IN THE MATTER OF THE RACING COMMISSION ACT, S.O. 2000, c. 20;
AND IN THE MATTER OF 2006 LIVE AND INTERTRACK RACE DATES
On October 27, 2005, Commissioner David Gorman presiding as Panel Chair, and Commissioners Bernard Brennan and Jane Garthson convened to hear the race date applications from Belleville Agricultural Society for Quinte Exhibition & Raceway, Kawartha Downs Limited for Kawartha Downs Raceway, 405730 Ontario Ltd. for the New Hiawatha Horse Park, and from Windsor Raceway Inc. for Windsor Raceway.
The Administration of the Ontario Racing Commission was represented by Brendan Van Niejenhuis, Legal Counsel and Wendy Hoogeveen, Manager of Information Services.
The Ontario Racing Commission, after reviewing the written submissions and hearing oral representations from the applicant and the Ontario Harness Horse Association, approved the following:
Live Standardbred Race Dates
New Hiawatha Horse Park 52
Simulcast Race Dates
New Hiawatha Horse Park 364
The post times were approved as applied for.
Reasons for Decision form part of this Ruling.
Calendars of the approved Live Dates form an attachment to the ruling.
Dated at Toronto this 13th day of December, 2005.
BY ORDER OF THE COMMISSION
John L. Blakney
Executive Director
REASONS FOR DECISION
On October 27, 2005 Commissioners David Gorman (chair), Dr. Bernie Brennan and Jane Garthson convened to hear the 2006 race date application for Hiawatha Horse Park.
The Hearing was held under the authority of a Notice to the Industry dated October 20, 2005. Said Notice required that public hearings be held with respect to the 2006 race date applications for Quinte Exhibition and Raceway, Kawartha Downs, Hiawatha Horse Park and Windsor Raceway. Rulings were previously issued with respect to Quinte Exhibition and Raceway and Kawartha Downs. The Windsor Hearing is on-going. This Ruling applies only to the application of Hiawatha Horse Park for 2006 racing dates.
BACKGROUND
405730 Ontario Ltd. (Hiawatha) applied for 52 racing dates at Hiawatha Horse Park in 2006, a decline of nine dates from those operated in 2005, and a significant decline from the numbers of dates raced annually in the years 2000-2004. Hiawatha’s dates peaked in 2000 when 78 dates were operated. Prior to that year (and prior to the implementation of slots) Hiawatha operated in an annual range of 44-60 dates, averaging 50 dates per year during the period 1991-1999. In the years 2000-2005 Hiawatha averaged about 67 dates per year. This application would restore Hiawatha to a schedule similar to what was operated in the 1990s. Hiawatha filed significant financial data in support of its application.
Mr. Walzak, speaking on behalf of OHHA, suggested that the track revert to its 2001 schedule, minus the December dates, for a total of 70 dates. He requested that the track be ordered to file an amended application. He also urged this panel to support an integrated approach to the allocation of racing dates which would involve tracks in southwestern Ontario, that is, Windsor Raceway, Hiawatha Horse Park, Western Fair Raceway, Woodstock and Clinton. There was no written material from OHHA to support its position.
The Administration took no position with respect to this application.
DECISION
After carefully reviewing the presentations from Hiawatha and OHHA, the panel approves Hiawatha’s application for 52 live race dates, all intertrack dates and post times as applied for.
As a condition of this approval, Hiawatha is hereby instructed to notify the Administration of the Ontario Racing Commission immediately following its receipt of a decision respecting its appeal of its property tax assessment. Hiawatha is then instructed to file, within 10 business days, a revised 2006 date application, adding dates to the schedule. The number of dates to be added is to be determined by Hiawatha management to reflect the success or otherwise of its appeal. The panel recognizes that timing with respect to receipt of the decision could be an issue.
In its revised application, Hiawatha is instructed to provide projections for the expected decline in respect of average purse value which will be reflected by racing additional days.
REASONS
Mr. Henderson painted a picture of a racetrack which was constructed several years ago to take advantage of its geography and prevailing entertainment options, but which has faced overwhelming change in recent years.
Hiawatha has experienced a significant decline in attendance from American customers, primarily because of the unpredictable length of time it can take to cross the Bluewater Bridge. It is estimated that only 10-15 per cent of total attendance is from the USA.
Currently there are about 950 slot machines in the immediate vicinity of the racetrack on the Ontario side of the border and more may be introduced shortly at the local charity casino. Poker, an extremely popular game, is also available here. Major casinos in Michigan are 60-90 minutes away. Table games are readily available on both sides of the border (but not at the racetrack.)
Mr. Henderson said that while attendance is reasonably good, patrons cannot bet with enthusiasm because pool sizes are too small. Daily pari-mutuel handles are frequently in the $20,000 area. He said that the only way to improve that situation is to simulcast the Hiawatha product into the Toronto area. However, at a per-program cost of $4-5,000 he said that the resulting revenues would not cover costs.
With respect to horse population, Mr. Henderson stated that the supply was healthy. He also noted that only 5-10 per cent of starters at his track came from the USA, partly due to the difficulty in arranging for veterinarians at the border crossing.
Of particular concern to the Panel was the filing of financial material that demonstrated runaway costs which are beyond the control of track management. The list included costs for water, gas, hydro, insurance and taxes. Leading the list was the property tax bill, which increased from $132,000 in 2001-2002 to an expected $532,000 in 2005-2006. This assessment, we were told, is being appealed.
Total wagering on Hiawatha’s live product declined by $572,000 this year over 2004. Simulcast handle is projected to decline by $866,000 and net win from the slots is also declining. It is not a pretty picture.
Mr. Henderson also expressed concern with respect to Western Fair Raceway’s foray into the summer months. On a few dates the tracks will be racing head-to-head.
Mr. Walzak acknowledged that horse people enjoy racing at Hiawatha. He also acknowledged that his proposed 70 date schedule would result in sharp decreases in the average purse size, but he said that this, in and of itself, was not a concern. Of greater concern was the root causes of the declines, and how best to stem the bleeding.
In the Panel’s view, Mr. Walzak’s request that the entire issue of an integrated approach to southwestern Ontario racing dates be studied is valid. We understand that there have been early discussions in this regard, and we urge the participants to continue these discussions with a view to having a cohesive presentation in time for the 2007 race date hearings.
It should be noted if one considers Hiawatha-Western Fair as a “circuit”, horse people racing here in 2006 will have approximately 182 dates available to them. This number compares favorably with any year since 1991.
CONCLUSION
The panel is concerned by the business trends at Hiawatha and by the sharp increases in uncontrollable costs. Management estimates that losses of between $6500 and $7500 are incurred on each live racing date. Of course, slot machine revenue compensates but the trend lines are discouraging.
Management has indicated that it would offer more racing if it is economically viable to do so. The results of its property tax appeal could help here.
The panel also feels that it is essential that an integrated approach to dates in this area be carefully considered by all participants prior to the 2007 date hearings.
This document represents the unanimous view of this panel.
DATED this 13th day of December, 2005.
Original signed
David Gorman
Panel Chair