Las Vegas Sun

March 28, 2024

California track designed for betting from home

DIXON, Calif. -- On the brown dirt fields of this small farm town, a Canadian company plans the next wave of the global gambling boom, a horse racing track built almost solely for television and online gamblers.

The $250 million Dixon Downs racetrack and entertainment complex planned 20 miles west of Sacramento is part of Magna Entertainment's vision to rule the emerging world of television, telephone and Internet gambling. Eventually, say analysts, millions more people from Omaha to Hong Kong will bet on the horses from home, earning fortunes for firms that produce horse races and handle the wagers.

"This is going to be the first racetrack ever developed as a TV studio," says Jeff Rabin, equity analyst at Dundee Securities in Toronto.

Indeed, in an era when up to 85 percent of horse racing bets are made off track, Dixon Downs represents one of the first built for people to largely not attend.

Says Don Erickson, ex-Dixon mayor and Magna consultant, its target audience is "the person who was brought up with MTV and is not content to sit elbow to elbow in a grandstand for 4 1/2 hours to watch 22 minutes of racing."

Magna has more immediate ambitions, too, in a nation that reportedly gambled $84 billion in 2000. It's eyeing eventual profits from "racino" slot machines at 13 racetracks acquired since 1998, possibly even in a California now dominated by Indian casino gambling. All this centers on a sport widely associated with decline and older men, a sport whose bettors represented 4.2 percent of the nation's gambling in 1990, but only 1.8 percent by decade's end, according to Kentucky-based Blood Horse Magazine.

Magna's plan to build one of the nation's most advanced racetracks is just the newest twist in a corporate drama that has wowed the horse world since 1998. That's when Magna, an auto parts firm based in Ontario, Canada, began bidding for horse and dog racing tracks, eventually buying 14 in nine states and one Canadian province.

The company's plan is to "become a major owner of racing content, live racing, which you get by owning race tracks," Magna CEO Jim McAlpine said. Then the company hopes to reach "as many customers at home, in sports bars and hotels as we can."

In five years the firm has sprinted past the biggest name in horse racing, Kentucky's Churchill Downs, to dominate the sport in North America. The firm's holdings include three tracks in California, which boasts the nation's biggest betting prizes.

Likewise, Magna's track-buying spree set the stage for the company's Xpressbet, a telephone and online network begun last year to handle home betting, and HorseRacing TV, a 24-hour cable network launched in January. Both are critical to a strategy to dominate global online betting and horse racing entertainment.

In Dixon, a one-high-school town of 17,000, city officials have begun processing plans for 1,600 horse stalls, a 260-room dormitory for groomers, a one-mile track with 1,800 grandstand seats and a three-story 5,000-seat "simulcast center" for bettors to watch North American races on TV. The complex on Interstate 80 would open in 2006.

Magna also plans 1.2 million square feet of off-track entertainment, copying another emerging trend on the horse track circuit: the mini Las Vegas-style resort to attract women and families. Drawings show stores built around a walking promenade with movie theaters, restaurants and hotels.

But the company plans no slot machines at Dixon Downs; they're banned outside California's Indian reservations. Dixon Economic Development Director Marshall Drack says Magna officials have said they don't want slots in Dixon, "even if it becomes legal in California."

Magna officials, however, say California's Indians have an unfair monopoly on slot machines and would like to change that. But the California Nations Indian Gaming Association, representing 51 casinos that generate an unreported amount of money every year, opposes any legislative attempts to allow gambling beyond tribal casinos.

Called "racinos," the combination of slot machines and horse racing is growing nationally, especially as states look for ways to collect taxes and fight massive budget deficits. Already, Delaware, West Virginia, Rhode Island, Iowa, New Mexico and Louisiana have legalized slot machines at racetracks, making them formidable challengers to the nation's other gambling outlets. Though Magna owns no racetracks in those states, it has slot machines at Flamboro Downs, a track it bought last year in Hamilton, Ontario.

The company, which bought two tracks last year in Maryland, Laurel Park and Pimlico, is leading the push for slot machines there. Maryland Gov. Robert Ehrlich wants to put 10,500 slot machines at Maryland horse tracks in exchange for $350 million in expected taxes to close the state budget deficit.

Magna is also lobbying Pennsylvania officials to legalize slot machines.

Slot machine revenue would burnish Magna's image with investors and fatten its stock price, says Louisiana-based leisure and entertainment analyst Daniel Davila. The company reported a $14 million loss last year.

If Magna can get slot machines at just one track, Davila says, the impact can be "extreme," because of "the dramatic effect slots can bring to the bottom line."

Slot-machine revenue, says Rabin of Dundee Securities, means Magna tracks could offer higher purses for horse races, which "attract larger fields and better quality horses. Bettors are sensitive to better quality horses. That means more wagering and more profits."

Rabin notes that 80 percent of people who bet on horses are men, while 80 percent of those who play slots are women. Adding slots to a racetrack, he says, "increases the target market significantly."

Slots or not, Dixon residents both fear and welcome a possible new player in their midst. Says Kathey Larson, owner of The Printing Shop in Dixon: Magna's pitch is a "great idea" that will bring money and jobs. Customers, she says, are "80-20" for it.

City Hall, while remaining noncommittal, believes Dixon Downs could significantly boost the town's $11 million budget with property, hotel and sales taxes. It could be, economic development director Drack says, a "fantastic opportunity. We're getting the 21st century version of a sport that's 400 years old."

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