by Bill Finley
The Historical Racing machines that began operating at Red Mile in 2015 may have gotten off to a slow start, but recent trends show that they have caught on with gamblers in the Lexington, KY marketplace and are now creating a significant revenue source for both the city’s standardbred and thoroughbred operations.
Red Mile’s president and CEO Joe Costa told Harness Racing Update that the machines handled $224 million in 2016 and he expects that number will increase dramatically this year. He said the track had a record month in February and said every indication is that March’s number will establish still another record.
“It is going wonderfully,” Costa said. “There were a few surprises relative to our original premises. But none of those surprises deterred us from what we thought all along, that this would be a tremendous success and a great benefit for the equine industry in Kentucky. We found out that this particular product takes a little while to catch on. But we are now hitting our targets and have every reason to believe the business is going to continue to grow over the next five or six years.”
Explaining that Historical Racing games aren’t as profitable as slot machines, Costa said that the net profit from Red Mile machines is somewhere between one and two per cent. And that money has to be split with Red Mile’s partner, Keeneland. An agreement is in place with Kentucky harness horsemen whereby purses were doubled for the 2016 and 2017 meets. Costa did not want to speculate what the purse structure might be in 2018 when a new deal will kick in.
Keeneland has boosted its purses for its upcoming meet, attributing most of the increases to Red Mile machines. Purses for some races have risen by as much as 17 per cent.
Red Mile has discovered the Historical Racing machines, also known as Instant Racing, normally are not an overnight success. They are made to look and act like slot machines, but are instead a pari-mutuel-based game where players win or lose based on the results of previously run or “historical” races. Gamblers have traditionally flocked to slot parlors the moment they open, while taking a wait-and-see attitude when it comes to Historical Racing.
“This is something where the handle on these games grows incrementally,” Costa said. “Historical Racing and slot machines are different in so many ways. With slots, you open the door and ‘bang.’ With these machines you have to slowly build the business before you get to the point where you’re close to mature gross gaming numbers for the marketplace. It might take five or six years for that to happen.”
Costa said that the primary benefit from the machines is that they have guaranteed that one of the sport’s most iconic racetracks will be here for years to come.
“Now that we’re seeing that these machines are turning out to be everything we’d hope they would be, they are going to be a significant revenue stream,” he said. “That will allow us to reinvent ourselves, modernize the facility and preserve and save a 140-year-old institution. For myself and for the ownership, these are exciting and hopeful times. We had a long walk in the desert while we were trying to figure out a way to preserve this institution.”
As long as profits from Historical Racing continue to grow and after the current agreement with horsemen expires, there will likely be a large pool of money available for purses. Costa is not sure, yet, how it will be divided up, noting that management and horsemen will have to solve one of those nice problems to have.
“There are a lot of mouths that will need to be fed,” he said.
Possibilities include adding racing dates, increasing overnight purses and enhancing the Grand Circuit races.
Costa said that he would like to focus on rebuilding the overall Kentucky racing and breeding industries.
“One thing I think is truly needed is to build the fair program in Kentucky,” he said. “We have to start to develop a farm system to grow the racing base in Kentucky. Overnight-racing Kentucky horsemen don’t really exist anymore. We have to bring that aspect of our industry back.”
He said he would personally be against expanding the racing schedule at Red Mile.
“I’m hoping horsemen realize there will be an issue when it comes to filling additional races,” he said. “There just aren’t enough horses out there. Look at the Meadowlands and how they struggle to get full fields. What does that tell you about having even more racing?”