Keeping Pace: California Screaming
COHEN: Let's start here. What happened at Cal Expo and why do you think it happened? SIEGEL: Cal Expo harness racing is really not a unique story. It is representative of what has happened to harness racing (and Thoroughbred racing) over the last 30 years. In the most simple terms, the public has spoken loud and clear about their interest in racing. For a variety of reasons, the interest has and will continue to decline. Why? I could write volumes just on this one point, but handle numbers bear out this fact clearly. Casino gambling and more recently the introduction of legalized sports wagering has given the public more choices for their wagering dollars. Add that to the fact that the equivalent take-out for sports and casinos is around 5 percent or less, it makes the case for racing tougher to convince consumers to put their money there.The particulars of Cal Expo are simple. Thoroughbred racing in northern California was basically killed when Golden Gate Fields closed. One attempt to resurrect the racing at Pleasanton failed miserably as there were simply not enough horses and wagering to sustain that meet. Then the summer fair circuit tracks, seeing the writing on the wall, began falling apart, with the State Fair at Cal Expo being one of those. The state then made an assessment that maintaining the track just for 38 days of harness racing was simply not worth it given their next best use of that property was, whatever that next best use is. So they made an economic decision to exercise an early lease termination right they had in the lease agreement with the harness operators.
COHEN: You crunched some numbers on this last week. And the charts (that accompany this interview) quite clearly show the scope of the decline. SIEGEL: Yes, take a look at the numbers. Race days have declined precipitously over the last 20 years, and handle, adjusted for inflation, did as well. As public interest declined, the Cal Expo operators adjusted the race days so that purses per day remained roughly flat, even in a couple of years a modest increase. So while real (inflation adjusted) handle declinced 80% or so in the time period, the handle per race declined only 50%. Well, 50% is still a really bad picture, but Chris Schick, in particular, did a fantastic job in minimizing the impact of lack of public interest to keep the lights on. A huge amount of recognition should be given to Chris for managing this situation as well as he did over the last many years. This drop in handle and total purses is only the tip of the iceberg. A lack of adequate veterinary resources, challenging environmental elements, a more stringent (and therefore costly) regulatory environment and other challenges, in my opinion, made keeping the Cal-Expo harness operation afloat a near impossibility. I personally feel very sorry for the horsemen who will find relocation difficult or impossible and I can only hope they planned for this day, as it should have been clear to most that this day was coming. Maybe not in 2025, given how sudden the end came, but certainly within the next few years. (article continues below)
COHEN: What can or should Standardbred stakeholders do to better protect the tracks that are left, many of which are also seeing drops in handle?SIEGEL: You asked the $64,000 question that frankly, does not have a good answer, and some people are not going to like my answer. Given the competitive environment for the wagering dollar, combined with the lower take-outs, combined with regulatory pressures, I don't see a practical way for any kind of growth, let alone stability. Here are my suggestions. The first thing is to embrace HISA. As expensive as this might be, it at least does something to appease (better) the animal rights folks, and even regular folks who look unfavorably at all of the kinds of cheating that goes on, and it goes far beyond mortality rates, as we all know the Standardbreds are so much better than Thoroughbreds in this regard. But we need to improve in changing how the public perceives drug use and other forms of cheating. Next thing we need to at least try are some innovative improvements in the gaming side of things. For sure, fixed odds are better positioned to attract sports bettors than pari-mutually based odds.
In-race wagering, now possible with real-time tracking systems, is another innovation already being done in the UK for Thoroughbred races with good success. We should be pushing regulators to allow for this innovation. Racetracks can also use some modern-day technology to put together more competitive races. A number of tracks are doing this already, and studies have proven that based on wagering patterns, these races have greater parity in the pools and have resulted in modest increases in wagering. Finally, at the end of the day, to compete with sports, the take-out has to drop. I know this is only possible with great contraction in the number of races being run, since the tracks are largely a fixed cost operation. I know that means fewer tracks, fewer horses, fewer horsemen, etc., but you asked about protecting what we have left, and this is one way. This is what WILL happen naturally if and when the subsidies end anyway. Finally, do everything one can to keep the subsidies flowing. Cheating jeopardizes these subsidies, so the industry should do all it can to minimize this risk. This is what baffles me the most about the USTA's position on HISA.
COHEN: Why do you think these subsidies, as you call them, will inevitably end?SIEGEL: I think the public is catching onto the fact that the public really has little to no interest in the underlying product, as measured by handle. There are only two arguments I hear to justify these subsidies (as opposed to having the same casinos that those monies now destined for purses go to other worthy causes - homelessness, improved medical care, education, etc). First is the open space argument. It is real. But so small. This goes to the open fields where hay is grown or where mares and foals roam. This is a benefit to the public at large. But how big?The other reason is economic impact. But there are scores of examples of the public losing interest in industries over time, for a variety of reasons. So the writing is on the wall. Like I said earlier, the industry should do all it can to maintain these funds. However, the individuals in it need to understand the economics behind the justification for the subsidies and in doing so, should understand that they are likely to decline over time, as much as they don't want to believe it. I think they do understand that without them, most facilities cannot survive.COHEN: Thanks, David. I know that there are other smart people in harness racing who share this generally pessimistic view. And I know of a great many people in the sport who see problems growing without any sort of comprehensive vision or plan from within the industry to solve them. Every minute the United States Trotting Association spends spinning propaganda about HISA is a minute the USTA hasn't spent figuring out how to improve the basic economics of the sport. It is no mystery why Cal-Expo closed or why Freehold Raceway in New Jersey closed last year. How many more tracks have to close before we see some sense of urgency?
An update on the USTA's fight with Diamond CreekI promised Keeping Pace readers an update after we published the April 21 interview with Standardbred owner, breeder Howard Taylor, a lawyer who represents many in harness racing. I asked for more information in that column. What I did not know at the time we posted our piece is that the United States Trotting Association had already made public more information about its Standardbred Racing Investigative Fund probe of disgraced former harness owner and trainer Nick Surick. The USTA did so, its press release stated, to publicly respond to questions raised about the SRIF's work by Adam Bowden and Shaun Laungani of Diamond Creek farm, one of the biggest Standardbred breeding and racing operations in the U.S. From the USTA's press release: 'These comments included assertions about the factual basis for the sanctions they received and a denial that they broke any USTA rules. Mr. Bowden and Mr. Laungani have every right to discuss their cases publicly, but having done so, the USTA has a right to respond so that its members can understand what led to the sanctions and why a rule violation was found to have occurred. Staying silent on the matter risks confusion regarding the standards of conduct members are expected to maintain.' The USTA then linked to one of the most significant documents I've yet seen in this saga.
The link is to a 'brief' written and submitted by a five-person USTA committee that had been asked to serve as a bridge between SRIF investigators and the USTA's board of directors, which ultimately sanctioned Diamond Creek, Bowden, and Laungani. If you are interested in this story, take the time to read it. It is likely the most we will ever know of what is essentially the USTA's justification for the sanctions against Diamond Creek and company. The USTA didn't answer the many questions I have about the SRIF investigation, and the USTA's role in embracing it, but it did provide important details that help us figure out what exactly happened here.I give the USTA credit for releasing this information. And it's up to Diamond Creek and Howard Taylor to decide whether they want to continue this discussion in public. I hope they do. There are still far too many unanswered questions about the Surick investigation. Some questions, like why the USTA chose to pick a fight with Diamond Creek for its first published SRIF investigation, look backward. Many of my questions, on the other hand, look forward. Here's the biggest one of all: What's the USTA going to do about the conflict of interest its president, Russell Williams, has when it comes to investigating his breeding farm's competitors?I continue to receive feedback from within the Standardbred community about this saga. Some folks are more supportive of the USTA, some are more supportive of Diamond Creek's decision, but I have not yet heard from anyone who says that he or she is confident that the investigation and its results were as fair or transparent as they ought to have been. Some owners say they'll leave the sport if they ever are the subject of an SRIF investigation. This pushback was certainly foreseeable (if not inevitable) once the USTA created an investigative arm to look at things that state regulators can't look at or (more precisely) won't look at. The USTA must do better.
NOTESGood for everyone who rallied to shoot-down the de-coupling effort in Florida. The story, which has unfolded in public view for the past few months, is a reminder of the magic of powerful lobbying and what the racing industry can achieve when major stakeholders come together to fight for a common cause. To have Florida Gov. Ron DeSantis explicitly come out against de-coupling was a real coup. Now everyone who rallied needs to pay attention so the next time Belinda Stronach and the gang at Gulfstream Park try to get rid of the racing that helped get them their casino license.Good for The Stable Recovery at Taylor Made Farm and for The Washington Post for publishing a wonderful piece on Derby morning about a program that helps people who are recovering from substance abuse get back on their feet by taking care of horses. Those in the program start with 90 days of grooming horses, which puts them in better shape to get and keep jobs. Will Walden, the trainer of Bless the Broken, who finished third in the Kentucky Oaks on Friday, is a graduate of the program. Take the time to read this piece and to view the excellent photography that comes along with it. The piece made a good Derby day even better.Good for the Louisville Courier-Journal for posting a commentary piece from HISA CEO Lisa Lazarus during Derby week. Lazarus didn't say anything you don't already know. But it is smart to reinforce HISA's positions with people who don't live and breathe racing. From Lazarus: 'Thoroughbred racing can remain a central part of our culture only if the public trusts that we are faithful stewards of its remarkable athletes. The vast majority of people in this sport are doing right by our equine and human competitors — but there is always more to be done. The entire industry must continue to come together and make safety our top priority to preserve our sport.'
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