Are thoroughbreds a good bet for the state?

TEN HORSES SHOOT OUT of the gate with Simply Mas moving quickly to take the lead. The pack bunches up at the first turn, with Worth the Worry moving up on the inside and Goodbyeguinessbok gaining ground on the outside.  As they head down the stretch, Simply Mas fades and Worth the Worry surges to the lead. Dr. Blarney and Grady make a late charge, but neither can overtake Worth the Worry.

The exciting finish doesn’t hide the fact that this is a strange race in an odd place. Only horses bred in Massachusetts are allowed to compete, and the $30,000 purse comes from a tax on casino revenues in the Bay State. But here’s the real kicker. The race itself is taking place in New York, not Massachusetts, at a track called Finger Lakes, which is about a six-hour drive from Boston.

The fact that Bay State taxpayers are financially supporting a horse race in New York is a reflection of the desperate times for Massachusetts thoroughbred racing—desperate times that have come about despite strong financial support from the Legislature.

The state’s 2011 gaming law affected the state’s horse tracks in two ways. It set aside millions of dollars annually in casino revenues for the purses of horse races, and it allowed tracks to apply for casino licenses. Penn National and Plainridge Racecourse, the state’s harness racing track in Plainville, teamed up and won the slots parlor license in February 2014. Plainridge has been on an upward trajectory ever since. Suffolk Downs in East Boston, the state’s thoroughbred track, teamed up with Mohegan Sun but failed to win the Greater Boston casino license in September 2014. Since then, Suffolk Downs has been winding down its operations. The track was sold to a developer in May and only six race days are planned for this summer.

Yet even as the number of thoroughbred races dwindles, the casino money keeps coming—an estimated $16 million annually, and possibly more once the gambling palaces in Everett and Springfield open for business over the next few years. On Beacon Hill, where lawmakers abhor unused money, bills are being filed to steer the casino funds to other needs—balancing the budget, promoting conservation, and on and on. None of those seeking to raid the casino funds set aside for horse racing come right out and say thoroughbred racing is dead in Massachusetts, yet that’s what their actions suggest.

The people who raise and race thoroughbred horses in Massachusetts are not giving up without a fight. They want lawmakers to let them use a portion of the casino money to study the feasibility of building a $150 million horse farm in central Massachusetts featuring a race track, an equestrian center, and an agri-tourism village. If the study indicates the horse farm makes sense (and they are sure it will), then they want to borrow against the casino revenues to finance the farm’s construction.

Their rationale is much like any other business coming to Beacon Hill for a hand out—give us some money and the benefits will trickle down in the form of jobs and tax revenue. The thoroughbred industry in this case is looking for money to build a race track to replace Suffolk Downs. With a track, the argument goes, the well-to-do people who purchase race horses (most of whom do it as a hobby) will have an incentive to breed their horses in Massachusetts, creating jobs for trainers, stable hands, veterinarians, and the like, while also preserving open space by supporting horse farms and agricultural operations.

The local horsemen have a powerful ally in the Massachusetts Gaming Commission, which is a bit ironic since it was the commission that dealt a fatal blow to Suffolk Downs when it awarded the Greater Boston casino license to Wynn Resorts. The commissioners say they don’t know whether thoroughbred horse racing can be resuscitated in Massachusetts; they don’t even know that much about horse racing. But they are urging lawmakers to give them the running room and the casino tax dollars necessary to pursue every avenue of support for an industry that has been a strategic priority for Beacon Hill. “We are the stewards of that strategy until someone changes the strategy,” says Stephen Crosby, the chairman of the Gaming Commission.

While lawmakers try to decide what to do, thoroughbred owners in Massachusetts are trying to hang on. One way they are doing that is by competing against each other in New York. The New York races keep their horses in shape and give them a chance at earning some prize money, but most of the jobs and other benefits of horse racing flow out of state.

“This is a stopgap measure because we need a place to race and train,” says Anthony Zizza, the owner of Plausible, one of the horses in the Finger Lakes race. “When we get a racetrack, we will be racing in Massachusetts.”

BET FROM ANYWHERE

I didn’t travel to New York to watch Worth the Worry edge out Grady. I watched on my computer. In fact, I can watch virtually any horse race in the world on my computer. I can also bet on the races using my computer, my phone, or other electronic devices.

It’s estimated that 35 to 40 percent of the money bet on horse racing in America is done through advanced deposit wagering, a system that requires the bettor to deposit money into an account and then place bets electronically drawing on that account.  Michele Fischer, a vice president at Sportech, a company that processes billions of dollars of wagers a year, predicted at an industry conference in March that the percentage of horse-racing bets placed via computer will rise to 60 percent, and possibly 75 percent, over the next few years.

“I’d say in the next year or two you might see an app where you ask your digital assistant like Siri or Alexa, ‘Alexa, please bet $5 on this track, this race,’ and she confirms your bet. It’s just going to grow,” says Fischer.

Online betting offers enormous convenience, but it doesn’t change the fact that gambling on horse races is slipping in popularity. Picking a winning horse is a lot more complicated than scratching a lottery ticket or taking the over or under in football, which explains why tracks that have enjoyed success have turned a trip to the races into a social event. The mint juleps and hats at Churchill Downs. The horse path to the paddock at the Saratoga Race Course in New York. These are places where the setting and the people are as big a draw as the betting.

According to statistics compiled by the Jockey Club, Americans bet $10.7 billion on horse races last year. That betting total has risen very slightly the last two years, but it’s down 27 percent from a decade ago. Other forms of gambling have muscled their way on to horse racing’s turf. Casino gambling took in $73 billion last year. The Massachusetts Lottery reported sales of $5.2 billion in fiscal 2016. And, as a point of reference, Wynn Resorts is spending $2.4 billion just to build its casino in Everett.

The bigger problem for thoroughbred horse racing is that there aren’t enough quality horses, and those that are available are running fewer and fewer races. The number of foals born to thoroughbreds in North America in 2015 was 22,500, which was down 41 percent from a decade before. The number of horse races is down 26 percent over that time period. Tracks in Los Angeles, San Francisco, and Miami have shut down, and many others have cut back their racing schedule. Santa Anita Park in Los Angeles County canceled some races for lack of entries this year; a $400,000 race in June attracted only three horses.

The number of thoroughbred races in Massachusetts has plunged from 956 in 2006 to 63 last year, and the number of race days has fallen from 103 to 6. The number of Massachusetts-bred foals has dropped from 50 to 9.

Many hoped casino gambling would save horse racing in Massachusetts, both by funneling money from a tax on casino revenues into horse race purses and by partnering casinos with tracks. That approach appears to be working at the Plainridge Racecourse harness track in Plainville, where Penn National won a license to open a slots parlor. Penn has invested in improvements to the property, and the bigger purses are attracting more standardbred horses, the industry term for trotters.

Plainridge is running 125 race days this year, up from 80 in 2014. Purses have increased from $2.6 million in 2014 to $7.4 million in 2017. Wagers have risen from nearly $7.6 million in 2014 to $18 million last year. And a $250,000 race open to trotters from across the country is planned for July.

The story at the Suffolk Downs thoroughbred track has been very different. The track’s owners and Mohegan Sun had pledged to keep the track open for at least a decade if they won the Greater Boston casino license, but the Gaming Commission chose Wynn Resorts instead. Six days of racing are planned this summer, but after that no one knows.

The future of thoroughbred racing in Massachusetts is up in the air. Some think the industry can stage a comeback, but others say it’s time to put a fork in it. Even among those who think thoroughbred racing can be revived, there is no clear consensus on how to do it, which is a major liability when asking the Legislature for help.

THE RACING FACTIONS

At the top of the horse racing food chain in Massachusetts are the heavy hitters who live in Massachusetts but have ambitions far beyond the state’s borders. Lawrence Best, the former Boston Scientific executive and OXO Capital founder, exemplifies this group. He spent $2.6 million in March to purchase two thoroughbreds at an auction in Florida. His horses are being trained at Saratoga in New York.

Then there is Don Little Jr., a former professional polo player who runs Centennial Farms in Beverly. Over lunch at the Myopia Hunt Club in South Hamilton, he explains how he assembles investor syndicates to buy promising race horses. One of his investor groups paid $375,000 for Kentucky-bred Moyne Spun, renamed him Wicked Strong, and raced him in the 2014 Kentucky Derby and Belmont Stakes.

Little says he tells anyone interested in investing in a race horse that the odds are not good. “It’s like buying a lottery ticket, but it’s a lot more fun,” he says. “They call it the sport of kings for a reason.”

Nationally, Little says, there are too many tracks and not enough quality horses, a mixture that he believes leaves little room for a new track in Massachusetts. “It’s going to be next to impossible,” he says.

The next rung down on the state’s horse racing ladder is occupied by the people who breed, train, race, and take care of thoroughbreds in Massachusetts. These are the true believers in the future of Massachusetts horse racing. They are represented by the New England Horsemen’s Benevolent and Protective Association and the Massachusetts Thoroughbred Breeders Association, and they are the driving force behind the horse park. They have lots of political connections and a lobbyist on retainer.

Arlene Brown, who with her husband runs Briar Hill Farm in Rehoboth, says time is running short for those in the horse racing business in Massachusetts. She says it typically takes three years from a horse’s birth until it can get on a track and make some money. That’s three years of expenses before any chance of income. With all the uncertainty over thoroughbred racing, Brown says, few are willing to make that investment without a better sense of what the future holds. In the meantime, farms like hers are struggling to survive. “We’re hanging on, but it’s not going to be long with all the ups and downs,” she says.

Most Massachusetts thoroughbred owners have scaled back their operations and some have shipped their horses out of state. For most of them, racing is their passion, not their livelihood. Still, there is money to be made as their horses compete for purses provided by casino tax revenues. Joe DiRico, an executive with Hub Folding Box in Mansfield, made $266,800 in 2015 and 2016, according to Equibase, a website that compiles information on horse racing. Theresa Horky, the founder of Pegasus Solutions in Franklin, collected $158,625 over that two-year period. And Patricia Moseley, the widow of former Suffolk Downs owner James Moseley, won $145,050.

Anthony Zizza is much further down the money list, but he is a big advocate for horse racing in Massachusetts. For Zizza, a physician specializing in geriatrics and internal medicine, horse racing is a family affair, with his young daughter actively involved. He says a state investment in a horse park will pay big dividends. “This is going to create jobs and fuel the economy in an area that needs it,” he says. “I don’t see how anybody can say no to that.”

William Lagorio, a horse trainer, is a maverick within the Massachusetts horse community. He broke away from the New England Horsemen’s Benevolent and Protective Association and formed the Massachusetts Thoroughbred Horsemen’s Association. He thinks the horse park is never going to happen. He criticizes the Gaming Commission for giving Suffolk Downs a license to host a few race days a year, a license that allows the track to simulcast races from around the country all year long and collect a slice of online bets placed in Massachusetts. And he is convinced the key to getting a track up and running in Massachusetts is to use state funds to build a new track or refurbish an old one and bring in a national track operator like the Stronach Group to operate it.

Suffolk Downs is on its way out of the live racing business, but it’s not going away. Chip Tuttle, the chief operating officer of the track, has made it known that he wants to continue simulcasting horse races from around the country at a restaurant/sports bar once the track is gone. He says Lagorio’s claim that the state should shut down existing wagering operations and consolidate them with a new track operator is “preposterous on its face.” Many states allow off-track betting at non-racing sites as long as fees are paid to the venue operating live races, he says.

“We have 100 people working at our facility year-round even without live racing and a significant population base from which to draw for wagering,” he says. “The horse park concept and continued simulcast at Suffolk Downs continue to work hand in hand.”

Then there are the standardbred horse owners, who always get short shrift in any discussion of horse racing. Standardbreds are not as popular as thoroughbreds and have far fewer fans, but they could play a key role in deciding the fate of thoroughbred horse racing in Massachusetts. The trotters are doing well under the existing regulatory system, and don’t want it to change. In short, they don’t want casino tax revenues that could be going to their business going instead to schemes for building a track for thoroughbreds.

“That would be an affront to the horse racing industry as a whole in Massachusetts,” says Peter Goldberg, who represents the harness racing community on a committee that decides how casino money should be apportioned between the two types of horse racing. “All the articles about horse racing being dead in Massachusetts, they’re just plain wrong. Horse racing is not dead in Massachusetts. It’s alive and well. Thoroughbred racing is having some issues, but standardbred racing is thriving. Everything that the Legislature intended is being done in the standardbred industry.”

CROSBY TO THE RESCUE

Stephen Crosby, the chairman of the Massachusetts Gaming Commission, is an unlikely hero for the state’s horse racing industry. He voted against giving the slots parlor license to Penn National, which helped resurrect harness racing at Plainridge. And while he recused himself from the Greater Boston casino license decision, he has no regrets about his colleagues issuing the license to Wynn Resorts rather than Mohegan Sun, which could have breathed new life into Suffolk Downs.

Yet now, years later, Crosby is pressing the Legislature on behalf of his colleagues for the authority to take full control of the horse racing regulatory apparatus and the flexibility to use the casino revenues flowing to the industry to rebuild an existing horse track or build a new one.

A bill filed by the commission unequivocally spells out the need to “to utilize best efforts to ensure that the horse racing industry be preserved and sustained for, amongst other reasons, the preservation of open space, the agricultural benefits associated with horse racing, and the creation and preservation of jobs and businesses associated with horse racing.”

The bill would give the commission the power to use 50 percent of the casino revenues flowing to horse racing for basically anything the agency sees fit, but presumably the money would go for a horse park study. It could also be used to finance a horse park, the development of a new track, or the refurbishment of an existing one. The bill would also give the commission full control of simulcasting licenses. Right now, the Legislature doles several of them out, including two to dog tracks that were closed by a voter referendum in 2008. The dog tracks simulcast and collect bets on dog and horse races from around the country, earning a percentage for their role.

Crosby characterizes the commission as a neutral party merely carrying out the wishes of the Legislature. “If the Legislature wants to change its public policy position, that it no longer wants to try to sustain the thoroughbred racing industry, that’s their business. That’s fine with us. We’ll do what they say. But until they’ve changed the mandate, we’re operating under that mandate,” he says.

He talks about convening meetings of all interested parties to determine what, if anything, should be done to rescue thoroughbred racing. But he says the commission won’t do anything until it has full regulatory control of the industry and the resources flowing to it. That will give the commission leverage to get all the parties to the table. “What I do know is money talks, nobody walks,” he says.

“Does this equine park make sense?” he asks. “I have no idea. I don’t know a thing about the economics of a racetrack. But if we were in control we could spend some money to do a serious feasibility study.”

Tuttle, the Suffolk Downs official, says the commission had its chance to save thoroughbred racing and didn’t. “We worked incredibly hard from 2007 to 2014 to save thoroughbred horse racing in Massachusetts and there was a clear path to do that,” he says. “The Gaming Commission chose to go in another direction. I have no doubt they are genuinely sympathetic to the plight of the horsemen and a lot of people who worked at our facility. But I also think that, realistically, there’s very little chance of horse racing coming back in Massachusetts in any substantial way. And that is due mostly to national trends beyond anyone’s control in this market. It’s the equivalent of bringing back print media and Blockbuster stores.”

Ray Paulick, the Kentucky-based publisher of the Paulick Report and the former editor of Blood Horse Magazine, has been covering the horse racing industry for nearly 30 years.  He is skeptical that a new thoroughbred track will emerge in Massachusetts, largely because horse racing is a low-margin, low-profit business.

“It doesn’t make a lot of sense to invest $100 million in a new race track,” he said. “I don’t know where they’d get the horses. There’s a shortage of horses, which is really a shortage of owners, throughout the country. Every track on the East Coast right now is having a hard time getting enough horses to sustain their program.”

As for the horse park concept, he thinks that’s a long shot. “I’m from Kentucky, so I’m familiar with the horse park there. And that place struggles even though it’s in the middle of horse country,” he says. “The idea that people are going to go there [central Massachusetts]—I don’t want to say it’s preposterous, but it’s a real long shot. It’s a pipe dream.”

The Legislature has been kicking the can down the road on horse racing for years, extending the existing fragmented regulatory framework one year at a time, never really making a decision. With so much left to do in the current regulatory session, the likelihood is that the status quo will prevail once again. But it won’t be long before no action becomes a decision that could be the death knell of thoroughbred racing in Massachusetts.