Impact on Thistledown After Being Purchased by Harrah's Entertainment

Harrah's Entertainment Inc. has purchased Thistledown, but the Las Vegas-based gaming company did so not because the North Randall facility already conducts Thoroughbred racing but because it is likely to eventually operate video lottery terminals.

In casino gaming circles, Harrah's is most known as operator of high-end Las Vegas gaming properties such as Caesar's Palace and the World Series of Poker. Clevelanders might be more familiar with its management of the former Casino Windsor, but the idea is the same: Harrah's is associated with gaming.

Put another way, horse racing is merely a means to an end--a way for Harrah's to enter a market that otherwise would be closed without a racing license.

Harrah's owns Louisiana Downs in Bossier City, a Thoroughbred track that Thistledown historians may remember was once owned by Ed DeBartolo (just as Thistledown was before Magna Entertainment Corp. bought it), so its Thistledown acquisition reunites it with Louisiana Downs in some ways. Harrah's also owns Chester Downs near Philadelphia, a Standardbred track Harrah's built when Pennsylvania allowed slot machines at racetracks.

Conducting Thoroughbred racing is an expensive proposition. The aforementioned Magna is now bankrupt despite owning some of the most lucrative properties in the Sport of Kings: Gulfstream Park in South Florida, Santa Anita Park in Southern California, and the Preakness Stakes, middle jewel of Thoroughbred racing's Triple Crown.

Racinos, tracks with casino-style gaming, typically make money, but they would make more money without having to operate a race meet. The trade off in the eyes of politicians is that horse racing is an agribusiness that provides jobs to both rural and metropolitan sectors as well as an economic impact that goes beyond gaming dollars. In Kentucky, the sales tax on horse sales is a big part of the state budget.

Given that trade off, it is easy to understand why Harrah's CEO Gary Loveman would say that horse racing is a drain on the company's profits. Why should he care about racing when his company's core business is gaming? Harrah's is a private company based in Las Vegas with significant backing from companies based in New York and Texas, so the idea that they would rather operate racing at a loss as an economic benefit to Ohio versus make even more money off slot machines is unlikely.

With the Ohio Supreme Court's September 21 decision that voters must decide whether to allow expanded gaming at the tracks, Harrah's will be operating Thistledown sans VLTs for at least nine months and likely longer, and if other acquisitions by gaming companies (though not necessarily Harrah's) are any indication, do not expect many capital improvements at the Big T. The public relations angle here is that companies like the facilities to fall apart to create evidence of how badly they need expanded gaming revenues to help revitalize the facility. Even Churchill Downs, site of the Kentucky Derby, has been suspected of the practice.

From a class standpoint, racing in Ohio is near the lowest rung on the latter. Put in baseball terms, it's short season single-A. Will slots at tracks change that? A little bit. Ohio's proximity to the Thoroughbred racing's epicenter, Kentucky, gives Buckeys a chance to lure top broodmares for breeding purposes and top horses for races. Beulah Park, River Downs, or Thistledown will never be Saratoga or stage a race as important as the Kentucky Derby or Preakness, but it can offer some solid double-A or even triple-A races more often than just the Ohio Derby once a year.

Is Harrah's acquisition of Thistledown good for horse racing in Ohio? There are worse partners, but don't expect the company to make a day at Thistledown as glamorous as competing in the Main Event at the World Series of Poker!

In Harrah's favor is that unlike other racino operators, the company has consistently left racing people in charge of racing operations and gaming people in charge of gaming operations. That means current Thistledown employees can breathe a little easier about still having a job once the machines start going.

Thistledown is where I fell in love with Thoroughbred racing, something that not only is a passion for me but also is my career. Ideally, I would like to see this industry succeed on its own without supplemental revenue from other forms of gambling, but I can't blame racetrack owners for not wanting to compete with facilities in other states that have different forms of gambling (e.g. Mountaineer Casino Resort and Racetrack).

Slots and racing can coexist for the benefit of Ohio, and Harrah's has made such arrangements work in other states. Just don't believe the politicians when they say that this is about the horses. As always, follow the money, and that trail leads directly to the gaming machines.

Ed DeRosa is a Garfield Heights native who now resides in Lexington as the news editor of Thoroughbred Times.