Michigan racetrack owners eager for slots

Amy F. Bailey

Thursday, June 5, 2003 | 10:05 a.m.

LANSING, Mich. -- Daniel Rakieten says he has done everything he can to save the horse racetrack in Jackson that's been in his family for 55 years.

After reducing the number of races and laying off employees to cut costs, Rakieten said he will have to close if lawmakers don't approve a plan that would allow slot machines and other games at horse racetracks.

"It's crucial to our survival," he said.

Rakieten and other horse racetrack owners and operators said their revenue began dropping when the state lottery began in 1972, but the situation has grown worse since casinos opened in Detroit and on Indian reservations around the state.

In an effort to boost attendance at Michigan horse racetracks, the state House last month approved legislation that would allow each track to install at least 500 slot machines and other gaming devices to lure new customers.

The Senate and Gov. Jennifer Granholm haven't shown the same kind of enthusiasm for the three-bill package.

A spokesman for Senate Majority Leader Ken Sikkema, R-Wyoming, said the legislation will have a difficult time in that chamber because many senators either oppose expanding gambling in the state or worry it would hurt existing casinos.

"It's an underestimate to say that this will have a tough time in the Senate," spokesman Bill Nowling said.

Granholm has said she understands the desire to increase race track attendance, but has some reservations.

"I've said repeatedly that I'm very concerned about the proliferation of gaming in this state," she recently told reporters. "I'm ... cognizant of the fact that if you've got thousands and thousands of (slot) machines, then you eventually turn a racetrack into a casino that happens to have a horse nearby.

"I don't want that to happen," she said. "So I think there needs to be a balanced and thoughtful approach to this."

Although Michigan Racing Commissioner Robert Geake said he couldn't take an official position on the bills because he's part of the Granholm administration, he has long advocated installing electronic gaming machines at horse racetracks.

"I do believe that something of this nature ... has to happen to save the horse racing industry in Michigan," he said. "They no longer can attract the bettors they used to because of casinos."

There appears to be little public sentiment for installing electronic gaming machines at horse racetracks, however.

Sixty-six percent of the 600 registered Michigan voters polled May 5-9 by Lansing-based Marketing Resource Group oppose legislation allowing the machines. Twenty-five percent said they supported it, according to the poll conducted for the newsletter, "Inside Michigan Politics."

The poll had a margin of error of plus or minus 4 percentage points.

Owners of the three Detroit casinos are lobbying heavily against the legislation, worried that additional gaming opportunities will reduce the number of people visiting their casinos.

The nonpartisan House Fiscal Agency said the state Lottery and three Detroit casinos could lose $18 million to $54 million in revenue if each horse racetrack installs the maximum 2,000 electronic gaming machines allowed under the bills.

The electronic gaming machines are expected to generate $200 million to $400 million, according to the House Fiscal Agency analysis. The money would be split between the race tracks, the state general and school aid funds, state agriculture needs and the city of Detroit.

In an effort to offset revenue lost by the Detroit casinos, lawmakers introduced a bill that would allow the casinos to broadcast and take bets on horse races.

But the House put off a vote on it because it didn't appear to have the three-quarters vote needed to amend a law approved by Michigan voters in 1996 that authorized the three Detroit casinos.

Attorneys hired by the Detroit casinos said the whole package will wind up in court if it's signed into law because each bill would amend the voter-approved Detroit casino law and needs approval from three-quarters of each legislative chamber.

Some opponents of the legislation say it would make Michigan's gaming industry bigger than Las Vegas' because the bills would allow people to bet on horse races by telephone and over the Internet. They also would permit up to 15 off-track betting facilities to open a year.

Others question if adding slot machines really will give racetracks the boost they need.

Jacob Miklojcik, an economic consultant for Greektown Casino in Detroit, said only two states -- West Virginia and Delaware -- have successfully added electronic gaming machines to their horse racetracks. Neither state has casinos.

But Dan Adkins, vice president of the Hazel Park Harness Raceway, says adding slot machines creates an opportunity to get more people interested in the sport of horse racing.

Adkins' business group owns one of the West Virginia horse race tracks that installed video gaming machines, and he has seen the additional gambling options bring people to tracks who wouldn't otherwise come.

"If you can attract people who want to come to gamble, then you can introduce them to racing," he said. "Once they experience pari-mutuel racing they like it."