Panel sessions from the 2003 Joint Annual
Meeting of HTA, Thoroughbred Racing
Associations and Racetracks of Canada
held in Hollywood, Florida, March 13-14, 2003

Racing Today and Tomorrow, As Seen By:
OTB Executives

Mr. Dave Johnson: Many of us remember when the total handle was what was bet at the racetrack within the confines of the racetrack. This panel is about off track betting, and how it relates to various industries, various parts of our business. There has always been some off track betting that has been illegal, but let’s look at this phenomenon, off track betting, as a journey starting in the 70’s. Here we are now with most of the wagering being done not at the location.

Just to get a quick sense of what we are, I have asked the panelists to give a one minute as to where we are, where we are going, what they like, what they don’t like, good news, bad news. Let’s start with Drew.

Mr. Drew Shubeck: In Pittsburgh we currently operate four OTB’s, surrounding Pittsburgh about 50 miles and we are trying to develop two more before the end of the year. The original concept was about a 20 thousand square-foot facility that would handle between 28 million up to 45 million dollars. The new type of OTB we are talking about developing is a much smaller OTB. We will conserve capital but we will still get a lot of bang for the buck.

Ms. Mea Knapp: Suffolk OTB has fourteen branches in a suburban county about 22 miles from New York City. In addition we run a telephone betting operation for a neighboring county as well as ourselves. We have about $205 million worth of handle, which represents 10 percent of New York State's off track handle. The largest part of that is in New York City.

Mr. Ray Casey: I am the President of the New York City Off Track Corporation. New York City OTB has been around since the 70’s, approximately 30 years. Currently we do a little over a billion dollars in handle every year. Our projection this year, with the weather, that is my new curse word for this month, will probably only be a billion 25 million which is a little shy of some of our earlier projections. We are still bouncing back from 9-11. Unlike some of the other OTBs in other locations around the United States, New York City OTB was at the epicenter of what happened. We needed to close down a number of branches for an extended period of time. The branches that we have been able to get open are still probably running 10 to 15 percent below the pre-9-11 time frame. Unfortunately, there are less people around that area of the city even today. The handle is creeping back up, but we have a bit of a path to go.

We have approximately 75 locations around the city of New York. We have a mix of the traditional OTB parlor; a number of teletheaters where we integrate other forms of entertainment into the OTB product, a number of what I call public/private partnerships with various restaurants. That is primarily the area where I see growth. We have an ability to save on capital, but also return a fair amount of money to the OTB Corporation. Better yet, though, is it our best vehicle to reach new fans, whether they are a harness fan or thoroughbred fan, those fans are coming into these establishments to eat, drink and hang out and it gives us an opportunity, in a very lively environment, to present the racing product. That is one of the places we are growing handle with a new market share, as opposed to our customers having more opportunities to wager.

Mr. Michael Connery: I’m the President of Capital OTB, which is in Albany. I represent 17 counties that are mostly rural. In our area we have 78 facilities and one of the new things we have is called Easy bets, which we will probably get into. I am the new kid on the block; I’ve been President only four months. I come right out of the counties, I don’t come from the horse racing industry, although I was born and raised about 55 miles from Saratoga. As to the future, one of my big objectives is to let the counties know just exactly how much good OTB can benefit them in the years ahead.

Mr. Johnson: Let’s get right to one of the most interesting statistics. Mea will give us an overview of a teletheater in her Suffolk district that handled $50 million from one building and the how handle was up nine percent.

Ms. Knapp: The OTB’s come from a very different perspective than most of the track owners and the horsemen. We are all about money and handle. The issues of drug testing, jockey safety, track conditions, we don’t deal with them on a day to day basis. They do form the basis of our product.

What we concentrate on is handle and profit. The teletheater is a building that opened in 2000. It replaced a building of similar size, but it has managed to double the handle. When Ray spoke about introducing young people to racing in the restaurants, the teletheater serves some of the same function. It looks like a casino. When people walk in, that is the first thing they say.

You walk in the front door and in front of you on a 19 foot high wall is an 8 x 10-foot screen. It has two 6 x 8-foot screens on either side of it and then the entire wall is covered with 50 inch TV’s. When people walk in the front door, the first thing they see is horses running on a very large screen. They see luxurious carpeting, wall coverings, a restaurant and bar, there are at least two hostesses who greet them. There is a $2.00 admission fee, because it is a surcharge-free branch. The tellers who take the bets are in uniform. The two greeters are in matching jackets. It does have a casino atmosphere. You can sit at a betting carrel and order food and drinks brought to you. In addition it does have what is known as a Winner’s Circle for the bigger bettors. That is a very substantial part of the business.

Mr. Johnson: Ray, there are people that say OTB is simply a delivery system. Are you a real part of the horse racing industry or are you just a delivery system?

Mr. Casey: Let me answer that question in two ways and just pick-up on something Mea said about drug testing. The way in which I view the horse racing industry, is, as an industry. At one time, probably 30 years ago, everything began and ended at the racetrack. You raced horses off site, but everything happened at the racetrack. I look at the horseracing industry, it has sort of been pulled out on a string and it’s on a continuum. The issues that relate to drug testing, and all the issues that relate to trainers, jockeys and regulators are just as important to a horsemen as they are to the OTB.

For the industry to remain vibrant, everyone has to do a good job on the things they are focusing on. Clearly, we at the OTB’s, count on other people in the industry to focus on those issues. The issues that we focus on are, once that product has been created, how do we sell it to the fans. Racetracks have always been in the business of selling their product and the simulcast signal is one of the big vehicles for doing that and some people do a good job and I’m sorry to say some people do a terrible job. Everyone needs to focus on the ability to sell this product. When we look at the trends in handle at New York City OTB, through a number of different initiatives in the past, we have been able to bump up handle.

We have done a very, very good job at giving opportunities to our customers to bet more, to churn more money back into the system, to have different kinds of opportunities, to bet on exotics. And we have done a very good job of that. But that is a zero sum game at some point. You need to be able to bring new fans into the fan base.

One of the ways an OTB can do that is to be able to sell that product in a creative way. You need to work hand in hand with the racetracks. Since I took over OTB, I spend most of my time with my simulcast coordinator telling him to call a track and trying to talk about a cross promotion to do at a track, talking to a track about their simulcast signal. We have some tracks that don’t pay attention to those issues. They need to understand that in evaluating their signal at their track there is a focus on that particular signal. But when it comes to an OTB, I could be bringing in nineteen different signals at one time and a bettor looking at ten or twelve different screens need to clearly be able to identify his track that he is betting on. He needs to know that when that race is going to come up that he spent the night before handicapping, he wants to know exactly where that is and where it is going to appear on whatever facility. The OTB’s need to be able to balance all the product so that handle is distributed fairly evenly and the customer can choose what they want to bet on.

The short answer to the question, how the OTB’s are apart of the industry, they need to work with everybody on the continuum, but we need to focus on what we do. That is the interface with the customer that is trying to bring the new customer in. We can’t do it without the racetracks. But, to some degree the racetracks can’t do it without us. That may be a little controversial, but I firmly believe that together we have a lot of potential left in this industry.

Mr. Johnson: Drew Shubeck, Ray just talked about rewarding customers and bringing in new customers. At the Meadows, how do you reward, how do you bring in new customers?

Mr. Shubeck: At the Meadows, we use MEC player rewards. It is a Magna owned track and we have a player tracking system that rewards players on a sliding scale. It starts out very small at about an eighth-of-one percent, and rides up to three percent for our players that wager the most money in our facilities.

Mr. Johnson: Does an eighth-of-one percent make a difference in rewards?

Mr. Shubeck: Not really, but the purpose is to get the people signed up at the track and the OTBs.

Mr. Johnson: How do you get the new folks to come out, how do you let them know?

Mr. Shubeck: Getting new folks out is a problem. This past year we devoted some money to marketing, we didn’t have any in the past. We get our commercials on Fox Sports Net in Pittsburgh. We do have a twelve hour a day TV show that right now we are showing HRTV on, which is a Magna owned product that is produced at Santa Anita during the day. We do show our live races on cable TV in Pittsburgh, to about 850,000 homes.

Mr. Johnson: We have been talking about what has happened. Michael is here to look in to the future. Get the crystal ball out and tell us what’s in store.

Mr. Connery: I just want to add to what Ray said, like this panel, doing this and talking in front of the horsemen. We do have to come together, in the future. They have to understand us and we have to understand them. We can all make this work.

Ironically, last week I went out to Morrisville College, that’s the Equine Center, one of the first ones in the nation. That’s where they teach the backstretch. And the horsemen―there was a group of mostly young ladies that are attending that class, not a big class―were asking us how do we get the young people to come.

We are lucky; our teletheater is about 56,000 square feet. It has all the same amenities that Mea said, the big screen and what have you. But that is incorporated, we have the teletheater but there is a surcharge on that. But right next door we have a big area where we have the telebranch, where just everybody can come in. It is nothing more than a gigantic Easy bet.

But this coming week-end, we are going to have―it’s advertised, promoted, everything, on some of our big screens―the NCAA Tournament. Not that we aren’t going to run horseracing just the normal way on the big screens, but we are going to get a whole new generation in there that is going to learn about the horseracing industry. Also, upstairs, next week we are going to have handicapping courses. What we are trying to do is to look in to the future to find a way that we can increase our handle that will not only help our counties, but will help the horsemen and everyone involved. That’s the name of the game; we have to get our handle up.

Mr. Johnson: One of the roadblocks that might be in the way is some legislation. When we were at La Costa several years ago, probably half the audience was smoking as we were sitting in these seminars. Nobody is smoking in here today and it’s because of the legislation. Mea, what is the situation on the border between Nassau and Suffolk counties in New York?

Ms. Knapp: Smoking has become an enormous issue in New York State. I was speaking to somebody from California yesterday, who assured me that in California it eventually worked out and everybody is happy. But then he added that in California you can step outdoors were it is between 50 and 75 degrees at most anytime. Anybody who has been in New York this winter knows that’s not the case with us.

New York State as a whole is looking at smoking legislation. But most of the counties and the city of New York have pre-empted the state and passed legislation. Long Island, with Nassau and Suffolk counties, two very large suburban counties, provides an interesting example. In Nassau County, which is our neighbor, their smoking legislation went into effect on March 1st. When I got the numbers from March 2nd, it probably took a day for everybody to realize, one of my border branches increased the handle by 137 percent. Since nothing else special happened that day, I’m going to assume that is pretty much everybody in Nassau who wanted to smoke came to Suffolk that day. We in Suffolk, though, will have no-smoking legislation very soon.

We had an interesting change in the legislative thinking. Years ago our legislature passed a law that said if you built a totally separate ventilating system, you could allow smoking in the same building, completely separate from the existing system. We went ahead and did that in our branches. They have recently passed legislation that said they have changed their minds; you’re not going to be able to allow smoking. There is a quirk in the law, we think, we fall under. So we are not going to have to fully comply, until somewhere around 2005 or 2006. Clearly the wave of the future in New York State is no-smoking.

Mr. Casey: Actually I can add to that. The experiences in New York City have not yet completely started. New York City has had an anti-smoking bill in place that affected all the OTB’s a number of years ago and as a result of that legislation, the New York City OTB’s built separate smoking areas within all their branches. The legislation that will take effect on April 1st, basically goes a step further, and now eliminates all the capital investment we made in separate smoking rooms. All of the OTB’s will by law be required to be smoke free as of April 1st. New York City OTB has been taking some steps with the legislature, to discuss with them the possibility of some kinds of exemptions in certain cases, but, the direction that the city is going is to a smoke-free environment.

It is important to note that these are not anti-OTB or anti-business initiatives. When you look at some data there are issues that relate to second-hand smoke for employees. Even where you are running a track in your state and they pass an anti-smoking bill and you may have a view, as some in my company did, that everybody in the branch smokes so we aren’t going to have a problem. All of the labor groups that work at that branch were on the phone in a heartbeat to remind us that the law was currently changing; they wanted us to take very aggressive steps to prevent smoking within those branches.

We have some infrastructure in place within security to be able to deal with some of those issues, but we believe there is going to be a handle impact. Time will tell whether it is a permanent impact. We are glad that we have some infrastructure. Something we may want to touch on later, Dave, is some of the TV networks. Clearly people are not going to go so far to prevent you from smoking in your house. We’re able to reach eight million customers in the state of New York through our cable network. It will still impact handle, because for a lot of our customers, especially in some of our high roller areas, betting is not just betting, betting for a lot of customers is a social event. They don’t want to sit in their living room by themselves and win. Now, somebody who is betting professionally and betting for a profit, yes, well I guess he is sitting; his office can be his living room. But for the most part, for our really good customers, they very much enjoy hanging out with two or three of their friends. Sometimes I think it is better that when they win a race, that it’s not the money they win, it's that the guy next to them didn’t win, and the mileage they get out of that. If they want to smoke that is going to create an issue for us.

Mr. Johnson: We were visiting with Bryan Krantz from the Fair Grounds, and learned this is not just an OTB situation. He told us about when the old Fair Grounds burned down that the no-smoking thing was paramount. He has a no-smoking balcony; it is easy to get outside at the Fair Grounds, but this is a major concern. He also let told us about what he thinks is going to happen when slots come into New York.

Mr. Connery: Yes, and in some ways he is not too optimistic as far as the tracks. It all depends on the location how it affects neighbors and other tracks. But to add to the smoking thing, we just heard from Suffolk and New York City. Up our way it will probably end up, unless the state intervenes, a legal nightmare for my group, because Albany County, a connected county, is proposing no smoking. But I can never see it in, Franklin and Essex and a lot of those other counties. So we’ll be running around as to which parlor, maybe we can benefit as Mea said; we can send people up next door.

Mr. Johnson: We have been talking about New York, what about your venue in Pennsylvania, Drew?

Mr. Shubeck: In Pennsylvania we subscribe to the separate but equal theory. We have separate areas for smokers and separate for non-smokers. The biggest problem is the employee problem. That can’t be solved; we are wide open to litigation from waitresses, barmaids, bartenders and mutuel clerks. We do have a barrier; we did at the Meadowlands that you shouldn’t smoke at a mutuel clerks' window. It is observed by the majority of customers, but it is an on-going problem for us.

Mr. Johnson: Let’s move to the television situation, Ray, give us an overview of what is good news and bad news, where do we go from here?

Mr. Casey: What we do at New York City OTB, we roll out our simulcast signal as well as television, broadcasting, programming on two cable channels throughout New York City. Those cable channels reach a potential viewer ship of approximately eight million people. It is Time Warner and Cablevision and we roll out on both. We roll our signal over some channels. One of the benefits of being in New York City, emphasis on City, OTB, you have use of some of the cable systems that are allocated to the city of New York, so we have one channel, Channel 71 in New York, that we have 24-7. We have another channel, Channel 73; we have on a part-time basis.

Just recently, I was able to negotiate a new deal with some of the cable providers in the city for some more cable time on channel 73 and I primarily did that as a result of a meeting that I had with Barry Schwartz. When we first sat down, when I came into the industry after we finished talking about NYRA and some of his horses, we talked about the other thing Barry likes to do which is wager on various products from around the country, as well as the New York product. One of the things that bothered him and he introduced me to some other players down at the track and it bothered them, is, we quad the screen. We quad the screen for a business reason; if we show two tracks on the screen, we will do X amount of handle and when we quad the screen we show four signals, we do incrementally much better handle and profit, when we do that. Bottom line.

What happens, though, is that the customer has a little trouble sometimes reading the odds and it becomes a bit of an issue. So one of the ways that we tried to solve that was to try to get more cable time when we had a lot of very good products showing at the same time. So we were able to shift some of our product to a secondary channel and then only show two signals at one time. The races, when they go live, all go full screen, so as soon as we start getting down close to post, which has changed in New York, but I won’t get into that, we will go full screen and show that signal.

On Mondays and Tuesdays, when New York is basically dark, we do other kinds of programming, which is where Mr. Johnson―if I called it a handicapping show, I would be underselling it―does a well-rounded horseracing show, with handicapping as a part of the show.

Recently we have started to focus on using the television show to bring new fan base into New York City. One of things that we found out when we did some focus groups was that people were intimidated, everybody in this room knows about certain kinds of wagering. So we have started to put fifteen minute segments together that we call Behind the Game. We go in and do a segment about how they clock horses. We even did a segment on a blacksmith shoeing a horse.

We take little clips in a very ‘how to’ way and take customers and bettors behind the scenes and into the backstretch to talk about the things that happen there, so they understand the game better than they did before. That has been very, very successful. It has been driving viewer ship to our programming during that period of time. TV is an integral part of selling our product in New York City.

Mr. Connery: We do the same thing in our seventeen counties. We have an agreement with Time-Warner. It goes out on channel 12, 24-7 and that is one of the keys. When I first walked in there, our TV station was very under- utilized. To the advantage of horsemen, to the tracks and to the promotion of the industry, you get out there. The first time we cut it off or threatened to do something like that, people screamed. I never knew that many people visualized, took advantage of the TV opportunities that we have to offer. Ray described it best, it still is underutilized, but it’s there, available, and it is really a good promotional tool for the future.

Mr. Johnson: Drew might be able to give a little bit of an insight as to how important that television channel in New York is, because when Mayor Giuliani was trying to sell New York City OTB, one of the bidders was the Magna Corporation. I understand that one of the important parts of that puzzle was television.

Mr. Shubeck: Most definitely. We have cable TV distribution to about 850,000 homes. The channel is available to us 24 hours day, but between midnight and twelve o’clock noon we go the infomercial route. So if you want to get a rotisserie chicken, or a thigh master, that is the channel you go to. After that, starting at noon we start running HRTV, which is a Magna owned product, and we feature Magna owned tracks and various things we can get in, like Fair Grounds and other tracks. Currently we can’t use NYRA or Churchill because of their TVG deal.

Mr. Johnson: Do you think that will change?

Mr. Shubeck: I hope so.

Mr. Johnson: Mea, what is the situation with television in Suffolk County?

Ms. Knapp: We run the account wagering for Nassau and Suffolk counties. It is a substantial part of both counties business. Combined we do about $460 million, probably close to fifteen percent of that comes in through the telephone room, however, we as a combined entity, have been unsuccessful in getting more than basically just the NYRA sponsored channel, which runs some days up until the bridge but not always. So one of the most difficult parts for our customers is the lack of consistency. It does say something about how important it is that we do as well as we do with the product we are able to offer at the moment.

Mr. Johnson: How do we grow the handle and the business with youth? How do we handle our age groups now and how do we improve it?

Mr. Shubeck: One of our ideas with going into an existing sports bar is to go after their existing clientele and show them that wagering on horses isn’t a sinister thing to do. It’s a family oriented thing. If the people come into there and can be subjected to some thoroughbred and standardbred racing, hopefully they have the eagerness to go out to the Meadows.

Mr. Johnson: Hasn’t the lottery changed a lot of thinking about gambling. I remember growing up in St. Louis, and because my family went to the racetrack, we were almost like criminals. But now wagering, whether it is through the lottery or whatever seems to have given an imprimatur to that.

Mr. Shubeck: There is no question. The lottery is everywhere. They have vending machines; you can buy scratch off tickets. On-line wagering is in almost every jurisdiction now. It’s everywhere. It’s underestimated what it has done to thoroughbred and standardbbred racing.

Mr. Johnson: Mea, what about the age and youth situation there?

Ms. Knapp: That is probably one of the biggest challenges facing the horse racing industry, the age of the people that you find, certainly in our OTB locations. I talked about the casino atmosphere in our newest facility, and we do get young people and more importantly more women in that facility than we do in any of our other facilities. That is a difficult issue and particularly for harness racing because a lot of the young people I see do tend to be more flat players as opposed to the harness players. That is really something the industry needs to address.

Mr. Johnson: Ray?

Mr. Casey: The industry has almost skipped a generation in New York. That is not good. It is different in other parts of the country, I had a recent trip to Kentucky, and one the things that impressed me was in Kentucky it appeared there was greater cross section of age groups interested in horse racing, than exists in New York. The question is how do you hop-skip over a particular generation and try to sell to a new audience. Integration with other kinds of sporting venues, integration with other kinds of entertainment opportunities is really the key to being able to present a horse racing product and have it become interested in by a younger group.

You also have to pay attention to how that product is presented. I have been talking to other people and other segments about ways in which you can present the data, new kinds of betting machines. The environment that Mea talks about, the casino environment, works. It doesn’t necessarily always have to be a casino, but the society that we live in, just look at our kids, put on a PlayStation, give them a control and they are good for a couple of hours. It’s instant gratification.

Now, I’m not saying we sell a horseracing product to a child, but there are a lot of people who are twenty or thirty something that have a GameBoy at home also. What they are interested in is graphics, getting an instant reward. In the race track environment years ago you had half hour between races, at a track you have live product every 30-35 minutes. But you also have simulcast opportunities. One of the benefits that simucasting has brought to the industry, you have an opportunity to play every five minutes or better. Those are all valuable things to try to grow to a younger audience.

It’s important to try to reach a female audience. Looking at this audience today, if this is a cross section of the horse racing industry, we still have a problem. There are 200-250 people in this room. I’ve counted six-eight women. We all need to do something about this, women are 50 percent or better of our population and we need to do more to bring them in to various aspects of the sport.

Something that we are doing later this month is a system wide ladies’ day. We are giving free money and vouchers to any women that come into any OTB branch. We are doing mystery vouchers from two to a thousand dollars, system wide over 75 locations, a ladies’ day. It is going to culminate in one of our teletheaters where a lot of women from business and broadcasting are going to come in and there will be a lot of handicapping seminars to try to introduce ladies to the sport. I’m glad that we are doing this, but it is something I'm sad we didn’t do earlier. I'm going to do more of it because that is what I can do as a distributor of the product. But I think there are other things the industry can do. So it is not just you, there is another whole group out there who are just as old as us, and there is potential market share for everyone.

Mr. Johnson: Michael?

Mr. Connery: One thing I do want to mention is the sports bar. Up in Capital, we have already begun investigating that market. We call it Easy bets. We actually go into the sports bars; they make their application to us as the private sector. When somebody makes an application to us and they fulfill racing and wagering qualifications, they can get a permit to run an Easy Bet. At the Easy Bet, when you walk in you have the SST machines, TV’s through our simulcast, they can get the racing and it has proved to be one of the most popular. In our gross segment, it doesn’t come near our overall handle, but last year we started out at $5 million and we are up to $12 million in handle already. It is very well regulated as far as racing and wagering.

Mr. Johnson: Have we skipped a generation?

Mr. Connery: I agree with that. We all have one objective and that is the industry. One of the things we need to work on is the image. That was a big problem for me when I first started out. When you go out to sell our product, how do you overcome the negative image of our industry; the back room politics, legislation? It can be corrected and these are the things we have to overcome.

Mr. Johnson: What about legislation changes and slots, the impact?

Mr. Bob Seefeld: I'm with EQTAH, Andy Stronach’s company. I live in California, I have a friend who grew up on Long Island and they would go to Roosevelt on Saturday night, the Cloud Casino dining room. You had to pay the maitre d’ to get in. This was a husband and wife thing. There is almost none of this anymore. I can’t imagine a husband and wife going to an OTB and spending time there and making it a social event, let alone a date. If I took a date to an OTB, it would be my last date with them. How do you get this husband and wife date thing back?

Mr. Johnson: You are thinking of an OTB as a parlor, rather than the facilities that are now available, which are basically nice restaurants.

Mr. Seefeld: There are walk-ins, where there is just a scene that looks like something from a bad movie. Then there are the teletheaters, which are pretty nice, the Winner’s Circle, these are nice places where you can get dinner. But I wouldn’t take a date to the Winner’s Circle probably unless I’m seriously, seriously interested in gambling.

Mr. Connery: He is absolutely right. That is one of the first issues, when I walked in the door and you have 70 something parlors. It’s like economic development; the first thing you have to do is take a look at is exactly what you have and how you can enhance that before you can go on. I’m an old thoroughbred guy and I walked in to some of these parlors and I was aghast at what I saw and we are working on that.

Ms. Knapp: I used to go to Roosevelt on dates. To some extent the building I talked about serves as some small substitute. Truthfully you have to have an interest in horse racing and betting to begin with to have an enjoyable Saturday evening. What is missing are people who have little interest in horse racing, and that is the way I was as a nineteen, twenty year old, when I used to go to Roosevelt. That is where the tracks need to start pulling in people. My son has a house in Saratoga and I was surprised at the number of families and college age people that I see at Saratoga Harness. They have a nice restaurant, a good family atmosphere and if there is a future of bringing people in on dates, it probably is one of the harness tracks that are open on Saturday night, because in New York State we don’t have any flat racing at night.

Mr. Casey: I will just add that it is a very good question and a good observation. But I would like to get back to my continuum. In the continuum of racing everyone has a job to do. I don’t know if you are ever going to get someone to come and bring their wife on Saturday night into an OTB for a date. In a number of our restaurant partnerships, a lot of people go there on dates.

We have a place down by the water right on the beach that is called the Irish Circle that we opened up at the Rockaways recently. The handle took off like a rocketship during the summer, because everybody is in there and everybody is on dates. One of things that got us interested in new machines being developed was standing back and watching customers. I could see the guy betting and I see the lady that is with him that is very intrigued by what he is doing. But no way is she going to try it. So you need to have somebody there, spend time on customer service, someone who can walk up and show customers how to do it. Look how easy it is. Then before you know it they are both wagering.

There is ability in the structure, some place on the continuum to do that. You can do it a little in the OTB’s. But where you really want it to happen is at the racetracks. If you drive interest at the racetracks and people go as a family outing and there is entertainment there, they go there on dates. When it is not convenient to go to the tracks, they are going to come to the OTB. They are going to come to the OTB's during their workweek and when they are hanging out with their friends. The things that benefit the track also benefit the OTB. The interest that is maintained when you can’t get to the track is maintained by the OTB and on the weekends they go back to the track.

Mr. Johnson: Drew, do you consider ‘the date' as part of your plan?

Mr. Shubeck: Yes, we do. It’s like any other retail; location, location, location. You have to have a great spot that has a well lit parking lot that is clean. That is what you need to get people to come in the door. If you are going to rent four dollar per square foot properties behind a strip mall, you will never get those types of people in there. To get the foot traffic you have to be front and center. You will always get the hardcore horse player; he will find you where ever you are. But if you want to grow your business with this type of customer you have to be front and center.

Mr. Connery: That is a good point. They will find you wherever you are. You have to remember we haven’t even touched on our phone-a-bet. That is available to those people who want to make a bet right on their own television. They can almost make their own easy bet. Then you are going to have the Internet. Sooner or later you can bet we are going to able to bet over the Internet. So these are all the things everyone has to take a look at on how you are going to compete.

Mr. Johnson: So you introduce them via television and then you put them in the phone betting?

Mr. Connery: Yes, they can get a card and just call up, and if they have an account, they can make their bet through the system.

Mr. Johnson: But how do you get them interested in it? Is it true television?

Mr. Connery: The television screen or if you have some hardcore gamblers they know about phone-a-bet. Phone-a-bet is a big share of our handle.

Ms. Knapp: This summer there is going to be a new movie with Toby McGuire, who is popular among young people. You may see some opportunities to grow interest in horse racing as a result of the movie about Seabiscuit.

A speaker: What about how certain tracks are starting to redefine when the windows close? What is the OTB’s take on what is post time, what is wagering off time?

Mr. Casey: After the pick six scandal, post times, the way you cut-off betting, changed. From a national stand point the problem is everyone is handling the cut-off time differently. We need some kind of standardization among our associations as to how we handle any issue. This particular issue, the solution is in technology. We shouldn’t be cutting off betting, off site and at the track at different times.

There is a group of people who are working on it, I received a phone call from a working group some people in NYRA, the New York State Racing and Wagering Board, which was intimately involved in the Pick Six scandal, they have a lot of first hand experience. As well as the work the NTRA, Ernst & Young, and Giuliani Partners is doing. The New York State Racing and Wagering Board hosted a seminar upstate a few days ago. We committed to putting a working group together, at least in New York, to try to solve the issue from a technology standpoint, so that we can get as close to real time as possible. So whether you are off site or at the racetrack betting is the same time. I really firmly believe that we are now all one industry. We all can help each other. We need to make these decisions together.

Ms. Knapp: Ray has touched on the reality of the disparity in times, but Mike mentioned image. My concern from the change is that our customers perceive this change with a lot of cynicism. That is, my big customers have said to me, oh that is just typical racing, when asked if they care. This is a response to the pick six and it has absolutely nothing to do with pick six. “The tracks just did it because they wanted to do it.” That is bad for the industry, when customers see us with this much cynicism. As well as the reality, the perception needs to be addressed and needs to be fixed.

Mr. Connery: The continuity is our big issue. When this all took place, I can tell you when we had drop in handle, it wasn’t because of the change in schedule; it was because of the weather. All the way around, it didn’t affect us at all.

Mr. Johnson: Drew, you have the live racing at the Meadows, but also the off track betting. What about this unevenness in post times?

Mr. Shubeck: I feel that the entire network should close at the same time, regardless of when it is. With the current state of technology it is probably best to close when the first horse loads in thoroughbred racing and when we get to better technology then we can go when they break.

Mr. Johnson: Jamie?

Mr. Jamie Martin: You keep alluding to technology and the jump from generations. One of racing’s big problems is the technology gap. We haven’t kept up with technology. We are just on television and that technology is a little old now, we are just now getting that together. You talked about the Gameboy and using hand-held things, we are not even close to that in the business. On the other side of the technology is perhaps introducing different types of avenues, of wagering, that might bring more women into the sport.

The old cigarette, sit down and look at the Racing Form and handicap all day and go to the self-service terminals, that hasn’t seemed to attract women. Maybe there is something out there that would. I would like to talk about that and about technology again, the cycling of odds.

At the roundtable last week, there was talk of moving the cycling of odds from 60 down to 30 maybe even down to 15 or 10 seconds in the future. So when you have a horse that is five to one in the gate, that doesn’t necessarily go off at five to two because you are not looking at the odds a minute ago.

Mr. Johnson: Jamie you mention technology and that means computers. Do you believe our sports, thoroughbred and harness, travel very well on the computer and how much do you spend betting horses and then watching the races on computer.

Mr. Martin: I’m in a home office all afternoon and I have it on all the time. I'm watching and I have my accounts and Youbet and others and it's fabulous. The streaming video and advent of the cable modem, DSL, to be able to deliver a good picture, which is getting better all the time, with the help of racing entities that are sending it, is phenomenal. Again, it is not well promoted to the masses yet, and that technology can still be advanced. This might also be a place that we can re-address the women issue.

Mr. Casey: I think he is right. If the industry and the regulators get to the point where Internet wagering platforms are legalized and they can be regulated appropriately to keep pirates out, and we solve all the technology, if enforcement catches up with technology. That is on the continuum too, is enforcement.

But regulation has to keep pace with it too. Once we get to that point, and I don’t know if we are there yet, if we do get there, Jamie is right that will help our market share on the women’s side of things because I will tell you the experiences that I have with my wife, how she shops. That is the one thing about the computer that gets me. I talk to her all the time and I ask why does she buy so much stuff on the Internet, because there are boxes always coming to the house. She says, “I don’t have to talk to the man.” What does that mean? “I don’t like to have to get on the phone and talk to somebody, interact with them, have to decide all these things. I like the platform of the computer. I like to be able to sit there and browse things at my leisure, check things out, and order what I want.” She is more comfortable doing it, so she does it more. My wife can’t be alone, at least I hope not. That same platform, that attitude, if we are able to introduce wagering on the Internet, I think Jamie is right; we will be able to sell the product more to a younger audience as well as ladies.

Mr. Connery: In my four months, I have come to the conclusion that there is a future, but we have to do it together.

Mr. Johnson: That is a good way to end. If there is a future, we have to do it together.