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

Views of Racing, 2003

Mr. Stan Bergstein:  This morning we are privileged to have an outstanding panel of racing leaders in this country.  They are people known to all of you, but I will go through the introductions briefly.  Bernard Goldstein is the chairman and CEO of the Isle of Capri Casinos. They operate 14 casinos in North America, as well as Pompano Park Racetrack of which he is president; John Long is executive vice-president and chief operating officer of Churchill Downs; Jim McAlpine is the president of Magna Entertainment; Chris McErlean is vice-president and general manager of the Meadowlands and president of Harness Tracks of America; Barry Schwartz is chairman of the New York Racing Association; and David Willmot is chairman, president and CEO of Woodbine Entertainment Group.  This represents a spectrum of the power holdings of the racetrack community in North America. 

In 1980, Daily Racing Form asked 100 people in racing, including me, to project what they thought would be the situation in racing 20 years from then, or the year 2000.  I lucked into writing at the time that there would be a new breed of horse, 15 inches high that would be racing across television screens across the country.  Because of that projection, I’m going to ask our guests today, as a way of getting initial views, to give their views of what the next 20 years hold for racing. Barry, would you like to take that one? 

Mr. Barry Schwartz:  That’s a tough one.  I’m more concerned about what’s going to be in the next two or three years rather than twenty years down the road.  It’s very, very difficult to project. 

Mr. Bergstein:  Do you think technology is going to terrifically change the sport, or do you think the structure of racing basically will stay the same? 

Mr. Schwartz:  Technology is changing the sport as far as players using more computer programs to bet. That was discussed at great length yesterday.  It’s something that has to be looked at, and we have to figure out exactly, what we want to allow and what we don’t want to allow.  As far as racing changing, with almost every racetrack in America either getting or trying to get slot machines, I think the whole environment around racetracks is going to change.  I think they’re going to look more like Woodbine, I think they’re going to look more like some of the casinos in Vegas that have retail and shopping, they’re going to have events going on. Here at Gulfstream they’re doing concerts. We’re talking about ultimately having a major complex at Aqueduct where we could have championship fights outdoors. They used to do that sort of thing in New York, but this would be linked to the racetrack.  I think that if we build our slot casinos properly, in conjunction with the racetracks, we can certainly enhance racing, and we can raise enough money to make purses very, very large, and continue to attract people to invest in the sport. 

Mr. Bergstein:  Jim McAlpine, how do you see the future? 

Mr. Jim McAlpine:  I didn’t think I’d disagree with Barry so early in the session, but actually I’m delighted to be here, and we really do respect one another.  We don’t always agree with one another; I have to say the same thing about David over here, last year he chastised me because I missed a panel with him, and that was the day that I was in Texas negotiating with the vendors for Lone Star Park, and I couldn’t tell you guys why I couldn’t be here. 

Mr. David Willmot:  Excuses, excuses.

Mr. McAlpine:  That’s the straight goods. And John and his company are also are good friends of ours. 

Mr. Bergstein:  We forgave you long ago, and we’re happy that you’re here with us today. 

Mr. McAlpine:  Thank you very much.  I have a very, very positive view of our industry.  We have a lot of things wrong, but we have a lot of talent to fix them, and as I look at the industry today, at the big picture with 15 billion of handle and you ask me what could it be by 2023?  I think we should be shooting for 50 billion.  It’s out there.  We have a number of things we can do.  We have to deal with this issue of rebaters.  That could be $2 billion worth of business we’re not getting our share of.  We have the issue of advance deposit wagering.  That could be a 3 to $7 billion business, in my opinion, over 20 years. 

There are issues in Florida; Florida is a challenging state in which to operate, because basically you have four horseracing licenses in the state, and 24 pari-mutuel licenses owned by people who basically represent us as an OTB network.  They’re not doing the job that we would do as racetrack operators trying to develop our product in our market.  So there’s huge potential in a state like Florida. 

Similarly, there’s great potential in a state like California.  California has a structure of fairs that have OTBs in addition to their fair meets. Some of the fair operators, they’re great people, but they want to have expositions, they want to do things related to other animals. We have an opportunity in California to really grow the business. 

In the rest of the country, there’s huge growth potential if we get to a level playing field with other entertainment operators, not just other pari-mutuel operators or not just other gaming operators, but just plain entertainment.  We need to be able to open in the evening, if that’s when we want to do business and when we can get the most customers, we should be able to open in the evening. 

And then there’s the international market.  If you look at the international, $85 billion is bet on racing elsewhere in the world. About $700 million of that comes into the U.S. pools.  We have to be going out after five to ten percent of that market and trying to bring that betting dollar into North America.  We have the best product in the world.  Let’s figure out how to get it out there.  So I think we can be a $50 billion industry by 2023, and I hope we’re all here to see if that comes true. 

Mr. Bergstein:  I hope your projection is correct.  John Long, as a futurist, how do you see racing from Churchill’s point of view and from your own? 

Mr. John Long:  As I look out that far, I think simulcasting will play a much, much smaller role on a day-in, day-out basis.  If you believe that one or two or three of the states that are now debating alternative gaming are successful in getting that passed, and you end up with 2,000 slot machines at a dozen racetracks, I think the focus for many of the second-tier racetracks is going to go away from racing and we’ll focus more on the slot revenue.  And I think the simulcast market will shrink a little bit, I think we’ll see some of the second-tier tracks and jurisdictions focusing exclusively on alternative gaming. 

I also think the difficult thing to see in the future is what the breeding business is going to look like, because if we don’t have vitality in the breeding business, then it’s not going to make any difference what we think is going to happen about the sport. I think that’s going to be the most interesting thing of all.  In Kentucky, as everybody knows, breeding is our livelihood.  It is our number one cash crop.  We’ve surpassed tobacco production as now being the number one agribusiness generator in the commonwealth.  And the breeding business is going to be very, very interesting to watch over the next 10 to 12 years.  

I also agree with Barry and Jim that the places in which racing will continue will be multi-faceted, there’ll be many, many things going on at the venue that will allow you to do many of the things you can do at a shopping center. There’ll be entertainment, things going on, there’ll be restaurants, and they’ll be really very smart destination points.  

I guess the last point I would say is that I think racing has to get smaller before it gets bigger, for us to really ascend and explode into the next growth curve. I think we’re going to see, over the next 10 to 15 years, some of the smaller tracks deciding they need to get out of business, or they would rather focus their energies on alternative gaming, and we’ll see a number of racetracks closing over the next decade, which will make us smaller, but at the end of the day I think it’s going to make us stronger.

Mr. Bergstein:   Mr. Goldstein, from your unique vantage point, how do you see it? 

Mr. Bernie Goldstein:  I agree with the other speakers.  I think people in America are looking for a variety of entertainment conveniently located.  They don’t want to get onto an airplane and go to Las Vegas or Atlantic City; they want to be able to drive 15 minutes to a casino, they want all kinds of entertainment.  So I think what we’re going to be seeing is entertainment centers located all over the country, which would include racing, casinos, casual shopping, restaurants, all types of entertainment in one place.  I don’t think we have much to fear from people staying at home, because people don’t want to stay at home.  People want to go to someplace where they meet other people.  At our casinos, we see little old ladies who, for the first time, are getting away from the four walls and meeting other people and socializing with them.  They can’t do that at home.  And I think that’s a big part of the entertainment experience. 

Mr. Bergstein:  Chris? 

Mr. Chris McErlean:  I don’t necessarily disagree with any of the other comments, but I think one hope I would have, and unfortunately I’ll probably be the only one that’s still working in 2023, let’s hope that’s not the case, but I certainly would like to be the first retired, if possible.  I hope our industry is a smarter industry. I am bullish on racing, but I don’t think we’ve harnessed the technology; I don’t think we’ve harnessed what is really out there. We’re really just scratching the surface in what’s available and what can benefit our customers, our guests.  Everybody says marketing. I think we have to be smarter in who we target our audience towards, how we segment that; I don’t think we do that very well right now, and I think hopefully in 20 years we’ll have a much better way of doing that; but I think technology will definitely play a role, technology will definitely allow us to think smarter, do our business processes better, run our businesses more efficiently. There definitely will be consolidation, and there should be consolidation in some ways, that makes a stronger industry overall.  But I think we’re really just scratching the surface on the technology side, and it’s really something that I think will make our industry stronger if we utilize it in the right way and use that to help develop and grow our business. 

Mr. Bergstein:  David, many people in racing think you’ve already projected Woodbine Entertainment into the future.  How do you look at it from your vantage point? 

Mr. David Wilmot:  I certainly agree with Chris’s first point.  If I’m in this job in 20 years, somebody talk to my board and get me fired, because I shouldn’t be. Certainly I think as this industry goes forward, it is going to be much more reliant on technology. There are a lot of young, bright people in the industry, who should be moving into positions of leadership, that constantly have their eye on the future.  I think our industry in the past has been far too intransigent, and we haven’t welcomed young, bright executives into racing’s ranks, and I think we need that. But I agree with the comments about what the racetrack, racino, multi-component destination location is going to look like.  I think for the racetracks that exist, that will be the model; I think racing is going to have to be very, very careful if it’s going to rely upon alternate forms of gaming. It’s going to have to be very, very vigilant, every year, over the next 20 years to make sure we continue to make the argument with government that we’re a large agribusiness and the expansion of gaming needs to be controlled and hopefully bottled up as much as possible, in existing gaming locations such as racetracks.  So in terms of the physical assets, I agree with most of the comments.

Technology worries me.  I think in 1980 or 83, all of us felt that because it was only live racing and people that wanted to see racing had to come to the track and see the live racing as we have into families where both the spouses were working, discretionary time was becoming more limited, it became more and more difficult to get people to the track, so we had to take the product out to the consumer.  Technology has allowed us to do that. There was a science-fiction book, I read it in high school years and years ago, called Fahrenheit 451. It certainly projected into the future in terms of true interactivity with TV, surround-sound and home theater. TV was on all four walls of a room, they were all TV screens, and you sat in the middle of the room, and it was complete interaction. 

Getting to Bernie’s point, the social aspect―of social connectivity in that book―was brought about by true interactivity on TV, and so there was more cocooning, people staying at home more and interacting with other people through interactive. Now, can you imagine what that could do for racing on the positive side, in terms of taking the product to the customer?  Where they can sit and they can talk directly to a simulcasting host, or a handicapper, or they can maybe have the opportunity to ask the trainer questions directly and really, with the true interactivity between, you could get the person right inside the product, even if they can’t get there physically.  I think those types of things could be very positive. 

But to get to a point Jim had, something we saw here yesterday, Bet Fair, these betting exchanges. I walked in here yesterday saying, “I might have dispersal in November.”  That really, really worried me, because we have the problem of rebaters; they still need access to our pools, and if as an industry, we get ourselves organized and have protocol, protocols for who can get into our pools, like Jim, I think we can overcome the rebating problem, and I think we can control the betting pools. 

What I heard yesterday, and I’m sure it’s not going to be the last thing we see, is an example of how technology is going to allow people to use our product, bet on our product, without needing access to the pools.  And if they don’t need access to the pools, we have very, very little control over it.  It could be very, very cannibalistic in terms of our wagering.  Is Loren Abony, CEO of Columbia Exchange here?  Loren, I don’t know if I have your message right, but this is what I think it was.  I think it was, listen, you know, we’re doing this thing and it’s growing like crazy, and people are desperate for some sort of fixed-odds wagering in North America, and I agree.  You said it’s not going to be cannibalistic. I don’t agree.  I think it’ll be terribly cannibalistic. 

If I’m reading what you said properly, what we would like you to do is help us make it legal in North America, but by the way, it works because the takeout’s so low, so even though we’re at two to five percent takeout now, we’ll go to a little higher takeout to maybe carve out something for racing, which of course won’t be enough for infrastructure or purses, and by the way, the more successful we are, the more it’s going to diminish the pari-mutuel pools, so it’s going to clobber you that way, and if you don’t want to do that with us, we’re going to do it anyway.  So I was concerned about that as an example of what technology may represent as a threat to our industry, and as John Long said, everything is going to continue to depend on the breeding industry and the production of the horse.  Otherwise, it will become an industry that many of us, I including myself, don’t want to participate in. 

So I think technology offers some opportunities, but it also offers some threats, and as a worldwide racing community, we’re going to have to work together and find the means to control our product.  Jim McAlpine and I were in a Magna plane a couple years ago, and we were having a discussion. Jim owns a Ford dealership in Aurora, north of Toronto, and I said, “Jim, you know, you have bricks-and-mortar; you employ people; you buy the cars from Ford; you resell them at a profit, and that’s how you stay in business.”  I said, “How would you like it if there were guys in Antigua on the Internet that could sell Ford products without having a dealership, without having any employees, without having any bricks-and-mortar, and without paying for the car?  And therefore could sell the car at a fraction of what you sell your Fords.  How’s that for a business model?” 

A Speaker:  What did he say? 

Mr. McAlpine:  The bad news is: the Antiguans exist in the car market; the good news is he bought a car from me. And it’s red. Can you believe that?  It’s a T-bird!  Conservative guy like this bought a red car! 

Mr. Bergstein:  Barry has a comment on that. 

Mr. Schwartz:  Both Jim and David touched on rebates.  I guess I come from a very, very different point of view when it comes to rebates, because I believe in them.  Or some form of them.  I believe that historically racing has taxed the horseplayer who pays for everything at unbelievably high rates, and we have so much competition in gambling, and you can’t find any other game other than state lotteries that take out as much as racing takes out.  In New York, we’re highly regulated; most states are highly regulated, but I think New York is worse than all the others, and in addition to the regulation, we have OTBs, where anything that we want to do to enhance the on-track experience is fought by the OTBs. 

Not being able to give rebates several years ago, I convinced my predecessor, Kenny Noe, to apply for them.  I went the other way and reduced the takeout.  It’s pretty much the same thing.  But players today, I mean the big players, the players that will bet 10 or $15 million during the course of the year, some even bet more, they know that on a 20 percent takeout they can’t last very long.  They were driven out of, off the racetracks out west to where they would get the rebates, whether from North Dakota, Las Vegas, the RGS organization. I understand that.  I believe that I could get lots of those players back if I could change legislation, if I owned the OTB and nobody opposed it, and basically have a sliding scale of what I would give back if I could really give rebates to the big players. 

Our original plan was to give them to everyone, right down to the lowest level two dollar bettor, who would get cumulatively maybe a point back at the end of the year.  I mean, there’s clearly enough room in the pools.  On my win-place-and-show takeout, which is 14 percent, nobody’s giving a 10 percent rebate.  Unfortunately, I can’t do that across the board, but we’re moving in that direction. 

Mr. Bergstein:  I understand it’s crossed your mind that you might want to buy OTB.

Mr. Schwartz:  If I live long enough, I’m going to see them wither away and die, because that’s the direction we, OTB are going in. And just like so many other examples, OTB in New York City gives racing a black eye, because somebody walks down the street and looks into an OTB parlor and sees what they look like and says, “Oh my God!” that’s racing? that’s a terrible thing.”  Under our plan, we would have closed half of them the first year. 

Mr. Bergstein:  I wish you hadn’t mentioned if you live long enough to see it.  That thought has crossed my own mind once or twice. 

Mr. Willmot:  Stan, I want to respond to Barry: I completely agree with Barry.  We have a thing called Horse Player Rewards, which is exactly that: its selective takeout reduction the higher the amount you bet, so it’s air miles, it’s whatever—I absolutely agree with lower takeouts, selective takeout reduction, rewards programs for the licensed racetrack operators and their network.  What I’m talking about is the rebaters, who can afford to rebate down to a five percent takeout, because they don’t have infrastructure and they don’t have purses to pay.  And if we lose too much of the betting in the world to those operations, then we’re not going to be running for purses that we can sustain our operations. 

Mr. Schwartz:  Our handle for the last two years, and that would encompass one-and-a-half years of a lower takeout rate, have been up $360 million.  That’s about a ten percent increase over the last two years. 

Mr. Bergstein:  Chris, you have something to add? 

Mr. McErlean:  Not necessarily a contrarian view, because we do the same things in terms of a rewards program and onsite, but you have to look at it on a global basis in terms of the person who is doing the rebating or getting the rebate, that person is probably being sucked out of someone’s marketplace.  It’s not necessarily your own, it’s David’s or mine, and it’s great for the host track which is getting six, eight percent back on that wager.  However, we’re losing not only the wager, we’re losing the amount that goes to purses, the commissions, so in a way it becomes a zero-sum game, and in a paradox it’s almost better for Barry or Jim to have my big bettor bet through the offshore, I’m only paying them, probably less than six or seven percent, he’s getting more from the offshore places, so that could be their one OTB for all of North America, they’re making eight or nine percent off of that, no one else is betting anywhere else.  Not that it’s going to happen for every single bettor, but the largest volume bettors.  That’s the concern I have, that it creates this zero-sum game for the big tracks. 

Mr. McAlpine:  We all want to rebate.  We buy lumber by the truckload, we pay a lower price than the guy who buys it by the board foot.  The problem we have is a regulatory framework across the country that in many jurisdictions doesn’t allow you to do that.  And that’s what Barry’s saying, and it’s certainly our experience in some jurisdictions, so if we level the playing field, let people do what normal businesses are allowed to do, then we’ll find the level.  And we will end up being successful.  If we’re allowed to accept advance deposit wagering over the Internet utilizing technology and we’re allowed to price the product competitively with these other people, we will win.  If we try to set up a framework that basically tries to put a fence around the Internet, we will fail.  And if we are prohibited from conducting business like normal business people, we also will fail. 

Mr. Bergstein:  That raises the issue of the role of racing commissions, as to whether they are supposed to simply regulate racing, or whether they’re supposed to regulate business. In some states and provinces, they tell you how much you can charge for a hot dog, which seems to me to be the province of management and not of government. 

 Mr. Schwartz: Where do you want me to start saying I agree? 

That’s clearly the case. This all goes back to New York, certainly in the 50’s, when the New York Racing Association was formed. The only legalized gambling in America other than racetracks was Nevada, so they had to make sure they highly regulated it.  We have the same regulations today, 50 years later.  And we’re just a very, very small fraction of the gambling that goes on in the country. 

Mr. Bergstein:  Speaking of Nevada, two weeks ago, Barry, you came back from Las Vegas, where you went to interview possible operators for your casino, and you told the New York Post that you were very optimistic, at this point, although you had not been optimistic six months earlier, that you might have slots at Aqueduct as early as next fall.  Has anything happened in two weeks to change your view? 

Mr. Schwartz:  Not really. I still feel it’s possible. The real problem is that it’s tied to the budget, and they won’t take the VLT issue out of the budget and settle it aside. The problem that we’re faced with now is, if the budget isn’t signed off on until, as some say, maybe July or even August, there’s no way we can start construction until then.  I’m convinced we can, from beginning to end, do all our construction in six and half to seven months.  So if I could get started before this month ended, yes, I can be open this year.  It’s going to be a question of what the governor wants to do. 

Mr. Bergstein:  Jim McAlpine, you just devoted another $230 million to your project in Dixon, California. I saw the plans in the Sacramento Bee, and they’re very ambitious plans for retail shops, entertainment centers as well as the racetrack.  That’s been your concept, obviously, that’s been Magna’s view, and Mr. Stronach’s all along. But I just heard you mention something about the fairs. Is it your view that California and Northern California, where you’re proposing to build that racetrack, you can draw to that location?  Obviously if you’re going to commit $230 million, you must think so. 

Mr. McAlpine:  Let me try to address Dixon.  As you know, we are a tenant at Bay Meadows. We don’t own that property, we have a lease on the property, and long-term we’re planning what our northern California operation will look like.  Dixon provides a racing venue we think at some stage could be an alternative to Bay Meadows.  The number you’ve quoted is much more than the actual racing operation will cost.  The racing operation will be somewhere in the 80 to $100 million range.  The rest of the money is to build out the retail entertainment complex, and our view would be that will in all likelihood be done with partners who will help us provide the capital and the expertise to do that.  It’s a multi-year project, it’s not as if we committed $230 million and we’re going to spend it in the next 18 months.  As I said, in California we need to work with the fairs; we need to get together and get everybody focused on growing the horse industry by exploiting all the assets that exist in the state to the advantage of the horse breeders and the horse owners and the racetrack operators. 

Mr. Bergstein:  You tried to offer all 13 of your venues on your television network, and you expressed considerable chagrin, up to this point, of having success in California and getting access.  How do you see the future of television and racing currently? 

Mr. McAlpine:  I think the future of television and racing is very important, obviously.  My view is that over the next year or so, there will be much broader access through cable and satellite systems for our product, and whether that’s us, (and it will be us), it also will be other people getting our product and our message out to the public. 

Mr. Bergstein:  David Willmot, your experience with television has been fairly progressive, but not necessarily profitable, if I understand the numbers that I’ve seen, correctly.  What’s your view on the subject? 

Mr. Willmot:  Well, it wasn’t profitable in our investment in TRN, The Racing Networks in the U.S.  But that certainly was an early stage development.  TRN Canada is profitable, very profitable, but it’s based upon a completely different distribution platform.  We have over 100 people in our television department, we’re coast-to-coast, it’s gone very well, and certainly that’s going to be a key point of our strategic plan and going forward, Stan. The thing about Canada is we’re basically coast-to-coast, except for two provinces in Canada.  Canada is such a huge, disparate country, with the population spread all over the place, that deliverability of direct home satellite to the miners and the oil workers in northern Alberta and the Northwest Territories, they work for two weeks and they come into town for two weeks and they play poker.  We’d like to get a signal to them and have them bet on the races.  So it’s a very important strategy for us in a country as large as Canada. 

Mr. Bergstein:  The racing channel that you’ve operated has not drawn advertising, and that apparently has been a problem for racing everywhere.  The JMG operation in California, with jockeys wearing advertising silks and so forth, also has encountered the problem of finding sponsors.  How do any of you view the sponsorship situation of racing, from the point of view of obtaining sponsorship for racing because of its gambling aspects? 

Mr. Willmot:  That’s the issue.  Woodbine is a member of the World Racing Series, and we just had a meeting in New York about two months ago, and we’ve been fighting desperately to find a sponsor. Racing can’t find an international company to be a sponsor of 13 or 14 of the greatest international races around the world, where they have Singapore and they have Hong Kong and they have Tokyo and they have the U.S. and Canada, Europe and Dubai. But virtually every major sponsor we have approached, they still don’t want to get their fingerprints on gambling.  We’re fortunate at Woodbine, we have a number of midrange sponsors, we have Pepsi, we have Labatt’s, we have an insurance company called Addo, but it’s a struggle.  It really is a struggle, Glenn Crouter, who heads up our department in this, is here and Glen is always amazed, despite the fact that six million people a year go through Woodbine now, that, every time you go in to talk to a potential sponsor, it’s still, “Ooh, you know, it’s, oh boy, but it’s gambling.”  It’s an issue, it’s a challenge. 

Mr. McAlpine:  I think that’s changing, though.  In our case, with 15 venues across the continent, with millions of people coming through the doors, I believe that if you can put together a national platform, you can go to these advertiser sponsors, I think they’re there.  An example that we went through recently was the Sunshine Millions. We basically covered all of our TV costs, all of our production costs, through sponsorship, and it was because we promoted it as a national event.  I think we have an opportunity as an industry, working together, to really package racing and go after those sponsors.  I agree that betting or wagering to some of them is offensive, but there are a whole lot of people who are not offended by being associated with our industry, and I think we just have to work at it. 

Mr. Bergstein:  Not being national is what is frequently cited by advertising people when you go to them that it’s not a national sport. National events obviously draw. The Kentucky Derby has had no particular problem with your advertising, has it, John Long. 

Mr. Long:  No, we’ve done really well. All the Triple Crown has done well.  Jim’s right, I think that the resistance of sponsors becoming affiliated at least with our company has changed.  We’ve seen it over the last couple of years, being able to utilize the leverage of the Kentucky Derby and then transferring the sponsorship with someone that we might do in Louisville to their affiliate company in Chicago to do something with Arlington Park, or to do something that originally started in Louisville and then be able to take it over to Allen Gutterman’s group at Hollywood Park, so I think that the curtain is starting to part a little bit.  It’s really started to change fairly dramatically over the last couple of years.

Mr. Bergstein:  The issue of racinos, of course, has been a major one for the last few years. One of the concerns expressed is, if casino operators start running racetracks, or if racetracks start running casinos, and the profitability is so great, they will forget about racing.  That’s always been the fear.  That hasn’t actually happened, of course, in Iowa or in Delaware, where the legislation was written carefully for racing.  As you heard from Mr. Oberle yesterday, who was one of the prime movers of that legislation and presumably wrote much of it, if racing is written into the legislation and mandated its share, that danger somewhat disappears.  But I’d like to hear your view Mr. Goldstein. You don’t have a racino, but you have 14 casinos and one racetrack where I know you hope to have a casino. How do you view that danger or threat to racing, and how do you view racing as a component of your operation? 

Mr. Goldstein:  The places that have the racinos have been doing very, very well for racing.  The purses are up, breeding is up, and attendance is up.  I think the two, casinos and racing, go together very, very well.  Putting them in the same location, there are people who want to go ahead and go to the slot machines, people who want to go to the racing, and some of those people will also cross over.  I think by having them together you have the opportunity to get more people onto the track than you would if the casino wasn’t right there. 

Mr. Bergstein:  David Willmot, the perception is that you have done the best job to date of translating or of transferring slot players to racing players, and part of it, of course, is the investment you’ve made in the model casino, or racino, that you have at Woodbine.  Have you been able to make that transition of players from your casino to your racetrack? 

Mr. Willmot:  I think your total is going to be limited to a certain percent.  But if you could cross over 10 or 15 percent of the slot players, and I don’t mean cross them over permanently, but just get them to start being comfortable with pari-mutuel wagering, I think it would be a great success, because that’s a huge group of people. 

Something I feel very strongly about, as more jurisdictions are looking at alternate gaming, is that some of the construction models are going to be, “Well, we’re just going to build another building for the slots on the property.” At that point, racing is being used as an excuse for gambling, because the moment you don’t believe in the synergies of putting the slot players in the racetrack, where they’re combined with the horse players and  subjected to racing every day, I think you’ve given up.   

It would have been much easier for us, rather than to take a building that was built in 1956 at Woodbine, go through all the headaches of trying to retrofit and remodel it as we did, to just bang up another building from scratch.  But that was not what we were convinced was the right thing to do, and the reason we spent so much money on the rest of the plant is we wanted, when the slot players left the slot floor and went up to the food court or moved around the building, we didn’t want them to walk on the slot floor and go, “Oh, this is my stereotypical view of the racetrack, yeah.”  Pipes in the ceilings and steel girders and dirty floors and dirty washrooms.  We were convinced that as we started to bring millions of new people to our racetracks, we wanted them to see no difference in terms of the entertainment value between racing and slots.   

So I’m disturbed when I hear some racetracks say that if they got slots, they would build a separate building.  I think at that point you get one thing—you get the revenue from slots for your purses.  But you don’t get the buzz of getting people back to the racetrack and the live attendance at the racetrack, and the entertainment feeling, that a number of our old jaundiced horseplayers are enjoying the racetrack again because there’s a buzz, it feels like the place to be, and it feels like an entertainment location, not an empty place meant for just the most committed of gamblers. 

Mr. Goldstein:  I agree 100 percent with that. 

Mr. Bergstein:  Barry, I assume you and the rest of the racetrack operators in New York feel the present law is simply not viable as far as building or remodeling facilities.  Is there any chance that you’re going to get any action on that? 

Mr. Schwartz:  Could I just expand on something? 

Mr. Bergstein:  Certainly. 

Mr. Schwartz:  To further illustrate the problems we have with regulators in New York State, we were told by the lottery that they wanted no integration whatsoever of racing and VLTs.  They wanted them absolutely separate, and my feeling was we wouldn’t do that, because basically the VLTs are there to enhance purses and enhance racing. Based on projections, we are going to get 12 to 20,000 people a day through our facility, which is a pretty big number.  We’ll have the only casino in America that has subway access, which is really an amazing thing.  David, you said, 10 to 15 percent crossover; I would settle for five percent, and employ some of the tactics you’ve used, the vouchers for people coming in to try to get them to understand what a horse race is all about.  It’s very, very important to try to integrate the two, and yet, we’re looking at a lottery commission that’s telling us we shouldn’t do it.

Mr. Bergstein:  In your convention agendas that most of you have, you’ll notice that it mentions rules of engagement.  The rules of engagement are that you folks in the audience are not spectators here, but participants.  So I want you to avail yourself of that; there’s still a microphone right in the center of the aisle. Take the opportunity; don’t wait for a question-and-answer period at the end of this session. You won’t be interrupting; you will be interjecting, so if you want to interject questions at any time for any of these speakers, they’ll be happy to answer.  Paul Fontaine, who is not only an attorney but the racetrack operator at Plainridge in Massachusetts. 

Mr. Paul Fontaine:   I have a question for Dave Willmot.  You mentioned TRN US and TRN Canada, and that one was financially successful and the other was not.  As a subscriber to TRN Canada, I find myself getting the biggest bargain in racing.  It is incredibly inexpensive.  Why is it, then, that it’s financially successful?  That would be my first question; a second question is why Quebec is not integrated into that programming? 

Mr. Willmot:  The first questions easy. The second one, anyone from Canada knows.  We want to stay profitable, that’s the answer to the second question.  Paul, the distribution costs, the satellite transmission costs of TRN in the U.S. were very expensive, in terms of dealing with the satellite distributor.  Our arrangement with Bell Expressview is a completely different business model.  We do not pay for our satellite time on Bell Expressview.  We have a partnership with Bell Expressview where we share subscription revenue, and so therefore we’re simply not starting off the year with 2, 3, $4 million of satellite transmission costs.  And as we go to digital cable, we’re then able to use our production studios, we’ve got the fixed assets there, we just built a distribution on top of that, we’re on Rogers Digital, we’re on Kojiko Digital, we’re negotiating with Shaw, and so, if we can be on all the digital cable and direct-to-home networks, it’s just going to continue to grow dramatically.  The key is, we don’t have the huge nut starting off of paying for the satellite time, the distribution time.  Bell Expressview, which is part of Bellglobe Media, believes in the future of interactive TV, and they see horse racing, as it becomes more interactive, as the technology continues to move forward, such as Attheraces has in the U.K., they see a lot more people wanting to subscribe to racing networks because, other than lottery sales, it’s the only other form of legal in-home gambling.  And they believe it’s a growth area, and they’re prepared to front-end load that with us and build for the future.

The second question is, I think, the translation issues. Having Quebec inside of Horse Player Interactive and inside of TRN Canada would be no issue.  You can have bi-lingual commentators and everything else, but up until now, Quebec has basically looked towards wanting to have their own system for the province of Quebec.  But it’s an expensive system to build, so it’s much better if everybody taps into a single cross-country distribution system, you have one hopper for collecting the bets from across the country, you have source fees, and everybody shares, and gets the most business layered on to the fixed infrastructure.   

Mr. Bergstein:  If you’re not a racetrack operator, you may not know what CAFO is.  But, if you are, you are painfully aware. CAFO stands for, as I recall, Concentrated Animal Feeding Operations, and it has to do with affluent waters and how you get rid of animal waste at racetracks.  There’s been a new draconian law just put into effect, there still are hearings on it, and still an appeal from it until April, but some of these gentlemen here have already encountered it.  Mr. McAlpine in particular, I believe at Portland Meadows, and Jim, you might want to tell us so everyone here in this room understands the threat of CAFO to American racetracks. 

Mr. McAlpine:  Unfortunately, the threat is there because we never looked after it properly in the first place. We have aging plants and we have changes in environmental knowledge. When you look at the situation, it is, frankly, quite deplorable in a number of regions, so the situation we had in Oregon, basically we brought the plant up to compliance.  As we go forward, the old days of trucking this stuff out to the mushroom farms is going to disappear.  Not only is it going to cost more in the short term, but over time even that’s not going to be a possibility, so we’re going to have to deal with this problem in other ways. In our case, we’re going to try to do it on-site wherever we can. We’re building a new tunnel composting operation in conjunction with our Pond Meadows training center, because it’s one way you can turn a bad product into a soil supplement which frankly you can then give to people and you won’t offend the environment.  So I see it as a challenge; and I guess you could argue that it is potentially life-threatening, but you know what?  The environment’s the environment, and we have to learn how to deal with it, so I’m all for responsible environmental management, and that’s the way we’re attacking the problem. 

Mr. Bergstein:  The question, of course, is whether smaller tracks are going to be able to financially afford what they have to do under government mandate.  That issue still remains to be resolved, and it is a huge, huge threat.  John Long, you were nodding in accord and agreement. 

Mr. Long:  At Hollywood Park about three and half years ago, shortly after we acquired the property from Pinnacle, we end-ed up with our own water-treatment facility. We knew from Pinnacle that there were some issues with the sewer system and water coming off the backside, and Pinnacle had actually entered into an agreement with Cal EPA to fix that. All of the water that comes out of the barn area cannot go into the sewer system, so it gets routed to this place back over by the parking lot, and everything is cleaned up and we’re told that the water is almost drinkable. I have yet to experiment myself, but we’re told that it’s almost drinkable, and then what happens is the water goes into the lakes, into the ponds in the infield, and it has generally been regarded as one of the model setups of what we might be looking at in the future.  It’s a big spend; I think in all, it was probably about a $7.5 million just to fix the water on the backside.

There’s another interesting technology out there now, and we’re looking at a couple of them, having to do with manure removal.  I think somebody told me the other day that we spend $4.5 million a year through all the Churchill properties just to remove manure and get rid of it.  When you think about parts on the profit and loss statement that generally don’t have a whole lot of attention paid to them, that’s one big place, and there are a couple of companies that are doing some pretty interesting things. Technology has come over from Europe, that I think might hold some promise, where you can actually build a facility on the property, take the manure, turn it into electricity, provide all the electrical requirements you need for your facility and then actually have a little bit of residual you can sell onto the grid. 

Mr. Bergstein:  The problem of manure removal was one the late Bill Veeck did not envision when he took over management of Suffolk Downs, but he quickly wrote a book called 30 Tons a Day, which indicated that he learned the magnitude of the problem in short order.  You mentioned environmental issues, Jim McAlpine, which brings to mind the issue of smoking, which I thought was a dead issue in America because restaurants offer no-smoking or smoking sections.   Delaware, however, recently enacted a law that any public facility must be non-smoking entirely.  Even places that do things like put a smoking balcony outside of its regular structure are not exempt. Nothing public is exempt. Bill Oberle, who spoke here yesterday, is introducing legislation when he gets back that hopefully will rectify this by amending the legislation, but I understand, Barry Swartz, that you face the problem in New York. 

Mr. Schwartz:  Actually, this year at Saratoga we’re going to make the entire facility smoke-free.  There’ll be no smoking.  We’ve already announced there would be no smoking, but it was kind of a premature announcement, there would be no smoking in any of the reserved seat areas. 

Mr. Bergstein:  And that raised a little controversy. 

Mr. Schwartz:  It shouldn’t have. The press release shouldn’t have gone out, but we’ll have a press conference in June in Albany and we’ll announce the entire building will be smoke-free; there’ll be no smoking anywhere inside the facility.  Right now, at Aqueduct and at Belmont, we have separate smoking rooms, they’re really pretty horrible.  I mean, to sit in one of those rooms, it’s about a quarter of this size and you can’t breathe, but people seem to like them.  It’s a tradition, I think. 

Mr. Bergstein:  The issue, though, really goes beyond a smoking or non-smoking section.  I didn’t think there were many people who would do this, but Mea Knapp, president of Suffolk OTB, was here yesterday speaking on a panel, and she made the point that Nassau County, which is the adjacent adjoining county to Suffolk County in New York, put in a smoking ban. Suffolk OTB has a parlor right on or very close to the border of Suffolk and Nassau.  After Nassau put its ban in, Suffolk’s nearby OTB parlor’s business increased 131 percent, and has remained at an exceedingly high level.  So obviously the smoking issue is of greater importance to a lot more people than I thought and that it could simply be solved by having a no-smoking section.  Has anyone else here encountered the problem, or anticipated it? 

Mr. McErlean:  We haven’t. I relish having to make decisions, but voluntarily declaring a non-smoking facility would be one decision I don’t want to have to make.  It’s difficult for us; we try to balance the smoking, non-smoking issue, different parts of our facility, for those individuals, but there is no simple answer. I think, like Jim McAlpine said, it’s the evolution of knowledge and the same thing with the EPA issues, people are becoming more aware, and the laws and the regulations are changing and evolving.  I would suspect within a couple years, since we are a state facility, we’re probably going to be told that we’re going to have to be non-smoking.  That would probably be better than me having to make the decision and take the arrows myself. 

Mr. Bergstein:  Speaking of making decisions, and particularly in New Jersey, your governor is now caught between the Atlantic City casinos and the Meadowlands, as to whether they are going to be casinos at racetracks, VLTs or whatever at the Meadowlands, or at Monmouth Park or Freehold.  How goes that battle?   

Mr. McErlean:  Thankfully, that is another decision I don’t have to be involved in.  It’s a difficult issue. We’re one of the few states with pari-mutuel racing and a thriving casino business in the same state. Casinos and the Meadowlands, both came in at the same time, about 27 years ago, and they have been a great economic engine for New Jersey, the casinos obviously have contributed a lot, as have racing.  It’s going to be a different, difficult balancing act, and as people have read, a very political one as well. 

Mr. Bergstein:  Well, Governor McGreevey is not here, but a man who knows him pretty well is at the microphone right now, Leon Zimmerman, who’s the legislative representative for the horsemen in New Jersey. Give us the New Jersey picture, Leon. 

Mr. Leon Zimmerman:  I was about to look for an opportunity to ask the question that you just brought up. I’m concerned about something that appears to be happening in our desperation in the racing industry to find new sources of revenue to help finance purses. We see it in New York, and the latest talk in New Jersey, of course, is putting VLTs at the racetrack.  But it’s not to help racing.  That’s just an afterthought; it’s to help balance the state budget.  Some of the legislation I’ve seen that’s been proposed for VLTs at the racetrack gives 50 percent of the money to the lottery.  There’s next to nothing left for racing.  So the question I have for the panel is, do you think the racing industry’s being sucked in by state governments looking for new revenue to balance their billion-dollar-deficit budgets and we’re going to be getting drips and drabs from it, or is that the way to go, is that something we should be really looking at? You just hit the point about slot machines in New Jersey because it has a casino industry, but you don’t have to have casino-style gaming. 

Mr. Bergstein:  Jim McAlpine.  Jim?  Leon, before you leave, I have a question. 

Mr. McAlpine:  Leon actually just brought up a point that I wanted to raise in my closing comment, and that is that VLTs or slots are the newest drug in horse racing.  I have a very real concern that there’s no question this is being done to balance state budgets.  There’s a secondary issue, and I wouldn’t say we’re being sucked in, because I hope we’re smarter than that, but there’s a secondary issue, using racing as camouflage. Everybody says, “Boy, this is going to be great for the ag sector and this is going to be great for horse racing.”  But let’s not forget, the primary reason they’re doing it is to raise tax revenue, and let’s not also forget that they’re in charge of legislation and the legislative process. They can change it two years from now, five years from now, seven years from now, 10 years from now, and as their need continues to grow, and it will continue to grow, because we’ll have environmental issues, we’ll have all kinds of education, health and safety, you name it, issues, they’ll have to find more and more money, and they’re going to come to these big sources of revenue, and they’re going to increase the tax, so what looks today like a gift from heaven could potentially be a real disaster for our industry.

Mr. Zimmerman:  That’s exactly the concern I was expressing. 

Mr. McAlpine:  Just one more thing, because I get accused a lot of speaking out of both sides of my mouth by some people who don’t really understand this business or what motivates us.  I take a completely different position in a state like Maryland, where I’ve got a competitive environment on the east and west side, and I have to work on behalf of the industry in that state and the horsemen in that state, to be able to succeed.  If you asked me about Florida, I would take a completely different point of view, because in Florida I believe if we fixed the regulatory framework, the horse racing industry here will thrive without slot machines.  That isn’t as easy a fix in the state of Maryland. 

Mr. Schwartz:  I think it’s beginning to happen already.  I think governments realize they don’t have to give 50% to racetracks.  You’re not going to see any deals like Delaware, I don't think, coming down the pike now.  I think the horsemen in Pennsylvania were nuts in turning down 16% the other day, because that would have made them probably the richest horsemen in all of North America.  But governments are getting very smart.  Look what they offered us.  They offered us 25 percent, 12.5 percent to NYRA and 12.5 percent for the horsemen.  We couldn’t build a casino and pay it off at 12.5 percent. We’re fighting for a couple of points.  We’re fighting just to get to a point where we can break even, because we’re not a profit corporation anyway, so the balance, the other 12.5 percent or the other portion will go to the horsemen.  But the governments are getting very, very smart about this, and you’re not going to see any big percentages going to racetracks. 

Mr. Zimmerman:  In New Jersey, one of the bills proposed has a single-digit amount, less than 10 percent, for horse race purses.  That’s just absurd. As Stan said, I represent the horsemen and we are going to take the position and fight in the legislature that if you put VLTs in our racetracks, in our house, then you’re going to have to give us more than that, or we’re not going to have it. 

Mr. Schartz:  I don’t think that’s absurd.  I don’t think single digits are necessarily bad depending on what they are. 

Mr. Zimmerman:  Well, it was pretty low. 

Mr. Schwartz:  If you talk about eight or nine percent of what our estimated first-year handle of a win in New York is going to be around $500 million. I don’t think that would be a bad number. 

Mr. Zimmerman:  Well, it was lower than that. 

Mr. Schwartz:  You’re talking about 40-$45 million to the purse account.  

Mr. Bergstein:  One good thing that might come from it, Leon, is that in New Jersey at least, it is unifying Thoroughbred and harness horsemen, which is a strange but very pleasant prospect.

Mr. Zimmerman:  That’s a tough haul. 

Mr. Bergstein:  Illinois horsemen are taking the same position you have.  John Long? 

Mr. Long:  A couple of comments to that.  I remember back in, I think it was in the mid-80s, when the California Thoroughbred industry had an opportunity to become part of the lottery, when the lottery debate was ongoing, and the Thoroughbred industry said, “No, we don’t want to do that, we don’t want to have any part of that because we can do it on our own.”  And that was probably one of the most remarkable decisions that I can remember in this business, going back that far, because when you think about what the industry could have looked like had it been a participant with the lottery, it would have been completely different.  I think the analogy is the same today.  Yes, the states are getting smarter, and yes, the regulators are getting smarter, but if we don’t get involved today, I think the garage door’s going to close.  It is absolutely going to close.  In Kentucky in this last legislative session, every casino company in America, present company excluded, I don’t know— 

Mr. Goldstein:  No, we were there. 

Mr. Long:  You were there, okay. Every casino company in America was working the halls of the House, and the message was, “Don’t do this for the racetracks; they don’t know anything about gaming.  If you really want to fix the state’s revenue problems, let us build land-based casinos.”  I think for us in Kentucky, the day in which we believe that we were going to be able to control the agenda for the Thoroughbred industry in Kentucky might now be gone.  When I look at the next legislative session, I’m thinking that we may have to deal with all of the casino companies in America, and now we’re going to be fighting about land-based.  If we can’t make the story stick in Kentucky, then how the hell are we going to make the story stick anyplace else?  So I’m just saying the opportunity is here now. We need to grab it even though it may not be what we would like to have, it may not be what the deal was three years ago, but take it and make it work, because if we don’t, those days are over. 

Mr. Bergstein:  There’s one gentleman living all that right now, and he might have something to say.  Bob Farinella from Prairie Meadows, you’re encountering the situation now where the ideal dream pact that you had is not necessarily disintegrating, but is certainly under fire. 

Mr. Bob Farinella:  I knew I wasn’t going to get away with it, not having to present our particular case in Iowa.  But in Iowa, the way the legislation was set up, the licensees were left to negotiate with the horsemen, and we have done that in good faith and it has worked out well for us from the standpoint of upgrading our breeding.  The disadvantage we had was a significantly escalating tax, which really infringed on our ability to compete with the rest of the industry and continue to meet the needs of growing the horse industry, which we were challenged to do.  At this point in time, as you well know, the tax situation has been in question, is at the Supreme Court right now, they will hear that case on the 29^th of April. The local district court said it was okay to have a disparate tax rate, the Iowa Supreme Court said it wasn’t, and now it’s at the federal Supreme Court.  The issue is that the law in Iowa is upside-down and does need to be changed.  I think that our legislative leaders are working on that process to get that law changed and perhaps eliminate this continued court battle, because that’s certainly not the way to decide the fate of an industry, waiting for some court to decide what may or may not happen within the state. 

From the standpoint of purses, it’s very interesting to see that many states have mandated a purse percentage.  We had to negotiate.  Many times I think that a mandated percentage is probably a favorable way to go, because it takes a lot of the harangue out of the issue, particularly on a local level, as has been brought up.  We see that the industry has to survive, thrive and show that there’s some growth and economic value to the community, so the more that goes into purses, the question could always be from the local population.  In our case we have to have a referendum every eight years, so obviously you have to have good local support for what’s going on in the community. The question is always the dollars that go to purses, are they bringing true economic value to our community?  So it’s been always our goal to show how those dollars come back into the community, are recycled and generated, so we really have a salesmanship job to do with our own community and how well we’re making that economic model work. 

Mr. Bergstein:  I might add, Bob, that I was greatly impressed the other day; I happened to visit your website, and your website home page does a very good job with the pie charts that you show about how that money distribution is made to local charities.  And to local needs. 

Mr. Farinella:  Exactly, and we do operate as a not-for-profit corporation; in fact, about 20 percent of our operating revenues are plowed back into our community every year, which is a significant fee. 

Mr. Bergstein:  Thank you.  Anyone else have a question on that issue?   Is anyone else in the audience with a question?  Tom Charters, President of the Hambletonian Society/Breeders Crown. 

Mr. Tom Charters:  I’d like David Willmot to speak to the process when you were first offered slots, you had a real concern that if the percentage to purses was so low, there was a possibility it wouldn’t even affect, or compensate for the loss or attrition on your player, who play at the track and have these slot players in proximity. 

Mr. Willmot:  That’s right, Tom.  The suggestion that because the government wants to earn revenue from gaming, we should be suspicious of that, I don’t understand. The New Jersey government didn’t allow casinos into New Jersey just because they thought it would be a nice location for them, they wanted to tax them.  Gaming is something that politicians don’t want their fingerprints on, but they want the revenue from, and the key for racetracks is to work with government.  Of course government wants the revenue, they want the lion’s share of the revenue and they deserve the lion’s share of the revenue, because of what John Long said, they can put these things anywhere.  They don’t have to put them in racetracks.  What racetracks offer them is existing secure, and regulated gaming locations.  Racetracks offer government a politically safe and socially responsible destination location to put in expanded gaming.  What we as the racing industry have to do is convince government that they can realize 70% of their expanded gaming targets with minimum political and social risk by putting in a second product line. 

Now the key, to answer your direct question about the deal, is the province of Ontario. There has been much said and there were members of the government up here yesterday. The province of Ontario wanted to help horse racing, yes, but that was a tangential issue.  They wanted to expand gaming in a way that wouldn’t get them into trouble with the people.  So they looked at racing and they said, “Gee, these would be good locations, and we can help a big agribusiness that employs 40,000 people in the province.” But the first deal they offered us was a deal in which racing was going to lose money. For people who look at the Ontario model, let’s not kid ourselves about what the government wanted.  You can say, “Boy did they take advantage of us?”  But, we were willing victims.  You know, we negotiated the deal that made sense.  The key was, on the horsemen’s share, we wanted to make sure that if there was one nickel of cannibalization, from a pari-mutuel dollar over to the slots, that, what the horsemen earned from the slots would be exactly what they would earn into their purses from the pari-mutuel bet.  That was our key position, because then we could turn to the horsemen and say, “Regardless of how we market, regardless what we do within our plant to move people around, you don’t need to be concerned where the bet takes place or how the bet takes place; you are earning exactly the same contribution to your purses that you would have earned from pari-mutuel.”  And obviously it’s going to be greatly incremental.  I can just sit staggered that somebody says 16 percent isn’t enough.  Those are big dollars.

To think you’re going to hold up the  government, this is John Long’s point, and say, “Gosh, that isn’t enough,” they have all sorts of alternatives of what to do with gaming.  What you need to do is convince the anti-gambling people, the churches, that governments will expand gaming for increased revenue, they need the revenue, racing should not cry poor, that’s a joke.  I mean, somebody drives by Keeneland or drives by those farms up around Versailles in Kentucky, some poor Kentuckian, you’re going to tell them the racing industry is broke and needs help?  Racing has to go to the government and to the people and to the churches and say, “Revenue is going to be shared in a certain way; we are willing hosts for expanded gaming, we can help the state, we can help in education, we can help the churches, and we can bottle up expanded gaming in socially responsible locations.”  That’s a key message.  I don’t know what kind of returns people are looking at, there’s no reason why government should give it to you. We all understand negotiation; you have to have some leverage.  I don’t know what the leverage is.  We certainly are not unhappy with the deal we have in Ontario at all.  It’s a deal that’s going to keep the government working with us and keep them as our partners.  The last thing you want is for the government to be unhappy with the deal and be looking for some other alternative. 

Mr. Bergstein:  Final question from the floor, Steven Edwards of Racetracks of Canada. 

Mr. Steven Edwards:  Thanks, Stan.  I didn’t want to identify myself at all.  With what we’ve heard so far today, let’s assume we’ve agreed with it all, let me select a few points.  One, Jim McAlpine’s point that we’re really not in control of any of the gaming but horse racing, when and if governments decide to take the privilege of having slot machines on our site, etc.  We’ve got the competition from new technology, people who can offer gaming, offer wagering on our product without returning anything to us.  The one thing we haven’t heard this morning is, one, anything about our product, and two, anything about increasing the actual pie.

We’ve heard all of the rude remarks over the years that in the polls of sports that people watch, racing came in only second-last to five-pin bowling and things like that.  I’m not trying to suggest that this is true.  I’m wondering, though, when we will have an organization that can and will spend some little amount of time looking outside the tunnel in order to bring many more people to our sport, just on the racing side, to shore up our core business.  I’m thinking of ridiculous things like taking racing down fifth avenue in Manhattan and closing the street off for five hours one afternoon and putting some dirt down and having a match race run up the street, or run up Yonge Street  in Toronto or something like that.  We have the New York Marathon, we have other sports that are going all around the world and doing ridiculous things; we need to make some attempt to have horse racing in the Olympics or horse swimming.  We now have vacuum sweepers racing in the Olympics and bridge.  In other words, we need to have some sort of ridiculous type thoughts out of which will come two or three gems that will bring racing to a wider variety of the public, so we then have a bigger pie with which to deal, with which to cut from ourselves between the people that are legitimate and the people that are illegitimate, and have more of the public’s interest in the actual, beautiful sport that Mrs. Chenery spoke about this morning, and that is the horse.  I think we have to find ways of taking the horse to the people, like Formula One car racing does, not only at our venues, but find out the places that we can take them, even on the one-off shot, and I would like to hear some attention to those sorts of pursuits. 

Mr. Bergstein:  Thank you for your observations.  I want to tell you two things quickly.  One is that the panel that follows immediately is a panel of journalists and media people who are as distinguished in their field as this panel is on management. The second thing is that I’m deeply appreciative and I know that my counterpart Mr. Scherf is deeply appreciative, and all of us are, of the time that these major leaders of American racing have taken to come here and share their views with us this morning.