Hey there, time traveller!
This article was published 9/4/2013 (1333 days ago), so information in it may no longer be current.
In recent weeks there have been several articles concerning the funding of horse racing and the Manitoba Jockey Club, which owns and operates Assiniboia Downs.
Statements such as "after having poured almost $200 million into Assiniboia Downs over the last two decades" and "almost $10 million annually" need clarification.
These numbers are presented in the context that they are a massive subsidy and that these funds could be used for some other purpose if there were no horse racing.
This is mistaken and reflects a serious lack of knowledge about how racing is funded. The fact of the matter is that all of the funds that flow into racing are generated at Assiniboia Downs. I repeat "all funds."
Aside from ancillary income from food sales, rentals, trade shows, simulcast wagering, etc., the two main sources of revenue are: pari-mutuel wagering on the horses; and VLT revenues from the VLTs located at the track.
All wagering on horse racing is supervised by the Government of Canada and is subject to a "take out" or "withholding," part of which goes to the track and part of which goes to the provincial government as a pari-mutuel levy.
This levy is the successor to the old pari-mutuel tax, which was a "sin" tax and is unique to horse racing.
Every time a bet is made, the province collects a levy. For a number of decades this levy or tax has been rebated to the industry to support horse breeding and "purses" at the track. The levy is in the order of $2.4 million per year and the rebate to the industry is a similar amount.
These rebates are treated as grants and it is mistakenly assumed that they come from general tax revenue when, in fact, they are generated at the track. The rebates, if reduced or eliminated, would reduce wagering and the levy income proportionately.
If there is no racing, the government does not have to pay the rebates but loses the levy income and so does not have the funds to deploy elsewhere.
Assiniboia Downs' other major source of revenue is the VLTs in the track's gaming lounge.
These VLTs, just like those in every hotel, aboriginal casino, legion, the Jets new gaming centre, etc., are governed by a contract with the Manitoba Lotteries Corporation. The Downs provides the space and staffs the premises and receives a commission on the revenue.
Once again, if the machines are removed, the commissions don't have to be paid but the revenue also disappears.
If these funds are grants, then so are the funds flowing to the hotels, legions, aboriginal casinos and the Jets from VLTs, slots, etc.
All the contracts governing these gaming revenues are with the Manitoba Lotteries Corporation, not the government of Manitoba. The Manitoba Jockey Club, unlike the hotels and the Jets, is a non-profit corporation.
The Manitoba Jockey Club has successfully operated Assiniboia Downs for 20 years. It took over operation of the track in 1993 when it was in receivership and the provincial government, the bank, the horse breeders, the horsemen as well as the Wright family all agreed it was the best way to preserve racing.
The Jockey Club is governed by a volunteer board made up of individuals, each with many years of experience in the industry. Most of them were involved in the 1982 bankruptcy when the minister responsible, Muriel Smith, pulled the industry together to co-operatively develop a solution to save horse racing. These individuals, who serve as volunteers, have operated the enterprise effectively and have retired the $10-million bank debt they inherited when they took over.
The economic impact of Assiniboia Downs on the Manitoba economy has been studied many times, each time concluding that it is substantial generator of economic activity and taxes for the province. The most recent of these studies, done by PricewaterhouseCoopers, put the economic impact at $51.9 million per year plus hundreds of jobs, both direct and through farms and suppliers.
I believe that all of the above information is factually correct, based on my lifetime of involvement in the industry and having served 10 years as chairman of the Manitoba Horse Racing Commission under two different governments.
Any significant reduction of these funds, which are available to other non-profit and for-profit enterprises and generated on site, will destroy an industry that has a significant economic and entertainment role in Manitoba. That would be tragic.
Wayne Anderson served 10 years on the board of the Manitoba Horse Racing Commission and was chairman under two different governments.