As the horse racing industry in Ohio tries to re-invent itself with video slots and a new track in Austintown, state legislators should beware of mistakes in neighboring states that ''saved'' racing by doling out proceeds to cronies instead of investing in local communities.
An argument used frequently to convince state legislators to legalize gambling at racetracks is that it is needed to preserve horse and / or dog racing. Too often when that claim is accepted, it results not just in survival for the racing and breeding industries - but a bonanza.
Ohio already has programs to subsidize horse racing. The Thoroughbred Race Fund and Standardbred Development Fund (for harness racing) paid out nearly $3 million last year.
Now, some legislators want to give the Ohio Racing Commission a cut of the income from tracks where video wagering devices are being licensed.
Ohio stands to pocket nearly $150 million from a gambling company building two casinos so that it can move its two horse racing tracks to Austintown and Dayton and reduce the competition for drawing gamblers to its casinos.
The two neighborhoods that will be left with an abandoned horse track and acres of empty land face an uncertain future. Ohio has pledged to chip in up to $3 million so that the two cities losing the horse tracks, Toledo and the Columbus suburb of Grove City, can find a new use for the locations.
Penn National Gaming Inc. plans to move Beulah Park's thoroughbred racing from suburban Columbus to Austintown, where it will build a new track on property located south of Interstate 80, near state Route 46. Penn finalized a $4.65 million purchase of the approximately 180 acres in late April.
It also wants to relocate Raceway Park in Toledo to a new track in Dayton on the site of a shuttered auto plant.
Penn National, which owns and operates 19 casinos in the U.S. and Canada, has pledged to give the state about one-third of the profits from video slot machines that it wants to put in the new horse tracks. That is in addition to a $50 million license fee for the video gambling machines at each track. And that's on top of a $150 million relocation fee that will go to the state's general fund.
The agreement hinges on whether state lawmakers will give their approval to video lottery machines at the state's horse tracks and if the state wins a lawsuit filed by gambling opponents. The opponents are challenging whether the state can allow video slots at the horse tracks without voter approval.
Lawmakers who want to give the Ohio Racing Commission a cut of the income should keep in mind that this is how gambling-funded programs in other states, including nearby West Virginia, have operated for several years. Percentages of the gambling take go into the funds and are paid out to horse and dog racers and breeders.
That has made breeding and competing with racing dogs and horses a very lucrative business for some people. One greyhound breeder in West Virginia collected $655,012 from the state fund during a 12-month period. A total of more than $5.3 million was doled out through that program. Even Gov. Earl Ray Tomblin's mother is involved; her Tomblin Kennel Inc. raked in $268,410 from the breeder's fund in 2010.
West Virginia's gambling-supported horse racing fund did even better. In 2010 it paid out more than $8.1 million to the state's two horse racing tracks, to pay prizes and otherwise help those involved in the racing industry.
Preserving horse racing in Ohio is one thing. Diverting gambling proceeds that could go to local and state governments, paying the money instead so breeders and competitors can reap huge rewards, is another.
Legislators should ensure they do not allow that to occur. Grove City and Toledo deserve help replacing their empty shells. Austintown and Dayton will need help attending to all of the gambling ills that will burden their communities.