Day At The Track

Death knell may be approaching for Western Fair

01:59 AM 14 Nov 2017 NZDT
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Western Fair District is going to see changes as Gateway has been chosen to run gaming sites in London.
Western Fair District is going to see changes as Gateway has been chosen to run gaming sites in London.
Mike Hensen Photo

An industry older than Confederation, one that looms especially large in Southwestern Ontario, is shut out of behind-doors deal-making that could spell its demise. Harness racing in North America dates back to 1788 and was thought as recently as five years ago to support up to 60,000 jobs in Ontario.

But five years after Ontario slashed funding from slots revenue to the industry by more than half, those who depend on horse racing in the London region — breeders, trainers, drivers and many who supply the business — fear the death knell may be approaching.

“You got to feel kind of helpless,” said Mark Horner, who owns a stable in St. Marys and is a director of Standardbred Canada and the Central Ontario Standardbred Association.

Big change is coming to the Western Fair District after the province’s gambling arm, the Ontario Lottery and Gaming Corp., (OLG), licensed away gaming in much of Southwestern Ontario in private bidding won by Vancouver-based Gateway Casinos & Entertainment.

That winning bid has led to a complex set of negotiations, with Gateway demanding more favourable terms than what OLG paid to use the slots building at the fairgrounds in London, home to the region’s largest racing operation.

Gateway is in the business of casinos, not horse racing, so when its spokesperson threatened to moved the casino from the fairgrounds if the company can’t secure a good deal, that sent shock waves through the local horse racing industry that’s been on shaky grounds since 2013.

“It put a knot in your stomach,” Horner told The Free Press.

In horse racing, it’s the greyhound-like thoroughbreds that draw the biggest spotlight, from the rolling hills of Kentucky to the racetrack at Woodbine. But while thoroughbreds are a high-stakes game and the domain of the wealthy, sturdier standardbreds — the horses used in harness racing, where they pull a two-wheeled cart called a sulky — are the lifeblood of Ontario racing because they can race four times as often and deliver more predictable returns, Horner said.

Western Fair offers the second-biggest racing purses in Ontario, he said, and if that’s lost or even diminished, the entire industry in the province may be trotting towards extinction.

Hugh Mitchell, the chief executive at the Western Fair District, knows the stakes.

“Without the lease payments we can not support live racing,” Mitchell said. “We’re working with the government and Gateway to find a solution.”

Negotiations are tough because they involve agreements between four different entities: Gateway, OLG, Western Fair and the city of London, which co-owns most of the fairgrounds.

“I’ve never seen something so complex — not in my lifetime, and I’m 63. . . There’s a lot of heaving lifting left,” Mitchell said. “It really has (created) apprehension . . . This is thousands of jobs . . . The horse people are anxious. Most have spent their lives in this business (and) they’re not at the (negotiating) table.”

Horner is confident Mitchell does want to save horse racing – but he doesn’t know if the Western Fair has the leverage to get what it wants and Horner doesn’t see an ally in OLG, calling talks with the government agency an “uphill battle.”

As for Gateway, it has no interest in subsidizing horse racing. And while it hopes an expanded casino can partner with the racetrack, it’s the former that is the company’s focus.

“They are two separate entities,” Gateway spokesperson Rob Mitchell said. “We bid on a casino. (It) has nothing to do with horse racing.”

Gateway wants a larger casino that would also host table games and its signature restaurants, and possible a hotel as well — plans that require a far bigger piece of real estate than what’s now home to the building housing slot machines at Western Fair District.

Gateway has asked the city and Western Fair to sell it land they jointly own or to reduce the $6 million a year OLG pays to lease the casino building, a deal that expires in 2020.

The company’s bargaining pitch is simple: If you want 700 new jobs and more than $140 million in investment, sell us the land or give us a better deal.

So while Fairgrounds CEO Hugh Mitchell never imagined a hotel at the fairgrounds, he concedes that’s what Gateway wants, and if a deal is to be made to save horse racing, there may need to be new streams of revenue.

“We’re looking for complimentary uses that benefit all four parties,” Hugh Mitchell said. “Horse racing is in our DNA.”

Whether a hotel fits in city plans remains to be seen, however.

Possible opponents include those who represent existing hotels.

“I know none of the hoteliers are happy about it, the early rumblings,” said Luca Monti, sales manager at Holiday Inn Hotel and Suites London and a board member of the Ontario Restaurant, Hotel and Motel Association’s London branch.

“We welcome the tourists coming to the city, for sure, but if that’s going to be a one-stop destination, and have everything covered in that complex there, it’s worrisome to all of us.”

“We don’t think it will put us out of business, by any means. But it’ll hurt numbers.”

His concerns resonate with Coun. Phil Squire, who’s skeptical a new hotel and expanded casino will breathe more life into the Old East Village.

“I don’t think people should get too excited about the economic development in the area around it, because normally a casino creates a little area around it where you don’t get as much development, because everything is self-contained.

“The gambling, the restaurant, the accommodation is all in the casino structure,” Squire said.

The ward councillor, Jesse Helmer, shares that view.

“Casinos are not like other kinds of business. Generally speaking, they face inward. The goal is to keep people in there as long as possible, and provide everything they need in the facility, so it can tend to be a bit of an island,” he said.

Even residents in the Old East Village have mixed views of an expanded casino, said Helmer, citing “a mix of cautiously optimistic and just cautious.”

Helmer himself sees potential pitfalls and benefits to an expanded casino.

“The social impacts that come with gambling, especially problem gambling, are really significant,” and it’s easy to “underrate” the negatives, he said.

“(But) if (Gateway) relocates the casino out of the community, there might be an impact of millions of dollars on the city budget, and we’d have to make changes in the budget to accommodate that. We’d have to raise taxes or cut some services or push things off in the future. People need to understand those trade-offs,” Helmer said.

“The licence is for a big geographic area. Conceivably, Gateway could operate in a different location. That’s something else we have to keep in mind.”

Gateway has said it prefers the Western Fair site but will look elsewhere in London if a favourable deal can’t be struck.

Once Gateway completes a deal with London, it will turning to gaming operations and horse racing elsewhere in the region, including Clinton and Dresden, said Ian Fleming, manager of the Clinton Raceway.

“People are obviously nervous, Fleming said. “There have been a lot of changes the past four or five years.”

By Jonathan SherMegan Stacey, The London Free Press

Reprinted with permission of The London Free Press

 

PLAYERS AT THE TABLE

City of London

  • Now getting about $4.5 million a year from OLG, based on a percentage of slot revenue.
  • Received $597,500 in rent in 2017 from Western Fair District.
  • An expanded casino and hotel would bring construction jobs and long-term employment but also create competition for existing hotels and other entertainment venues.

 

Western Fair District

  • Getting $6 million a year from OLG for use of the slots building, according to Gateway.
  • With its agricultural roots, wants to keep horse racing viable.
  • Most of its lands are co-owned by the city.

 

Gateway Entertainment and Casinos

  • Won licensing bids to run government gambling enterprises in southwestern and northern Ontario.
  • Wants a much bigger London casino that includes table games, signature restaurants and possibly a hotel.

 

Ontario Lottery and Gaming Corp.

  • Wants to modernize — squeeze more cash — out of gambling operations in Ontario by handing the keys to private operators that win bids.
  • Giving about $160 million a year in benefits to the horse racing industry through the Horse Racing Partnership Funding Program and tax relief for horse-race wagering.

 

NOT AT THE TABLE (BUT WITH STAKES IN THE OUTCOME)

Horse racing industry

  • Saw its share of slot money slashed in 2013 from $345 million a year to about $90 million plus tax reductions
  • Before the change in funding, about 60,000 jobs were directly or indirectly related to horse racing; about half those jobs were lost

 

London hotel industry

  • Doesn’t want to lose customers to a hotel built on city-owned land

 

Old East Village

  • Redevelopment there might get an assist from an expanded casino and hotel.

 

THE EXISTING DEALS:

  • OLG and Western Fair District:

Facility lease through 2020 that pays the fair $6 million a year, according to Gateway

  • OLG and city of London:

City gets about $4.5 million a year from a deal signed in 2013 that lasts until there are no longer games there or the licensing permit is no longer available.

  • City and Western Fair District:

Lease payments that resulted in $597,500 in 2017; the fair is exempt from property taxes, since most of its land is co-owned by the city.

Any new or expanded building need the written approval of the city as well as the required permits. City also co-owns the existing grandstand slots building and half of the parking lots in front of the grandstand where the casino might be extended.

  • OLG and Gateway:

Gateway won bid for southwestern gaming services that include a casino in Point Edward and slots in London, Woodstock, Clinton, Dresden and Hanover, the last three of which have raceways.

 

HORSE RACING HISTORY

1788: An English thoroughbred stallion named Messenger is shipped to America through whom all Standardbreds, a more durable but less speedy breed, trace their ancestry.

 

1849: A great grandson of Messenger and the first standardbred, Hambletonian 10, is born in a rural hamlet about an hour north of New York City. He would go on to produce more than 1,300 foals by 1875 and make rich an illiterate stable hand named Rysdyk.

1879: The National Association of Trotting Horse Breeders agreed upon standards that require a stallion to trot a mile in two minutes and thirty seconds or better, or 2:35 if hitched to a wagon. The new name of the breed is called a standardbred and is best known for harness racing.

* Source: Standardbred Canada

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