NOcasiNO

MYTH:

FACT:

1. Excellent winter handle (January 1 to March 31) at Laurel. Except for unusually bad weather in January, the track's handle was higher than 1995, which was the best handle in the history of Maryland tracks.

   During February and March 1996, the handle was up $3.8 million compared to February and March 1995. Although the January 1996 handle was down $10 million (23%) from 1995, it was entirely due to the fact that there were 27% fewer of live racing days in January 1996 than in 1995. In fact, snow wiped out even simulcast betting during four days in January 1996, while there were no snow days in January 1995.

   Viewed another way, during the Laurel meet, average handle during live racing days was virtually the same in 1996 as 1995 (about $1.85 million) while average handle during simulcast-only days was up 33% (from $674,000 to $899,000). So, except for the snow, the average daily handle clearly improved over 1995.

2. Excellent spring handle (April 1 to June 9) at Pimlico. The Pimlico handle was $100,937,948 in 1996 compared to roughly $100,750,000 in 1995. This success is in sharp contrast to the prediction of Mr. DeFrancis' "racing consultant," that Pimlico would suffer a 15 percent decline when live racing began in April at Delaware Park.

3. More horses are running in Maryland. The number of horses racing each day in Maryland is higher in 1996 than 1995. At Laurel's winter meet (January through March), the average number of horses running per race increased from 7.62 in 1995 to 8.23 in 1996, according to a trade magazine called The Blood-Horse (May 25, 1996). In addition, Laurel and Pimlico have been running more races per day than last year.

4. More horses are being stabled in Maryland. About 150 more horses are being stabled at Maryland thoroughbred tracks in 1996 than in 1995, approximately a 10% increase. Just a few weeks ago, a large section of barns that were not being used at Bowie were opened to house four racing outfits from Florida.

MYTH:

FACT:

1. Pimlico/Laurel purses are currently higher than Delaware Park purses, and they will stay that way. Mr. DeFrancis told Barry Rascovar that "before long, Delaware Park's purses could be double Pimlico's." Barry Rascovar column in the Sun, May 26, 1996. That is simply false.

   Currently, Maryland purses are substantially larger than Delaware purses. According to a trade magazine called The Blood-Horse, (June 8, 1996), "Delaware Park is now giving away $152,000 per day in purses," while Maryland tracks are payin g $190,000 per day.

   Delaware purses will not grow. Between the opening of gambling machines at Delaware Park on December 29, 1995, and May 26, 1996 (the most recent date for which data is p ublicly available), the machines added $3,908,700 to the purse account. At this rate, the purse account will receive $9,522,537 annually. When this sum i s divided by the number of racing days at Delaware Park (130), we find that purses will receive an additional $73,250 per day from the gambling machines. The handle at Delaware Park generates perhaps $80,000 per day in purses, for a total average purse of about $153,250 (which approximates current purses and remains way below Maryland). All this is based on current revenues averaging $367 per machine per day at Delaware Park. Average revenues from slots in Atlantic City is $225 per machine per day, so it is likely that after the novelty wears off, purses from slot revenues will decline towards Atlantic City standards, not increase.

2. "Serious bettors" will not travel to Delaware Park to bet on "better" horses since they can already sit at a Maryland track or OTB parlor and, via simulcast, bet on the very best horses in America, racing at Hollywood Park or Churchill Downs. The only reason for Maryland bettors to go to Delaware Park is to play the gambling machines, not bet on the horses. Based on the 1996 Maryland handle, they're not going.

3. As long as Maryland purses remain at about the same level as the past few years, we will continue to have the same horses, jockeys and trainers. If Pimlico offers a $20,000 prize, for example, the track will get entries appropriate to that prize no matter what Delaware Park does. Maryland does not "compete" with Delaware for horses, it competes with dozens of tracks for thousands of horses. There are far too many race horses in the country and in this region for Delaware Park to matter.

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   MYTH:

   Track management is doing the best it can, but the product is just too difficult to sell. "The steep descent of Pimlico underlines racing's poor demographics. Its fans are dominated by older men in retirement. Racing doesn't draw the young. There's not enough going on at the track to attract them. Too many other leisure-time activities compete for their attention." Barry Rascovar column in the Baltimore Sun, May 26, 1996.

   FACT:

   The real problem is that management at Pimlico and Laurel fails to capitalize on its opportunities to grow the customer base, and at the same time, takes its regular customers for granted.
   1. The 1989-1995 performance of the Joe DeFrancis administration is terrible compared to the 1984-1989 management of Frank DeFrancis and partners, and compared to the success of other tracks during 1989-1994.

      From 1984 to 1989 under Frank DeFrancis, the thoroughbred handle increased almost 100% and overnight purses in Maryland became the third-highest in the nation. After Joe DeFrancis took over management in 1989 the handle increa sed less than 12% over six years.

      In contrast, over the same period, 1989-1995, Churchill Downs increased its handle by 92%, Penn National increased its handle by 90%, and Maryland's own Timonium racetrack tripled its handle.

   2. The tracks have failed to attract new customers. With the existing customer base, Maryland handle has fallen and risen based simply on the state of the economy. Why hasn't the track expanded its base?
      1. Bad management generally. On April 13, 1994, according to the official minutes of the Maryland Racing Commission: "Commissioner Mosner said that, from his personal observations, there appears to be: a lack of chemistry between management employees, a lack of pride, discipline and concern for customers, a poor racing product further hampered by poor scheduling of races, particularly on Saturdays when the attendance is the highest."

      2. Decline in advertising and promotions. Although customers spent $475 million at the tracks last year, only $3 million was spent on all forms of advertising, a 36% decrease in spending on advertising since Joe DeFrancis took over management in 1989. And DeFrancis dropped the prestigious Laurel International race because it didn't make money. Frank DeFrancis understood that special races like the International are invaluable promotional opportunities for the tracks, bringing in customers who wouldn't otherwise try the product.

      3. Poorly-kept facilities. In the May 21, 1996 edition of the Lexington (Kentucky) Herald-Leader, sports columnist Billy Reed wrote: "I was as thrilled by Camden Yards as I was depressed by Pimlico Race Course, home of the Preakness. At Pimlico, the stakes barn is horribly dilapidated and in desperate need of at least a paint job. I suspect that Citation was running the last time a paint brush touched the barn, but I can't verify this. And here's the really bad news: The stakes barn looks much nicer than its neighbors. You can't walk through the area without feeling depressed for the horsemen and embarrassed for the track. Then there's the grandstand. It has all the beauty and charm of a 1920s steel mill. At first sight, the natural reaction is loathing. It's a disgrace...the track is the pits...current Pimlico management has failed miserably...."

      4. The tracks ignore basic customer conveniences. There are only four pay phones in the entire grandstand area at Laurel. The bathrooms look very old. There is only one escalator, in one location, so most of the time customers have to walk up and down steps. The television sets for watching the races are ancient, and set up in the ugliest manner. Customers who want to watch and play out-of-state races have to sit on cheap stacking chairs, on a dirty, old tile floor, in big, smokey, impersonal rooms. Those few general admission customers sitting at a table had the cheapest folding tables one can buy. The food and food service is simply awful. How can they call this entertainment?

      5. The tracks nickel-and-dime customers to death. Last Saturday at Laurel, it cost $1 for general parking and $3 for general admission. (It costs nothing to park or enter at Delaware Park.) A program cost $2. A lemonade that should have cost 80instead cost $1.60. (Soft drinks are free to slot players at Delaware Park.) A pizza slice that should have cost $1.00 instead cost $1.95. Most incomprehensible of all, there were no ATM machines in the grandstand. Instead, customers could only use their ATM card at a booth with a $4 service charge added! If a customer wanted to take money off a credit card, a sliding scale of service charges starts at $8 for $50 cash, and goes up. (Naturally, casinos have ATM machines everywhere and do not charge any additional fee.)

      6. Despite his totally ineffective management, Joe DeFrancis has paid himself a salary of $3.25 million over six years. According to their annual financial statements, the tracks operated at a net loss during the first four years of Mr. DeFrancis' management. Nevertheless, he paid himself $2.85 million in salary during those four years and $3.2 million over the past six years. Now Mr. DeFrancis wants to be rewarded for his service with a license to operate two huge casinos which would earn for him, personally, net revenues of $100 million per year. This makes no sense.

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   MYTH:

   "Maryland wagering on the Maryland card" is down because of gambling machines at the Delaware tracks. Joe DeFrancis in the Baltimore Sun, June 10, 1996.

   FACT:

   The shift in betting from "live racing" to simulcast races has nothing to do with Delaware, it is the natural result of DeFrancis cannibalizing his own customers.

   Over the past few years, Pimlico and Laurel have offered more and more simulcasting of out-of-state races. Naturally, regular customers have shifted much of their betting to simulcast races instead of live races.

   There has been a steady progression. In 1993, $283 million was bet in Maryland on live races and $115 million on out-of-state simulcast races. In 1994, $232 million was bet on live races and $230 million on simulcasts. In 1995, $200 million was bet on live races and $275 million on simulcasts.

   Today, on a typical Saturday, Pimlico and Laurel offer customers about one-hundred out-of-state races to bet on, compared to between nine and eleven live races.

   But simulcast races are less profitable to the track and the purse fund than live races. When Marylanders bet on out- of-state races, the Maryland track has to pay a commission of about 3% to the out-of-state track, leaving about 17% (instead of about 20%) of the handle to split with the purse fund.

   In 1989, the tracks offered nearly $43 million in purses based on a handle of $426 million. Although the handle increased to $475 million by 1995, purses actually declined to $40 million. This is entirely the fault of Mr. DeFrancis who has knowingly shifted his regular customers' spending to a less profitable product.

   In fact, through mismanagement, the simulcasting of out- of-state races accounts for a big net loss to both purses and the tracks. In 1995, Pimlico/Laurel paid $13.5 million in "common pool wagering fees" to out-of- state tracks while only earning $5.6 million in commissions from out-of-state wagers on Maryland races.

   Many tracks across the nation have increased the handle and made record profits from simulcasting. But it only works if the track uses simulcasting (and OTB parlors) to attract new customers. Maryland tracks have simpl y not mad e any serious efforts to bring in those new customers.

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   SLOT PARLORS AT TRACKS AND OTB LOCATIONS WOULD BE, FOR ALL PRACTICAL PURPOSES, "CASINOS"

   1. Casinos make between 64% and 91% of their net revenues from slot machines. Between 79% and 91% of all the money bet in a casino is bet in slot machines (depending on the state).

      According to a USA Today cover story about slot machines (May 20, 1996), casinos "earn 70% of their yearly $23 billion take from slots." (This $23 billion is the casinos' net revenues after paying off winners. The total amount wagered in casinos was $367.9 billion in 1994.)

      According to International Gaming & Wagering Business magazine (May 1996), "Its irresistible attraction to players has made the slot machine the king of the casino and the biggest profit center in the U.S., generating, on average, 65% of the revenues and filling 80% of floor space."

      The following is for calendar year 1994, published in the International Gaming and Wagering Business magazine. 1995 statistics will be available soon, and I'll update this for you.

      New Jersey

      Total bet in slot machines - $26.355 billion = 79%
      Total bet at table games/other - $6.910 billion = 21%
      Total net revenues from slot machines - $2.297 billion = 67%
      Total net revenues from table games/other - $1.125 billion = 33%

      Nevada

      Total bet in slot machines - $83.038 billion = 83%
      Total bet at table games - $13.863 billion = 14%
      Total bet at race/sports book - $2.584 billion = 3%
      Total net revenues from slot machines - $4.144 billion = 64%
      Total net revenues from table games - $2.121 billion = 33%
      Total net revenues from race/sports book - $0.175 billion = 3%

      Colorado

      Total net revenues from slot machines - $264 million = 91%
      Total net revenues from table games - $26 million = 9%

      Illinois

      Total bet in slot machines - $9.701 billion = 85%
      Total bet at table games - $1.685 billion = 15%
      Total net revenues from slot machines - $645 million = 66%
      Total net revenues from table games - $334 million = 34%

      Iowa

      Total bet in slot machines - $971 million = 90%
      Total bet at table games - $102 million = 10%
      Total net revenues from slot machines - $80 million = 76%
      Total net revenues from table games - $25 million = 24%

      Louisiana

      (does not include slots outside of casinos)

      Total bet in slot machines - $1,473 million = 84%
      Total bet at table games - $280 million = 16%
      Total net revenues from slot machines - $118 million = 66%
      Total net revenues from table games - $62 million = 34%

      Mississippi

      Total bet in slot machines - $15.768 billion = 91%
      Total bet at table games - $1.607 billion = 9%
      Total net revenues from slot machines - $1,122 million = 77%
      Total net revenues from table games - $341 million = 23%

      South Dakota

      Total net revenues from slot machines - $39 million = 89%
      Total net revenues from table games - $5 million = 11%

   2. The proposed racetrack/OTB casinos would be huge, even bigger than most casinos.

      It was proposed that racetrack casinos have up to 3,000 gambling machines and OTB parlors have up to 2,500 machines. The last proposal in the 1996 legislature would have legalized a total of 15,500 machines at six locations across the state.

      Compared to most casinos around the nation, these racetrack/OTB parlors would be gigantic. The total number of slots in Maryland would also be large compared to a state like Illinois, for example, which has ten commercial riverboat casinos.

      In 1994...

      • the average casino in Atlantic City contained 2,157 machines
      • the average casino in Nevada contained 403 machines
      • the average casino in Colorado contained 173 machines
      • the average casino in Illinois contained 626 machines
      • the average casino in Iowa contained 478 machines
      • the average casino in Mississippi contained 984 machines
      • there were 25,882 slot machines in Atlantic City
      • there were 149,480 slot machines in Nevada
      • there were 10,724 slot machines in Colorado
      • there were 6,890 slot machines in Illinois
      • there were 2,869 slot machines in Iowa
      • there were 30,505 slot machines in Mississippi
   3. Because they are casinos, established casino companies will own or operate these racetrack/OTB gambling parlors.

      Caesars World operates the casino at Dover Downs racetrack in Delaware. Bally's manages Rosecroft and would both manage and own 50% of a Rosecroft casino. It is well-known that Ameristar Casinos expects the contract for the proposed Western Maryland OTB casino, Primadonna expects to operate the Inner Harbor OTB casino, and Harvey's hopes for an OTB casino license in Cambridge.

   4. Virtually any gambling game could be played.

      The proposed law would legalize any type of gambling game, as long as it is played on an "electronic gaming device." We would have conventional slot machines, video poker, blackjack, keno, craps, and any other game which could be converted to play on a video screen. The only difference between Maryland casinos and Las Vegas casinos would be that our casinos wouldn't have to hire anyone to operate the card and dice games.

   5. The racetrack/OTB casinos advocated in 1996 would cause the same problems as the casinos that were advocated in 1995.
      1. They will cannibalize existing businesses. The legalization of gambling machines will shift customer dollars from local restaurants, theaters and retail stores to the casinos. The businesses that lose revenues will be forced to lay off thousands of employees. And gambling machines won't create many new replacement jobs because they are not labor-intensive.

         A Maryland Department of Business and Economic Development study in October 1995 found that the legalization of casinos would cause between 45,000 and 58,000 individuals in Baltimore to lose their jobs. Even if casinos created 30,000 replacement jobs, DBED reported, Baltimore would still suffer a net loss of 15,000 to 28,000 full-time jobs. Slot machines would cause the same cannibalization while creating even fewer new jobs.

      2. They will cause gambling addition, and its associated costs, to skyrocket. Slot machines are the most addictive form of gambling. A study released in January 1996 found that the problem of gambling addiction decreased by 90% after South Dakota's electronic gambling machines were turned off by court order. Three months after the machines were turned back on, the problem had rebounded almost to its prior level.

         In Iowa, where 90% of the money wagered at the casinos is bet in slot machines, a study released in July 1995 found that 5.4 percent of the state's adults (roughly 110,000 residents) are lifetime pathological or problem gamblers. Before riverboats and their slots came to that state, only 1.7 percent of Iowans were lifetime pathological or problem gamblers. The problem has tripled.

      3. They will attract crime.

         Last fall, Attorney General Curran issued a report entitled "The House Never Loses and Maryland Cannot Win: Why Casino Gaming is a Bad Idea." That report explains: "Casinos would bring a substantial increase in crime to our State. There would be more violent crime, more crimes against property, more insurance fraud, more white collar crime, more juvenile crime, more drug and alcohol-related crime, more domestic violence and child abuse, and more organized crime."

         Slot machines would eliminate cheating by card dealers and their customers, but other types of crimes would still occur.

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   July 1996 NOcasiNO

   1-800-661-3423 in Maryland

   Maryland's Religious Community Opposed to Casino Gambling

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   For more information about NOcasiNO
   contact:

   Bernie Horn 75332.2212@CompuServe.COM

   or

   Larry Jameson larry@ccobbs.org

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