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It's a horse race for gambling dollars Emerald Downs is a winner in its first year By BILL KNIGHT SEATTLE POST-INTELLIGENCER REPORTER UBURN -- With Emerald Downs' first season heading down the homestretch, horse racing has experienced a significant comeback in Western Washington. The track's president, Ron Crockett, said Emerald will turn a profit this year, about what he anticipated. It is a pleasant contrast to many tracks elsewhere in the country where the sport is gasping for survival. But the new hub of Pacific Northwest racing is less successful than many had hoped. Attendance and handle, the amount of money wagered at the pari-mutuel windows, have slipped below projections, forcing a cut in purses for horsemen. And looming ahead is a contest of survival. After years of being the major form of legalized gambling in the state, horse racing faces heavy competition. First came the state lottery. In recent years tribal casinos have opened across the state featuring Las Vegas-style games such as craps, blackjack and keno, all aimed at the wallets of bettors anxious for a quick payoff. With their livelihood threatened, racing interests have not backed off. They are major players in a fiercely competitive, extremely complicated fight for the gambling dollar that is teeming with intrigue, politics and high finance. One of the battlegrounds could be in the Auburn area of South King County, where Emerald Downs and the posh gambling casino operated by the Muckleshoot Tribe are separated by about eight miles of highway. There has been one skirmish already. The Muckleshoots made a bid this year to take over operation of Spokane's troubled Playfair Race Course. The state Horse Racing Commission, skeptical over the tribe's motives, turned down the request. Now the conflict is headed for court. Most horse racing groups, like the Washington Thoroughbred Breeders Association, think the tribe is trying to gain a foothold in racing to enhance its off-track satellite wagering position. The breeders, strong supporters of live racing, backed the commission's decision, as did Crockett. In a letter to the commission, Dan Agnew, president of the breeders association, called the Muckleshoots' Playfair bid "simply a move to get their foot in the door and build a case for the expansion of casino games, super-payoff bets and simulcasting as the savior of Playfair racing at the expense of Western Washington racing endeavors." In some parts of the country, simulcasting -- beaming live races to off-track pari-mutuel wagering facilities -- has boosted revenue considerably. In other areas it has all but killed live racing. Many involved in horse racing here would like to see live races combined with satellite feeds from out of state. In California, that mix has boosted the daily handle, thus increasing the purses that sustain the horsemen who put on the show. At present only major races, such as the Triple Crown races, Breeders' Cup and occasional big stakes events from the West Coast, are allowed in the two dozen or so state wagering facilities. But if you're in business at Emerald Downs, like Crockett, there's a potential problem. The agreements negotiated between the state and tribal nations as mandated by the federal Indian Gaming Regulatory Act essentially would allow their casinos the same rights as those granted any nontribe operation. That means if satellite racing were expanded at racetracks, it could be open season for bringing in out-of-state races to the tribes' off-track facilities. "Say the Legislature passed a law allowing full-card and commingled races," said Ralph Vacca, general manager of the breeders' organization. "It'd be great, for example, to have Santa Anita races here after Emerald's closing. But that (change) would allow the casino a few miles away to bring in racing 365 days a year, maybe 20 hours a day." Bruce Batson, executive secretary of the state Horse Racing Commission, said that agency is aware of a strong undercurrent in horse racing's rank and file who want expanded satellite racing made available from out of state. "The question I ask is, what will be the effect of a competing product on the local industry? I'm not sure anyone really quite has the answer to that." Crockett has reaffirmed his commitment to live racing, pointing out the devastating effect a heavy diet of simulcasting had in Oregon. The Emerald Downs president concedes that "at some point we would have to go to a more expanded form of simulcasting." But when? At what cost? "We worked with horsemen across the state to get this facility (Emerald) built. One of the commitments is that we're live racing people. . . . Now comes that very difficult decision on when you expand simulcasting and not hurt the live product, but supplement the live product. That's the difficult decision point." How to deal with simulcasting is just part of the dilemma. In the Nov. 5 election, voters will decide the fate of Initiative 671, which would allow tribal casinos to add slot machines. Such electronic gaming equipment remains illegal in Washington. Approval at the polls could result in slots and other electronic gaming devices such as video poker dramatically boosting gambling activity in the state. Slots, the No. 1 moneymakers in casinos across America, are simple to play, especially compared with horse racing. "If initiative 671 should pass, that could be absolutely devastating for the whole thoroughbred racing and breeding industry in the state of Washington," said Vacca of the Washington Thoroughbred Breeders Association. "It has to do with diluting that gaming dollar just that much more." Having hundreds of slot machines at a casino just up the road from Emerald Downs "would be absolutely a disaster," he said. In some states, horse-racing interests have won approval to add slot machines next to mutuel windows to increase revenue and preserve the sport. Dover Downs in Delaware is thriving because of the slots. So is Prairie Meadows near Des Moines, Iowa, after a brush with bankruptcy. Now there are efforts to allow expanded gaming opportunities at tracks in Maryland, New Jersey, Arkansas, Illinois, Oklahoma, Nebraska, Kansas and even Kentucky, cradle of horse racing. Is it possible, or likely in Washington? If Initiative 671 passes, allowing slots at tribal casinos, there could be pressure on the Legislature to permit electronic gaming devices off reservations. State Gambling Commission spokeswoman Carrie Tellefson thinks if Washington ever allows slots at other places besides racetracks, the tracks also would be permitted to add slots. "There would be tremendous pressure," Tollefson said. "We've got a large gambling industry now that provides multimillions in funding charities." Batson of the Horse Racing Commission agrees. "With a gambling industry that's active in the political arena, it's hard to imagine them saying, 'Go ahead and have slot machines at racetracks and casinos and that's OK if you don't include us,'" he said. "I think if they go into one location, they'll be all over the place." Tellefson said in negotiating compacts with the tribes, federal law strictly prohibits the state from taxing casino earnings, which are earmarked for education, housing and other improvements for tribal members. In contrast, the state took in about $3.3 million last year in taxes from horse racing pari-mutuel money. That amount will increase to about $3.75 million this year, a flat 2.5 percent of the handle. Batson estimates the total handle for racing in the state in 1996 will be about $150 million, up from $134 million a year ago, thanks to the opening of Emerald Downs after three years without live racing in Western Washington. The increased handle was expected. It remains several furlongs from the $240 million bet in the state in 1992, the last season of live racing at Longacres, the storied track in Renton that had a 60-year run. The opening of Emerald Downs ended three grievous years for those who make their living breeding and running horses. Some supported racing at Yakima and Spokane. Others disrupted their families and shipped their horses to California. The breeding business took the biggest hit; the number of foals in the state declined nearly 40 percent between 1989 and 1994. Crockett's only major disappointment with the first season at his $82 million facility was the shortfall in the handle that caused purses to be cut 12 percent in September. By agreement with horsemen, 6.5 percent of the money wagered is distributed to winning owners. Projected at about $1.1 million a day going into the late-starting season, the handle was $968,685 through the first 60 days and the adjustment was made. "Certainly it is fair to say the expectations by most probably have not been totally reached, given the projections," said Vacca of the Washington Thoroughbred Breeders Association. "That's the only thing that's sort of a downer." Crockett said the difference was roughly equal to the money Emerald Downs had hoped to generate for purses from satellite off-track betting operations in Spokane and Yakima that did not open this year. Emerald races are beamed to 22 other off-track betting locations, including casinos in Bellingham, Anacortes and Sequim. Attendance fell after Labor Day and is expected to end up at about 6,500 a day, short of the projected 7,000 average. But Crockett wasn't whining. "Quite frankly, with the late run by the Mariners and Husky and Seahawk football starting, that taildown isn't surprising. The Mariners had three straight sellouts their last weekend. Good for them for their success," Crockett said. Revenue from other sources -- admissions, food and beverage sales, group sales, parking, racing forms and programs and the gift shop -- have been higher than expected. "We definitely will be profitable in our first year of operation," Crockett said. "Some things are higher and some lower, but it will net out about what we projected early on." Unlike Longacres in its latter years, Emerald has major debts, making a steady cash flow even more important to the operation of the new track. Crockett has avoided discussing specific numbers and declined to confirm reports that he told the breeders' annual meeting the track's mortgage is $5.4 million a year and rent is $1.12 million. Crockett said the decline in the number of horses late in the season is not unique to Emerald Downs. He pointed to entry lists for California tracks that showed many races with six or eight horses. "There's a horse shortage across the nation that is very acute, and we bumped into a situation where we had horses that had been running all year," he said. "Then we got into the time period (September) when Longacres normally would have ended." Crockett remains upbeat about the future of Emerald Downs, despite the possible conflicts and a negative campaign by the anonymous "Spokane Horsemen" accusing him of trying to kill Playfair. Crockett has questioned the financial potential of the Spokane track and voiced concern about regulatory fees that he feels help subsidize Playfair and Yakima. "I think we have a great base to build on right now," Crockett said last week. "Judging from the response from people who have been here and said they'll be back, I think it will grow." Vacca and most of the owners and trainers agree. "I think by and large everyone is very, very happy. I cannot think of anybody who has had many complaints about the facility, the way they've been treated, the food, the pricing. The positives certainly outweigh the negatives." Given the alternatives of the previous three years, Vacca said, "We've died and gone to heaven." Send comments to webmaster@seattle-pi.com © 1996 Seattle Post-Intelligencer The Hearst Corporation All Rights Reserved