Pari-mutuel and Simulcast (Off- Track)
Gambling:
Memphis Business Journal, April 29, 1996. A bill
narrowly passed the General Assembly that proponents say will make a horse track in
Memphis an appealing financial proposition for investors.
The legislation was requested by
the Tennessee State Racing Commission to address the negative impact of casinos in
Tunica, Miss. on the market conditions for a horse track in Memphis. “It’s
obvious they’re not going to get casinos in Memphis so we need something to keep
those finite entertainment dollars in the Memphis area,” says Arthur Giles, executive secretary of the Racing
Commission.
The bill would allow a Tennessee track—which would run at least 34 days
of live racing—to conduct wagering on live
broadcasts of races from other tracks, or simulcasts, on its non-racing days. Current law requires two live racing days for
every day of simulcast racing, which amounts to more than 200 days of live racing, a total
that proponents of the bill say the Memphis market can’t support. [Note: Our
largest city doesn’t have a big enough market to support a race track, so
they’ve got to take in bets from other parts of the state.]
Memphis Business Journal, May 20-24, 1996. “Don’t
Bet on It: Horse Track Hopes Depend on Nashville”.
Legislation set to become law
gets a horse track in Memphis out of the gate, but it may take voters in other areas of
the state—particularly Nashville—to
make it a winner. “Nashville is critical,” says Glenn
Petty…of…the group that has been working… to bring a track to Memphis. . This
legislation allows cities with populations of
100,000 and any county to conduct a referendum
regarding simulcast theaters. … The
new act would also lower the number of live racing days required to be conducted at the
track, lowering operating costs… But it’s the potential access to markets
outside Memphis that makes the project appealing because racing advocates have already
indicated the Memphis market alone… would not be enough to support a track. That
doesn’t mean there has to be a simulcast theater in every corner of the state for the
track to succeed, Petty says, but Nashville
is considered important because of its size. Chattanooga
is appealing due to its proximity to the Georgia and Alabama borders, he says, while
tourist destinations like Gatlinburg offer possibilities.
“That’s what it takes to make this project work,” Petty says. “It doesn’t work if we can’t
utilize what’s in the new bill.”
Johnson City Press,
June 6, 1996. “New law
stirs fears of betting”. A new law to
allow pari-mutuel wagering on live televised horse races from tracks outside Tennessee
could open the door to similar simulcast betting across the state, a local anti-gambling
activist said Tuesday. “The forces of
vice never rest until they win,” she said. The
simulcast legislation was passed hours before the state General Assembly adjourned in
April. The
measure was sponsored by Rep. Joe Kent, R-Memphis, who assured his colleagues off-track
betting would be allowed only in Shelby County, where voters have already approved a
referendum on pari-mutuel racing…. “The
idea is that you could go to a restaurant or sports bar in Memphis and watch and gamble on
races that are being broadcast live from tracks in Cincinnati,” Kent said… Opponents
of the measure say … “This law has opened the door to pari-mutuel betting in
every county of this state.” … Sen. Tommy Haun… along with Reps. Keith
Westmoreland, R-Kingsport; Bobby Hicks, R-Gray; Richard Venable, R- Kingsport; and Zane
Whitson, R-Unicoi, voted for the simulcast measure. Voting
“no” were Sen. Jim Holcomb, R-Bluff City, Sen. Rusty Crowe, R-Johnson City, and
Reps. Bob Patton, R-Johnson City, and Rep. Ron Ramsey, R-Blountville.
The Tennessean, Sept. 5, 1993, pg. 5B,
“Gaming proponents ready to campaign”. The owners of Turfway Park said supporters of legalizing casino wagering at Kentucky
race tracks are willing to spend “whatever it takes” to win over the public in
the event of a referendum on the issue. Jerry Carroll said a major media campaign would be
launched to promote the concept to voters if the General Assembly decides during the 1994
session to put the matter on the ballot.
Ottaway News Service, October 22, 1997. "Singel's
[Mark Singel, lobbyist for Penn National] main goal is to legalize slot machines at racetracks. He says the four Pennsylvania racetracks including
Penn National near Harrisburg, are losing business to tracks in neighboring Delaware and
West Virginia that have slot machines."
Intelligencer Journal, November 4, 1997.
East Lampeter Township supervisors voted Monday to take their battle to close Penn National's off-track betting parlor to the
state supreme court."
"Supervisor Jake Bear said the
board should stop worrying about the parlor and should start focusing on stopping Penn National's plan to install slot machines in its off-track betting establishments."
Inquirer
Harrisburg Bureau May 6,1997. "Pennsylvania
race tracks need slots to live…Dozens of supporters…converged on the Capitol
with placards and buttons pleading with lawmakers to save the state's tracks…"
The Cincinnati Post, September 19, 1997. Burdened
with an aging fan base, limited TV coverage and - most worrisome-growing competition from
riverboat casinos, lotteries, and other legalized gambling, the
horse industry today is struggling to keep up
on a fast track it once had to itself…. The solution, some track owners believe, lies in the
"racino," a combination racetrack and casino that draws people to the track with
video terminal versions of blackjack, keno and poker."
"Since the mid-1970s, horse
betting has dropped from 36 percent of all legal wagers to less than 8 percent
today.” "To Bernard Daney, chairman of the Delaware Racing Commission, the
choice was simple: 'it was a question of slot machines or…losing the track."
Memphis
Commercial Appeal,
2-9-98, Richard Locker commentary,
"City's Churchill Downs? Don't bet on
it. "More than 10 years after city
voters approved it, Memphis finally appears about ready to get its horse track. But
there should be no illusions about what Penn National proposes to build at Interstate 40
and Warford in North Memphis once it is awarded a state racing license. Forget Keeneland,
Saratoga, Oaklawn and Churchill Downs. What
we're essentially talking about at Tennessee Downs is a big off-track betting facility
that will operate 363 days a year with simulcasts of races for across the country--with 34
days of love harness racing thrown in to make the facility legal under Tennessee law…
When lawmakers approved the Racing Control Act of 1987, after nearly five years of
debate, one of the foremost goals was to help build an equine industry in the state, plus
all the other agricultural businesses that spring up to service a rack and horse farms. That meant live racing, so the original act
allowed wagering on simulcasts only between live races at a Tennessee track. A track couldn't simulcast on a day that it
didn't feature live racing. A lot has changed
since then….As the decade raced by, lawmakers gradually relaxed the rules. Legislation approved in 1993 opened the door to
simulcasting on days without live racing-- but declared that there still had to be two
live racing days for every one day of simulcasting.
In 1996, the door was thrown wide open [note: by one vote in the
Senate]. Simulcasting could occur year-round,
but a track had to have at least 34 days of live racing…the same as Keeneland, but
still one of the shortest live racing seasons in the country. …Tennessee Downs may not be the …track
that Memphis voters envisioned in 1987. But
it will give the city the year-round legalized gambling that leaders have pursued with
vigor for so long.
Knoxville News-Sentinel, February 15, 1998. “Legalized
gambling almost a sure thing”.
Legalized gambling is, by all appearances, finally coming to Tennessee.
Eleven years after the Legislature approved betting on horse races, the
state Racing Commission is poised to approve a
racetrack gambling operation called Tennessee Downs in Memphis. All
commissioners say they support the proposal and await only final background checks of
principals in the operating company, Penn National. The Memphis gambling operation will be
a far cry from the elaborate equine operation envisioned when legislators voted to
legalize racetrack gambling in 1987 -- a vote followed by the required approval of Memphis
voters within months. The daily gambling will be in Tennessee, but
the horses bet upon --
except those in a few token harness-racing events each year -- will be elsewhere.
Bettors will place their bets, then
watch a simulcast -- races occurring somewhere else televised live -- to see if they
win or lose. In the end, folks will just watch TV and gamble. The Racing Commission -- which has been around
11 years with nothing to regulate -- is also poised to close down now that gambling is
about to arrive. It is scheduled to sunset
out of existence on June 30 unless legislators vote to extend it.
Memphis
Commercial Appeal, 4-2-98. Tennessee's decade-old horse-racing legislation
remains on the books, but with no tracks to regulate, the state's racing commission was
put out to pasture last spring by the General Assembly.
Then
Penn National's Memphis proposal materialized. The
company was convinced it could make a track work in Memphis, the only Tennessee city so
far to have voted its approval for horse racing. [Wrong. Trousdale
County has also approved horse racing.]
But without the passage of pending Tennessee
legislation to renew its charter, the state racing commission "goes pumpkin" at
the end of June. No commission, no horse racing….
It's going to happen," Southland's general
manager, Barry Baldwin, flatly predicted. He's
already preparing to compete…. Of course, Penn National also would have to attract gamblers to
Tennessee Downs.
Horseplayers
bet against one another for a share of the pari-mutuel pool, the total amount wagered on
any one race, less taxes and the track's takeout. They
play an entirely different game from the Tunica casino customers, who wager against the
house. Penn National leaders are well-aware of that.
They want to come to Memphis anyway.
 "Look,
the people in the gaming industry love Tennessee,"
said John Walzak, a horse-racing veteran and faculty member at the University of Arizona's
racetrack industry program. "It's the
reason they get up in the morning. There's a frontier there. We have not maxed out. There is still growth possible."
Penn
National's immediate strategy for Memphis is to offer its customers a clean, upscale
betting parlor 363 days a year. (They'll be
closed on Christmas and Easter.) … But the
company's long-range goal, according to Southland's Baldwin, is first to establish
off-track betting parlors, and ultimately slot machines.
State law permits OTBs, but there are no other cities that have
taken the required local option to have them. Slots
are currently illegal in Tennessee. [They won’t
be for long if the lottery prohibition is removed].
"The first thing they're going to do is get up
and running in Memphis. Second thing is to
get OTBs. Third thing is additional gaming. That's been their history everywhere they've
gone."
…[At a track owned by Penn National]…Like lots
of patrons, particularly the retired ones,
Fozone kvetches. He complains about Penn National's prices, about their
take-out rates, about the way they operate things. "I
tell you what. If they treated the customer
right they'd do a lot better.” The
hostess stops by his table. He brightens
instantly. She comments that he’s a very
good customer, and he hustles off to place a bet on a race he's been waiting for at
Florida's Gulfstream Park.
Simulcasting, industry watchers note, has pumped new
life in the horse business. And in states
such as Delaware, where slot machines are allowed trackside, the boom in business has
boosted the racing purses - which draws the horsemen.
Walzak
thinks horse racing has clearly rejuvenated itself. "Business
has restructured over the last 10 years. Radically,
in many cases. Cutting personnel, cutting
management down, cutting out levels of management, getting expenses under control." [Note: this is NOT JOBS].
When
Penn National executives testified late last year before the Tennessee Racing Commission,
they described how several years ago they decided to beam some of their races up to a
satellite, so that local cable customers could watch the races at home. [This is called simulcasting].
Memphis Commercial Appeal 4-2-98, “Penn
National has its $15 million at the ready”. .. Live horse racing, a seasonal
business beset by dwindling attendance, has become a sideline. [Note: this is where
the jobs come from that the gamblers promised the Memphis voters.]Penn
National makes the bulk of its money by drawing race fans to facilities in
Pennsylvania and West Virginia to peer at televised races occurring at 75 other sites
around the United States while betting as if the horses were thundering around the
local track. These satellite signals open the betting windows at storied Hollywood
Park, Belmont and Saratoga, for example, to local bettors, keeping cash coming in seven days a week
year-round.
Penn
National revenues from simulcast events were 2 1/2 times that of live racing last year. With those kind of results it has no plan to break
the mold in Memphis. Tennessee Downs, as proposed, would offer 34 days a year of live harness racing,
and based on company estimates, lose money each
of its first four seasons after taxes. [Again, this is not to provide JOBS, which they usually promise.]
But
its clubhouse, restaurant and bars would be open
for simulcast betting every day but Christmas and Easter, generating an estimated
$1 million in the year before the rest of the
0facility is completed and opened for live racing.
"Without
full-card simulcasting, we wouldn't be there," said Joseph Lashinger,
a Penn National vice president and a director of Tennessee Downs, Inc.
The Commercial Appeal 12-11-98 Racing
on track, but with hurdles: Encouraged by a judge's recent ruling that pari-mutuel
wagering on horseracing remains legal in Memphis, Penn National Gaming Inc. now hopes to
start construction on its planned racetrack and betting parlor next summer.
But before any betting windows open in North Memphis, it still faces daunting legal and
legislative hurdles - over its regulation if not over its existence.
Penn National wants to wait and see if the General Assembly will reactivate the state
racing commission - something the Senate refused to do in 1998 -even as the corporation
faces an appellate court fight with the state attorney general's office.
Corporate officials believe that an outright appeal of the state's horse racing statute is
unlikely and that it's best to have government oversight of the racing and the wagering.
``So this is not a gambling vote anymore,'' [say what?] said Penn National's Joe
Lashinger, who hopes to open Tennessee's first horse track since passage of the racing act
11 years ago.
``It's `Do you want it regulated? Or do you want it unregulated?' And we would prefer for
the state to regulate it.''
Ulysses Jones (D-Memphis), the chairman of the House State and Local Government Committee
and a horse-racing supporter, predicts that Lashinger's clear-cut regulation scenario
won't be as sharply defined once it's debated in the General Assembly.
``By the time that you get it to Nashville, based on the mentality of the people in the
Senate, that's what it's going to be turned into - a vote that's dealing with gambling,''
Jones said.
And horse-racing opponents promise to fight Penn National vigorously in Nashville this
January.
``I foresee its being the same situation it was in the last General Assembly,'' said
Bobbie Patray, the state chairman of the Eagle Forum, a conservative organization strongly
opposed to horse racing.
Meantime, Penn National plans to start construction of Tennessee Downs in mid-1999. The company would open the simulcast betting
parlor immediately, then have its first live racing in May 2000.
Penn National applied for a state license in 1997. It did so just as the racing commission
was about to be dissolved under the Sunset Act.
Penn National got its license in early 1998 and hoped the legislature would extend the
commission's life. But that didn't happen.
The commission went out of business, and, seemingly, so did Penn National's chances of
opening its planned track at Interstate 40 and Warford.
Then in November, Shelby County Chancellor Floyd Peete Jr. ruled that the legislature's
failure to renew the racing commission hadn't, by default, made pari-mutuel gambling on
horse racing illegal in Memphis.
Instead, it simply rendered it unregulated. Only a repeal of the racing act would make
racing illegal, Peete ruled. He ordered Shelby County Dist. Atty. Gen. Bill Gibbons not to
prosecute Tennessee Downs for violating the state's gambling laws should it start
accepting wagers on races.
State Atty. Gen. John Knox Walkup represents
Gibbons. Walkup contends that pari-mutuel wagering on horse racing isn't legal because the
racing act mandates that a commission be in place.
After Peete's ruling, Tennessee Downs' prospects brightened.
In fact, the company believes it could open a simulcast betting parlor immediately and
still be within the law. [no track built, no
simulcast per state law]. It says it won't for now. ``We want to be regulated,'' said
Lashinger. ``We would rather have this decided in the legislature.''
Penn National hopes that, if the state chooses not to oversee its operation, the city will
enact its own racing commission.
The state attorney general's office plans to contest Peete's ruling, but Penn National's
attorneys expect the General Assembly to decide the matter before it gets to the state
appellate court.
``What we did was we told the Attorney General that the best thing that could happen would
be to have the legislature resolve this one way or the other, either by repealing the
underlying statute or resurrecting the regulatory commission,'' said Nashville attorney
Henry Walker, who represents Penn National.
``So we struck an agreement with the A.G. that we would not open for business until the
legislature had the chance to address the situation.
``And since we made that commitment, the attorney general's office said, `Well, then
there's no need for us to seek a stay of the chancellor's order.' ''
The attorney general is contesting Peete's ruling nevertheless, Walkup spokesman Sharon
Curtis-Flair said Thursday.
Commercial Appeal 3-9-99 Abstaining
Cohen blamed in defeat of horse race bill NASHVILLE
- Sen. Steve Cohen (D-Memphis), a longtime backer of horse racing in Memphis, is being
blamed for Monday night's defeat of the bill designed to bring pari-mutuel horse racing to
Memphis. Cohen abstained from voting on a bill that would restore state regulation of the
proposed harness racing track and off-track betting facility planned by Penn National
Gaming Inc. near Interstate 40 and Warford. The bill failed 15-16-1, two votes short of
the 17 votes needed for passage. Lt. Gov. John Wilder (D-Somerville) did not cast a vote,
but said he would have voted on the measure ``if I would have made the difference.'' Penn
National lobbyist Robin Merritt said Wilder had intended to vote yes, making the decisive 17th vote. The measure could be
recalled later. ``They should have counted their votes better,'' Cohen said after the
session, explaining that he wasn't comfortable with racing regulation being handled by the
state Department of Commerce and insurance rather than a state Racing Commission, which
was dissolved last year. ``I told the lobbyist I wasn't ready to vote on it,'' said Cohen.
``I proposed the original bill, and I'm not sure that the Department of Commerce and
Insurance is the right place to put racing. This is not what I sponsored and it's not what
the people of Memphis necessarily voted for.'' ``Memphis
voted for thoroughbreds and a minimum of simulcasting, not a minimum of harness racing and
a great deal of simulcast (betting on televised races from other tracks),'' said Cohen. ``I'm
not necessarily against it, I just wasn't ready to vote for it. This is an issue very
close to me, but this bill is not what the people voted on; it's not thoroughbreds and it's not the Racing
Commission.''
Knoxville News Sentinel 3-14-99 AP story--…
The Senate earlier this month rejected a proposed harness racing track in Memphis that
foes warn could open the door to other forms of gambling in the state. That bill can come back, however, and there are
four other bills dealing with the track proposal.
May 22, 1999, legislative update SB 887 - On
Wednesday evening, the bill to revive the racing commission went down to defeat. 12 ayes -
20 noes.
About seven on Wednesday evening, Sen. Jim Kyle finally
presented the latest
version of SB 887 to the Senate. It had gone through 12 rewrites before it
got to the floor. The final one (Amendment 12) reinstated the Commission,
directed the Governor to appoint the members, permitted Penn National to
reapply for a new license, validated the rules previously promulgated,
increased the "handle" (amount of revenue) from simulcasting, and required
that there be a referendum at the Memphis Mayor's election in October.
All the Penn National Lobbyists (including Penn National VP Joe Lashinger)
were gathered at the rail near the entrance to the Senate Gallery. After about an
hour's debate which included a lengthy impassioned plea from Sen. Kyle to support the
bill, the "question was called". At
8:12 p.m. the votes went up:
12 ayes and 20 noes, Speaker Wilder not voting. Senator
Tom Leatherwood intervened with the two undecided votes and persuaded them to vote no.
OUR THANKS TO the following no votes:
Senators Ben Atchley, Marsha Blackburn, Tim Burchett, Charlotte Burks, Bobby Carter, Bill
Clabough, Rusty Crowe, Lincoln Davis, Gene Elsea, David Fowler, Tommy Haun, Doug
Henry, Roy Herron, Tom Leatherwood, Randy McNally, Jeff Miller, Curtis Person, Ron Ramsey,
Mike Williams, and Andy Womack.
August 1999- Favorable
court ruling on Racing Commission -- The Court of Appeals reversed the
November Chancery Court decision ruling that it had no jurisdiction to enjoin the District
Attorney General from prosecuting Tennessee Downs [the name of the proposed harness track
being pursued by Penn National] if they engage in pari-mutuel wagering on horse racing.
[Note: the Tennessee Attorney General had
ruled that if there was no Racing Commission, there could be no track. A judge had ruled otherwise, and now that decision
has been overturned. This is cause for
thanking God!]
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