Slot Machines Worth Their Weight in Gold

Slot machines have had a profound impact on the value of horse racing properties nationwide. One industry insider told me: “It is remarkable to me that within the last three years, Gulfstream Park, Santa Anita and Hollywood Park (three of America’s most prestigious thoroughbred tracks) have all sold. But the track that had the highest sales price was Bluff’s Run (in Council Bluffs, Iowa). Who would have ever thought 10 or even five years ago that Bluff’s Run would be worth more than Santa Anita? For that matter, we’ve just learned that Delta Downs is worth about as much as Santa Anita.”

Both Bluff’s Run and Delta Downs were purchased in 2001 by gaming industry giants. Bluff’s Run was purchased by Harrah’s Entertainment, Inc. on August 1, 2001, while Delta Downs was purchased by Boyd Gaming. Inc.

Diminutive Bluff’s Run in America’s heartland and Delta Downs in southern Louisiana, each worth as much as mighty Santa Anita, the showplace of thoroughbred racing in Arcadia, California, a suburb of Los Angeles? Incredible. And all because of the legalization of casinos (slot machines) within the confines of each track’s property.

Bluff’s Run presents greyhound racing the year ‘round. The track itself opened in February of 1986. It was one of the reasons that famed Ak-Sar-Ben Race Track in Omaha, Nebraska met an untimely demise. Ak-Sar-Ben had one of the better summer thoroughbred meetings in the Midwest, certainly on a par with Chicago during the 70s and 80s.

It was, among other things, competition from the dog racing at Bluff’s Run that siphoned fans away from Ak-Sar-Ben. The crowds thinned and the quality of racing declined so much that by the early 90s, the once proud summer showplace was struggling to survive. It eventually closed its doors and was demolished.

“In many respects, the people that ran Ak-Sar-Ben never comprehended the seriousness of the competition until it was too late,” one racing veteran from the Cornhusker State told me. “When dog racing was introduced in Iowa, the betting public in neighboring Nebraska was captivated by the faster nature of the sport. Now something even faster has come along, slot machines, and greyhound racing is hurting.”

The only difference is that even though dog racing revenues have declined and the sport itself isn’t as popular as it was 15 years ago, the tracks that host them are thriving and greyhound racing is supported because of slot machines and the tremendous revenue they generate

Dubuque Greyhound Park in Dubuque, Iowa, opened in June of 1985, eight months prior to Bluff’s Run. Dubuque currently hosts live greyhound racing from late April to late October.

Prairie Meadows inaugurated as a pari-mutuel thoroughbred and harness track on March 1, 1989. This year it will have a thoroughbred season from late April to early July, a “mixed meeting” (thoroughbred and quarter horse) from mid-July to late September, and a harness (standardbred) meeting from early October to early November.

Slot machines were introduced at all three tracks in 1995: At Bluff’s Run on March 15, at Prairie Meadows on April 1, and at Dubuque on November 22.

The results were immediate. For the fiscal year July 1, 1995 through June 30, 1996, adjusted gross revenue at Bluff’s Run was a staggering $142.4 million; at Prairie Meadows $118 million; at Dubuque, which opened with half as many slot machines and much smaller casino floor space than its Iowa competition, $11.4 million.

Five years later during the fiscal year July 1, 2000 through June 30, 2001, adjusted gross revenue at Bluff’s Run declined to $123.7 million, still a handsome sum, but only because Prairie Meadows surged to $137.5 million and Dubuque more than tripled to $36.9 million.

Adjusted gross revenue at the three tracks during the first three quarters of the current fiscal period, July 1, 2001 through March 31, 2002, reads: Prairie Meadows $107.9 million, Bluff’s Run $95.8 million, and Dubuque $28.9 million.

Just look at how “coin-in” figures for slot play in the casinos at Bluff’s Run, Prairie Meadows, and Dubuque Greyhound Park & Casino have soared through the years: From fiscal 95-96 to fiscal 2000-2001, coin-in at Prairie Meadows went from $1.6 billion to $2.3 billion. During the same period at Dubuque it went from $172 million to $563 million. The competition kept Bluff’s Run on a fairly even keel, $2.3 billion as opposed to $2.2 billion.

The number of slot machines at Prairie Meadows has grown from 1,100 in 1995 to 1,444 this year; at Bluff’s Run from 1,120 in 1995 to 1,500 this year; at Dubuque from 529 machines to 600 machines in 2002.

Even though the greyhound racing at Bluff’s Run and Dubuque flourishes because of revenue from slot machines that’s used to support it, the sport itself is being buoyed artificially. The support it once enjoyed has waned significantly. The fact of the matter is, people go to the tracks to bet the slots and not the dogs.

At Bluff’s Run, for example, the handle on live dog racing the first three months of 1998 averaged about $1.1 million per month. The first three months of 2002 it has dipped to about $700,000 per month.

There are no new horse racing fans being made either. The handle on simulcast horse racing during the first three months of 1998 at Bluff’s Run averaged about $1.6 million per month. During the first three months of 2002 that monthly average has plummeted 50 percent to around $800,000.

Iowa derives tremendous tax benefits from gambling on slot machines at its race track enclosure casinos. In January of 1997 the tax base on adjusted gross revenue over $3 million was raised from 20 percent to 22 percent, increasing by 2 percent each succeeding calendar year until the rate is 36 percent!

The money goes to city and county governments, the Iowa General Revenue Fund, and to gambler’s treatment programs.

Just as with the horse racing industry in Iowa, greyhound racing in the state has benefited enormously to the tune of improvements to the facilities and upgrading of the purse structures. At Dubuque Greyhound Park & Casino, for example, the kennels recently underwent a half million dollar renovation.