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Odds are, bet on Downs a losing proposition

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Capitulation does not always have to be a bad thing.

Sometimes, it's more mature to recognize when a fight is no longer worth fighting. When it is better to keep your powder dry now to fight another day.

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Unfortunately, in capitulating, you need to ensure you are not creating more problems than you had before. Yet that appears to be exactly what has happened with a decision by the province to capitulate in a battle with the Manitoba Jockey Club (MJC), operators of Assiniboia Downs.

The province announced Wednesday it reached a 10-year deal with the MJC to keep the race track open.

For many years now, MJC has enjoyed a larger share of VLT proceeds than any site holder in the province. No longer interested in subsidizing horse racing, in January 2013 the province served notice it was terminating the revenue-sharing agreement. The MJC went ballistic, hiring lawyers, filing lawsuits and threatening anyone they perceived to be a threat.

In reality, there never was much promise in all the MJC legal wrangling. And yet, the province backed down.

The settlement will see MJC receive increasingly smaller operating grants over the next decade, until the only support it will receive will be what any site holder would earn from the VLTs. MJC has said it will spend time over that decade on a development plan in partnership with Peguis First Nation.

That solves one problem. However, in knuckling under to the MJC, the province has created several other problems that could make this fight seem like an insignificant undercard.

First, let's be honest about the fact horse racing itself will never pay the bills at the Downs. It is a dying sport, in large part because the betting public has moved on to more modern and convenient forms of gambling. For many years now, the only thing keeping many tracks open has been government and taxpayer largess.

With these market realities, what will the MJC do to save the Downs? It has bet its entire future on a partnership with Peguis First Nation to build a $100-million redevelopment featuring two hotels and convention facilities. The MJC/Peguis partnership has also made no secret of the fact it would like to include a casino. This desire was repeated Wednesday in various media interviews involving MJC/Peguis lawyers.

This is where the province has done a great disservice to MJC. In addition to allowing it to continue drawing taxpayer money, in capitulating it appears the province has given MJC and Peguis hope a casino deal could be done.

The official line from the province is there will be no additional casinos on the outskirts of Winnipeg, and no casino deals with individual First Nations. There is no reason to believe that position has changed. But perhaps the MJC and Peguis believe that having successfully bullied the province once, they can do it again.

Ah, if only that were the only lingering concern created by this mess. In setting the MJC loose to pursue a redevelopment with Peguis, the province is also setting the stage for a huge battle in the future with similar existing or proposed developments.

Currently, the city, along with support from the federal and provincial governments, is expanding the RBC Convention Centre Winnipeg at a cost of $180 million. As well, the province is a co-owner of Brandon's Keystone Centre, a convention facility that is also home to the Royal Manitoba Winter Fair.

In addition to all that, the Red River Exhibition Association is in the midst of a major expansion and redevelopment of its lands adjacent to Assiniboia Downs. These plans include -- you guessed it -- convention facilities.

The RREA approached the MJC last year with a proposed partnership to redevelop the Downs and the exhibition lands together. One of the main reasons the province supported the RREA plan was it ensured all that land in far west Winnipeg would be redeveloped in a complementary fashion. Allowing the MJC a reprieve not only ends hope of a co-ordinated approach, it all but ensures the MJC and RREA will pursue competing developments, something that will erode the viability of both.

When you look at the consequences of capitulation in this instance, it is impossible to figure out what the province was hoping to accomplish. The MJC/Peguis legal assault, which included a motion for an injunction, was not destined to succeed. If there ever was a time for a government to dig in its heels and hold firm, this was it.

No, capitulation doesn't have to be a bad thing. But for it to be the right thing, you have to be sure that in backing down now, you haven't created bigger problems down the road.

With this deal, the province has not only committed itself to pouring millions of taxpayer dollars down a less-than-promising black hole, it has also set the stage for a whack of future trouble.

dan.lett@freepress.mb.ca

Republished from the Winnipeg Free Press print edition April 25, 2014 A7

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Updated on Saturday, April 26, 2014 at 8:08 PM CDT: Fixes typo.

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