Monday, February 27, 2012

The Myth of the horse racing subsidy

My MPP finally got mentioned in the Globe and Mail
That Dalton McGuinty would even consider no longer using slot-machine revenue to prop up an otherwise money-losing racing industry, veteran MPP Garfield Dunlop charged, is proof that the Premier “hates rural Ontario.”
             -Adam Radwanski
Ah yes ... the horse racing subsidy.

This from a brief mention in the recent report of the Commission on the Reform of Ontario's Public Services:
In addition to revenues from wagering, since the late 1990s the industry has benefited from a provincial tax expenditure (a reduction to the provincial pari-mutuel tax) and a percentage of the Ontario Lottery and Gaming Corporation’s gross slot revenues that together are worth an estimated $400 million in 2011–12. Over the past 12 years, approximately $4 billion has flowed through 17 racetracks to support purses, racetrack capital improvement and operating costs.  - page 316
Later, on page 408, the report would put the shocking tag of $334 million in 2009-2010, an amount Dwight Duncan would note; “would pay for over nine million hours of home care or insulin pumps and supplies for five years for almost 17,000 people,” Mr. Duncan said.  - February 13, 2012

So off I went on a little fact-find expedition, which -I note for reporters outside of Toronto - didn't take very long at all.  Harris co-located the slots and unfortunately before the string of Ontario Lottery and Gaming Corporation Annual Reports I could locate were found, there was this reference to the 2000-2001 report on CTV's site:
The 2000-2001 report shows a stunning surge of more than half a billion dollars in profits from some 5,000 slot machines at 12 racetracks. One-armed bandit lounges were expanded with some controversy the year before to bolster the flagging racing sector.
I added the emphasis to be clear that things started off pretty good.  In 2002-2003 annual's report we see racetrack accounting shown separately from charity casinos (racetrack's providing 77% of the total of the two with revenues of $1,262,523 and direct operating expenses of $614,262), but after that they are shown together.  That's a lot more than $334 million a year.
That's not Donald Drummond's point though - he points out slot machines put at sites geared to that, instead of tagged onto horse tracks to prop up a dead model, would be far more profitable.

Fortunately, we have a group of sites developed just for slots.  The are called resort casinos.  Now if Drummond, Duncan, Radwanki, Regg Cohn, etc., had any horse sense we'd see the decline of money from one business (revenues less net expense), while the other escalated.

Reality stupidly refuses to submit to the definition of reality dictated by Drummond's commission, and it's mainstream media cheerleaders.
How many needles can you buy by dumping $650 million a year in revenue to save $334 million in expenses?  Those $4 billion in subsidies seem to have $6-7 billion of revenues offsetting them (some of the $9 billion of revenue being from charity casinos).

This isn't proof the Premier hates rural Ontario.
It is a good indication in dealing with OLG, a serious person would start with the resort casinos.

Maybe horse shows would help.


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