ontario currently," Leal said.
According to Leal, it's not a matter if the government will restrict the $345-million, it's a matter of when. "We've got to make sure that there's an orderly transition out of this support program," he said. "I believe it would be irresponsible, just to cut it off on day one…so that the industry has a period of time to adjust."
U.S, racing jurisdictions take a far bigger cut of the slots pie than does Ontario, says Paul Estock, executive vice-president of the Harness Tracks of America, in Tucson, Arizona.
In Delaware, 42 per cent is retained by operators (rather than government), while Indiana tracks get 65 to 75 per cent and New York tracks have a deal to keep 33 per cent of the slot revenue.