Page 69 - Winter 2020

BIG MONEY ON THE LINE
We’re not talking about a side gig when discussing the economic impact of horse racing in the state of New Mexico. It’s the third larg- est source of income, a $500-million industry. Only oil/gas and tourism are in front of it. But, if horse racing hurts, so does tourism. It’s rac- ing that pulls people from all over the country to the quaint village of Ruidoso. Many make hotel, and other accommodation, reservations a year in advance.
Lines snake out the doors of restaurants, hungry out-of-towners packed shoulder-to- shoulder after a day of racing or a late night
at one of the big horse auctions. Country/ Western music echoes onto the sidewalks in front of jammed-up bars, some of which have been in place for decades. Shops with lavish window dressings, sterling silver and turquoise jewelry, rhinestone-embellished suede dresses with fringed sleeves. It’s a shopping mecca
set against a backdrop of mountains and sun- shine. Cash and credit cards flow easily, with merchants relying on the racing season for a huge chunk of their annual income. This year, visitors were discouraged from making the trip. Even the Feds will hurt when these guys file their 2020 tax returns.
Racing employs thousands of people, from fields to farms to barns to racetracks. There are people who grow feed to sell to stores to sell
to trainers for the horses in their barns. There are veteri narians and farriers who make their daily rounds at tracks. There are the people who sell horse trailers and pickups, and other people who sell tack.
There are numerous infrastructures tucked away in racing. There is an alphabet soup of associations, all set up and defined to offer a specific aid or benefit to the people involved in the industry. The NMRC enforces the rules and regulations, striving to protect the integrity of the sport for the betting public.
The NMHA works for the benefit of all horsemen. There is the NM Horse Breeders’ Association (NMHBA), working for the welfare of the breeding segment of the state’s industry. Everyone has held the line during COVID-19.
Now, follow the money trail. There is a central, common, primary source of sustaining income for everyone; sometimes a direct route, other times more circuitous. The lifeblood is on-track and off-track betting revenue in com- bination with racing’s percentage of casino- gaming dollars. More than one-half (approxi- mately) of the betting revenue comes from on-track. That money, in one way or another, feeds everyone and stuffs the bag holding the purse money. But....
The casinos are closed and there is no on- track wagering because there are no patrons. In other words, the money source is gutted.
COVID was responsible for millions of dol- lars in lost revenue in 2020. And, one of the things most people are overlooking is what’s go- ing to happen in 2021? Think about it because, basically, we’ll be going into the new year of racing with little to no carry-over revenue.
For 2020, Ruidoso Downs is hailed as the hero of the year, with every horseman in the in- dustry tipping his hat to the iconic track. True, they received a share of the $3.2 million coming out of Sunland and SunRay. That was definitely a positive but it barely made a sound when it dropped into the bucket.
Ruidoso ran its entire 50 days, including the Ruidoso, Rainbow and All American Futurities, which form the Quarter Horse version of the Triple Crown for the entire, country-wide QH segment of the racing industry. They did this with no casino money and (very little) on-track wager- ing. They did it without concession revenue, with- out food and beverage, without gift shop, without program sales. Not even ice cream cones.
For the sake of perspective, let’s say they had $1-million per day in off-track handle. Take
three percent of that, or $30,000. $15,000
of that $30,000 goes to the track, but daily operating expenses for the track are probably somewhere between $30- and $35,000. That means they lost between $15,000 and $20,000 per day. Ruidoso Downs did a huge favor for New Mexico racing and, because of what they did, they were actually slugged with the biggest financial hit of anyone.
In 2019, the pari-mutuel combination of bets from tracks and casino gambling produced $50 million in purse money for owners, trainers and jockeys, while casinos contributed over $60-mil- lion to the state. It’s a successful, productive, sym- biotic relationship but it works only if the union between the tracks and the casinos remains intact.
The tracks could reopen to live racing but they would still be in a tough financial spot if the casinos remain closed. A divorce between those two elements spells disaster for racing because there would not be enough money generated for substantial purses, and rich purses are what horsemen follow. Depending only on pari-mutuel handle that doesn’t in- volve casinos just doesn’t provide a financially sustainable situation.
Right now, no one has put a specific number on the racing revenue consumed by COVID. For one thing, not all the information is in yet. For another, it’s difficult to devise a formula that will reflect accurately the direct economic hit. And, for yet another reason, the pandemic is not over. That may be the most unsettling of all.
We do know there’s a dangerous trickle- down effect.
For starters, the NMRC depends on on-track pari-mutuel for the money to fund its drug test- ing program. That testing is already cut by 50 percent. That’s a huge concern because it direct- ly impacts the integrity and the safety of racing in the state. At the time this article was written, the NMRC had $145,000 in testing fees and $60,000 in revenue. That’s not good math.
COVID was responsible for millions of dollars in lost revenue in 2020. And, one of the things most people are overlooking is what’s going to happen in 2021? Think about it because, basically, we’ll be going into the new year of racing with little to no carry- over revenue.
WINTER 2020 67