Tuesday, August 14, 2012

Standing Up For Customers in Ontario

Eric Poteck is a horseplayer who wants to change racing. Based in Canada, his journey to have input as a customer to make our game better was detailed in part one of this series.

In Part Two, he details what he think should happen to racing in Ontario, in a letter he has sent to all stakeholders . As most know, slot machine revenue has been taken away from Ontario racetracks (to be eliminated in March of 2013). The Ontario Horse Racing Industry Association - a group representing many racing fiefdoms - put forth a plan recently, that they hope the government embraces. Eric looks at that plan (the plan is linked here) below, with comments from a player perspective and lobbying force. You likely won't read a more to-the-point critique from a knowledgeable participant in the process anywhere in the racing press.


I believe Horserace wagering can be the greatest gambling game on earth.  It is challenging, exhilarating and competitive, cerebral and just plain fun.  My favorite game is being ruined by greed, short sightedness and just plain ignorance.  In my own way I have been challenging the Ontario industry stakeholders to correct the flaws that exist within the game.

Four and a half years ago after an apparent transmission error in North American only, which led to the incorrect posting of the results of the 2007 Arc de Triomphe I was inspired to read the provincial and federal rules that govern Horseracing.  I was appalled at what I read and began a journey to create a Horseplayer presence at the regulatory level in Ontario.  After speaking with virtually every senior industry stakeholder in Ontario and various members of the CPMA I targeted the Ontario Racing Commission (ORC) as the most logical location for such a voice.  

 In February of 2011 I submitted a conceptual Proposal for a Horseplayer Advisory Group to the ORC.  

 In March of 2011 the ORC indicated that their management directors were in support of the concept.  

In January 2012 at the ORC’s request I presented the concept and back up rational for the need of a Horseplayer group to the ORC’s Consultation Group.  

In July 3, 2012 I made a presentation to the OMAFRA Transitional Panel. 

In October of 2008 I did a comprehensive review of the CPMA rules as they apply to Horserace wagering. 
I have reviewed the OHRIA Plan made public on July 24, 2012 from both a Horseplayer perspective and how I perceive the Minister of Finance office would view it.   

My thoughts and observations are as follows.

My initial thought after reviewing the Plan was how vague the proposal is.  Given the seriousness of the crisis it was my hope that the Plan would contain a specific concrete model on how the industry would travel down the road to become self sustaining.  Sadly it did not.  It appears as if the plan was hastily thrown together and lacks any real substance.  It is a regurgitation of the same old philosophies that has led to the industry’s current crisis.

*The Plan makes mention of ‘increasing government net revenue from gambling’ but it never indicates how the Plan would achieve such an objective.

*The Plan sarcastically states that, ‘the transitions funds of $50 million over a three year period would certainly assist some of those currently employed within the industry to transition to unemployment and public assistance.”  If you have your hand out asking for money I do not believe sarcasm will win friends and influence others.

*The Plan notes some racetrack operators have expertise to manage casino type gaming.  This may or may not be true, but those same racetrack operators have not shown expertise in running a Horserace wagering industry.  The Association and Horse people have taken with both fists for the past 14 years without building or even contemplating a future strategic plan.  The industry’s rejection of Standardbred Canada’s Racing Development and Sustainability Plan is a perfect example of the industry’s short sightedness.

*The Plan mentions the ‘current excellent level’ of Ontario Horse Racing.  That is undoubtedly true from a breeder, owner, jockey, trainer and race track operator perspective.  However with take outs as high as 27%, it is not true from a customer or Horseplayer perspective.  This is further highlighted when one considers the lack of Transparency, Accountability, Fairness and Integrity (TAFI) from as Horseplayer perspective as clearly detailed in my ORC proposal.

*The Plan notes the fund would be administered by OHRIA.  OHRIA’s past instills no confidence that they could run the industry.  OHRIA has had that opportunity to run the industry for the past 15 years and they have been asleep at the wheel.  Based on what I have gleaned OHRIA is merely an extension or arm of The Woodbine Entertainment Group.

*The Plan notes the need to move from a supply-side mentality to demand-side.  This need has been noted by some senior stakeholders for at least the past 4 ½ years with Hugh Mitchell being one of the more vocal proponents of such.  Yet there was zero action taken.  

 The number of race dates proposed in the Plan makes no reference or quantification or rationalization in the number of dates suggested based on demand.  A logical starting point for demand side economics would be the current level of pari-mutuel handle. One has to question the commitment to demand-side economics when the Plan notes, ‘the question remains as to the size of the fund that will be needed to fund some 797 live race dates under the new model.’  That sure sounds like a supply-side economic philosophy.

*The current model of 1540 race dates which receives $340 million in slot funding equates to an average of $220,780 per race date.  Under the proposed Plan of $210 million in funding based on 797 race dates equates to an average of $263,490 per race date.  In essence the Plan is asking the government for 20% more money per race date than it currently receives.  I fail to see the logic of such a strategy.

*The Plan recommends that the government have up to 3 appointed OHRIA board members.  If am Mr. Duncan I would be looking to have control of the $210 million in funding, not just a voice, particularly given the industry’s past history of malfesasance.

* My impression of the Plan is it has tried to appease ALL members of OHRIA.  No hard stand has been taken.  I understand that some in the industry believe that a reduction of 48% of the race dates is a hard stand, but the reality is tracks that race regularly for $50,000 or $100,000 in purses with $4,000 to $20,000 in pari-mutuel handle is ridiculous.  One of the biggest travesties in Ontario Horse Racing is Quarterhorse racing.  The industry was showing declines in both Standardbred and Thoroughbred handle and instead of investing in Ontario’s long established breeds a decision was made to divert monies to establish a third breed.  Taking a fringe hobby where they raced for purses of $600 and increasing them to $10,000-$100,000.  There has never been a customer wagering base for Quarterhorses in Ontario and probably never will be.  Had the money that has been pumped into Quarterhorse racing been spent on marketing the game’s two established breeds, making it more attractive to the Horse wagering customer, perhaps the industry would not find itself in the dire position it is currently in.  For the Plan to suggest spending $8 million on Quarterhorse racing is ludicrous.

I could go on, but I believe the point has been made.

The pertinent question I have after reviewing the Plan is, “what is OHRIA really thinking?”  Do they truly believe the government will buy into this Plan?  Having spoken with a number of OHRIA’s board members I believe there are some very intelligent people there.  Do they really believe this plan will fly or is this really a smoke screen?  Have they yet to play their true hand?  Is this part of a strategy to negotiate with the government?

My best guess is that there is a hidden agenda, but that is pure speculation.  I can only hope that there is a Plan B, because if this is as good as it gets, I cannot see Horseracing in Ontario surviving.  And that would be very, very sad…….

What I do believe is that this current plan reeks of what Mr. Sadinski referred to in 2008 as a pervasive culture of entitlement within the industry.  Based on this Plan, the mentality of OHRIA has not evolved but rather has taken a giant step backwards.


Anonymous said...

A very knowledgeable piece, written by someone who clearly knows the ins and outs of this business. Perhaps the government should look at giving a person like this a voice at their table. It would certainly do the 'customer' some good.

Anonymous said...

An incredible piece of investigation. Finally....someone has the "nuts" to come out and call it like it is. Through a FB group site that I started in April: "Stand Out/Speak Out-For The State of Ontario Horse Racing",these are exactly the points that I have mentioned from the onset. The beleagered horsemen do not want to believe that they have been taken advantage of in such a fashion,and fear speaking up against OHRIA (a div - of WEG)for fear of been "crushed" and slapped with a no trespass notice for speaking the truth. Lets face it, Stanley Sadinsky's government commissioned report written in 2008 and released in 2009 says that "OHRIA has become an ineffective regulator for the horse racing industry" and should be replaced. This report was buried by OHRIA and only now are the horsemen aware that it even existed. With the corruption,lack of transparency and accountability from leaders OHRIA and the obvious collusion with WEG, they are NOT fit to be a regulator at all. As for track operators such as Woodbine that have used the SARP program for personal self enrichment schemes, where for example Woodbine alone has received $872mm since the year 2000 that is unaccounted for...this makes ORNGE look like having a garden tea party with your grandmother, no wonder the government acted. Do you really think that the chairman of WEG stepped down because of what he said in his press release...or is he now running, because he knows the government is finally on to enrichment schemes? Then you turn around and threaten the government by saying this will be the last Queens Plate....very bad idea to get the government all riled up that already wants to rid themselves of people like that. The only way that this industry even has a hope to survive is to clean house on the regulation side of things and to either eliminate the track owners from the equasion or put a noose on them so tight they cant by a roll of toilet paper without government consent. They deserve it...they have ruined this industry through corruption and soon as the horsemen of this province realise this...the better they will be to start anew....and I am confident their days are numbered.

Candice Love

Fishface said...

What will gov't think of the Plan?!

Well one might ask what plan first and secondly, what does OHRIA think gov't will think when as Poteck points out they are basically preaching same ole, same ole in many regards.

We already know what gov't thinks of that, "cease and desist"!

It is sad that this industry is their own worst enemy