B.C. Horse Racing Industry Management Committee
Horse Racing Industry
Business Plan
The next stage in revitalization
June 2011
2011/12 – 2012/13
Disclaimer
The circumstances of the B.C. horse racing industry are fluid and sensitive to a variety of pressures. This
plan outlines steps for the industry on the basis of the B.C. Horse Racing Industry Management
Committee’s understanding of circumstances at the present time. As such, this plan is subject to change.
Context
In response to declining revenues within the horse racing industry over the past decade, industry
organizations requested the intervention of the provincial government in 2009 to stabilize and revitalize
racing in BC. Under the direction of the Honourable Rich Coleman, Minister of Public Safety and
Solicitor General (PSSG), the B.C. Horse Racing Industry Management Committee (HRIMC) was formed
with the full authority to provide strategic direction, decision-making, and business leadership to the
horse racing industry with the aim of revitalizing the industry.
The HRIMC began its formal involvement with the industry in January 2010. Now, a year later, the
HRIMC has implemented a number of changes that has strengthened the industry, gained a clearer
understanding of the challenges besetting the industry, and identified next steps for continuing to
develop effective business practices within the industry.
The environment in which the HRIMC operates continues to be challenging on a number of fronts. At
various times, industry members take factional positions based on breed affiliation or on divisions
between owners and breeders. This situation is exacerbated by fragmented representation of the
thoroughbred and standardbred sectors through five different associations, and by a culture of rumour
and innuendo which seems to pervade horse racing operations. More significantly, the industry’s future
operations at Hastings and Fraser Downs could be radically altered by municipal political decisions. The
track operator, Great Canadian Gaming Corporation (GCGC), is currently negotiating with the City of
Vancouver to change its 20 year lease agreement at Hastings. The agreement consists of a five year term
(set to expire in November 2012), plus a 15 year renewal that requires commitment to significant capital
upgrades. If GCGC cannot get the City to amend its requirements for capital upgrades, it may opt not to
exercise the renewal term of the lease in 2012, which could result in the closure of Hastings race track.
Prior to 2010/11, government has supported the horse racing industry financially via grants based on
15.5% of net slot revenues at the Hastings Park and Fraser Downs casinos, historically averaging
approximately $5.8 million per year. For 2010/11, the government horse racing grant has been
increased to $10 million. In subsequent years, the intent is to decouple this grant from slot revenue and
fix this grant at $10 million. This shift in government funding anticipates increased challenges to the
casino revenue stream from potential competition. Vancouver is considering a proposed expansion of
the Edgewater casino to make it the largest gaming facility in B.C. The city of Surrey has expressed an
interest in potential public consultations to consider adding a casino to an approved hotel and
convention centre development. If carried to fruition, a large-scale development would compete directly
with the casino at Fraser Downs and likely result in its closure. It is not clear to what extent attendance
at either Hastings’s or Fraser Downs’s race events are dependent on the adjacent casino.
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Prior to the involvement of the HRIMC, the horse racing industry lacked strong central management
and, as a result, had failed to develop an effective business model that would allow it to co-exist with
other more modern forms of gaming and entertainment in BC. The committee has taken a number of
steps to ensure that major industry decisions adhere to a sustainable, business-like and transparent
model that serve the collective good of the industry. The HRIMC indentified four main areas in which the
industry needed an improved business model:
1. Governance
2. Cost efficiencies in operations
3. New Revenue Initiatives
4. Improving player interest and participation in B.C. horse racing and wagering
These four themes provide the structure in this report for articulating accomplishments, lessons learned
and next steps.
Governance
Accomplishments
• Concluded a Memorandum of Agreement (MOA) with key industry participants that formally
endorsed the establishment of the B.C. Horse Racing Industry Management Committee,
effective January 1, 2010, and provided full authority to the Committee to allocate revenue
earned by the industry, make strategic business decisions, and ensure accountability for
revenue.
• Developed and implemented an entirely new, simplified, transparent and accountable financial
model that moved the overall management of industry revenues under the control of the
Committee.
• Improved communication between sector organizations through regular meetings and web
updates.
• Allocated 2010 revenue of $44.88 million to critical industry purposes and organizations. The
2011 allocation builds on the work done in 2010 and includes new government support in the
form of a set amount of $10 million. This increase in government support brings the 2011
allocation to $48.05 million. New features include an industry marketing fund ($800,000) to be
managed by the BC Lottery Corporation (BCLC) and enhanced funds to industry purses.
• Developed and implemented a set of principles for determining race seasons in a more
business-like manner.
• Established performance metrics for the standardbred and thoroughbred sector to monitor
viability of the existing race schedule.
Lessons Learned
• HRIMC has managed to maintain overall credibility as neutral party that does not serve the
interests of any one sector of the industry, a key achievement given the factional nature of the
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industry. In order to maintain this faith in the HRIMC’s neutrality among industry participants,
the following needs to be ensured:
o The committee structure (6 members: 3 external to the industry plus one from each
sector) should remain in place for the 2011 race season;
o Should Derek Sturko conclude his term as chair at the end of March, as had been initially
indicated, 1 the new chair should come from outside the industry; and
o Though individual committee members may change in the future, the committee should
always have 50% composition from outside the industry.
•
Now that the HRIMC has largely completed work on establishing an industry governance model,
significant work needs to be carried out on new revenue initiatives and improving player
interest and participation in B.C. horse racing and wagering. These tasks need to be undertaken
by a dedicated FTE (hereafter referred to as ‘Director of Racing Sustainability’) with significant
experience in marketing and stakeholder relations. 2 This Director of Racing Sustainability will
need to do the following:
o Work as part of the BCLC organization;
o Develop and implement specific components of the HRIMC marketing plan in
coordination with BCLC and industry stakeholders;
o Act as a coordinator between different industry groups to ensure collective problem
solving; and
o Accept strategic oversight from and provide updates to the HRIMC.
Objective: Establish a permanent mechanism by which the work of the HRIMC can continue
Next Steps:
• The HRIMC should complete its work on industry governance by
o Developing and formalizing a formula for determining allocation of forecasted industry
revenues,
o Formalizing principles for determining races seasons for both breeds,
o Identifying a permanent lead on the financial working group and formalizing financial
reporting mechanisms, and
o Establishing an annual audit of all industry allocations.
• The HRIMC should have an ongoing role in
o Continuing to act as a communication hub for different sectors in the industry, and
1
The HRIMC has expressed unanimous support for Derek to continue his role as chair through the transitions of
the 2011 race season.
2
Currently staff support to the HRIMC has been provided by the Gaming Policy and Enforcement Branch (GPEB)
through a special advisor on horse racing (the staff member has now left to pursue another position in a different
Ministry) and part time assistance from the Manager, Strategic Initiatives and the Manager, Financial Strategies.
These staff members do not possess the marketing expertise to fulfill the role of the new Director of Racing
Sustainability. An additional consideration is that with the Chair of the HRIMC having moved on from his role as
ADM of GPEB, the rationale for the continued participation of the industry regulator in a revitalization initiative is
unclear.
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•
•
o Providing strategic oversight to the Director of Racing Sustainability.
In preparation for hiring a Director of Racing Sustainability, the HRIMC should create a job
description, outlining clear responsibilities/ accountabilities based on the model of the internal
auditor at BCLC who reports administratively to the CEO, but takes strategic direction from the
BCLC board. In this case, the Director of Racing Sustainability would report administratively to
BCLC but take strategic direction from the HRIMC.
The HRIMC recommends that the Director of Racing Sustainability position be
o Funded via BCLC’s operating budget for the 2011 race season with support as required
from the GPEB budget;
o Funded through the $10 million government contributes annually to the industry for the
2012 race season and beyond;
o Part of BCLC and be subject to the terms and conditions of BCLC employees; and
o Accountable for strategic direction to the HRIMC.
Cost Efficiencies in Operations
Accomplishments
• Established conditions for the number of days of the 2011 fall standardbred season based on
performance metrics.
• Provided mandate for negotiations with Woodbine racetrack for a more cost effective simulcast
signal.
o GCGC and TBC have established agreement in principle for five year contract with a
reduced commission to Woodbine – creating $500 thousand in savings annually at
current betting levels.
• Initiated cost saving explorations of the following scenarios:
o Running both breeds at one track,
o Reducing racing to one breed, and
o Developing harmonized race seasons with Alberta to create an informal Western
Canada race circuit.
Lessons Learned
• Under the current model, there do not appear to be further major cost savings to be achieved
• Analysis on the cost benefits of either shutting down one track or one breed has been
inconclusive to date.
• As long as a two breed racing industry remains economically viable (i.e. no major downward
trends in revenues), this two breed model is supported by the HRIMC.
• Though the Alberta Standardbred Horse Association was opposed to suggestions of harmonizing
race seasons with B.C., this remains an option that should be explored further when there is
increased support within the industry.
Objective: To continue to reduce operating costs without impacting the revenue earning potential of
the industry
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Next Steps
• Ongoing search for efficiencies.
• Monitor track circumstances and recommend action as necessary.
• Explore harmonizing race seasons (thoroughbred) with Seattle.
• Explore harmonizing race seasons (standardbred) with Alberta.
New Revenue Initiatives
Accomplishments
• Supported the coordinated efforts of GCGC and BCLC in marketing at Hastings and Fraser
Downs. To date, attendance has increased at Hastings Park as a result these efforts.
• Provided mandate to BCLC and GCGC to draft a new horse racing industry marketing plan. This
plan has been completed (although additional detail work still needs to be done) and approved
by the HRIMC. When implemented, the plan is intended to
o Maintain overall industry wagering levels,
o Increase B.C. racing’s market share of simulcast wagering,
o Build attendance and wagers at live races, and
o (Long term) Build consumer interest in horse racing and wagering through product
innovation and new distribution channels.
• Established formal marking allocation ($800K for 2011) to be managed by BCLC.
• Assuming the provisional agreement with Woodbine holds, GCGC will now have access to B.C.’s
HPI client database, which allows for new marketing opportunities in simulcast.
Lessons Learned
• The efforts of GCGC and BCLC to promote racing at Hastings succeeded in drawing larger crowds
to the track for various special events. While this success demonstrates that racing can still find
an audience in the Lower Mainland, the immediate financial impact of these efforts was limited
because
o New customers did not participate significantly in wagering, and
o Customer retention poses a challenge given that the quality of the food and facilities at
Hastings Park are not impressive. Facility upgrades (more on this in the next section) will
be needed to develop repeat customers.
• Currently, most of industry revenue is generated through simulcast betting. Enhancing the scope
and quality of simulcast products should be a focus for the Director of Racing Sustainability.
Objective: Attract and retain new betting customers to horse racing
Next Steps
• Implement marketing plan.
• Align improved purses with high profile races
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•
•
•
Develop strategic plan to increase field size in order to strengthen simulcast product and live
events.
BCLC takes leadership role on marketing and implements marketing efforts through the Director
of Racing Sustainability.
BCLC takes leadership role in increasing market share in simulcast channels through the Director
of Racing Sustainability.
Improving player interest and participation in B.C. horse racing and wagering
Accomplishments
• Supported GCGC and BCLC efforts to enhance special events (i.e. jockey cam, jumbo screen,
promotional contests between races)
• Initiated exploration of new, simplified forms of betting with the Canadian Pari-Mutuel Agency
Lessons Learned
• Aside from the food and facility issues already mentioned, race tracks face another hurdle to
maintaining an engaged crowd throughout an evening of racing: namely, the extensive
downtime between races where nothing occurs to keep the crowd entertained.
• In order to address these shortcomings, the track operator, GCGC, will need to invest significant
resources into renovation and also event planning.
Objective: To enhance consumer interest through product innovation and new distribution channels
Next Steps
• Improve betting options for players, including
o Reducing the takeout on the Win/Place/Show Bet to the lowest percentage in Canada
(possibly all of North America),
o Developing new types of wagers more understandable by non-traditional customers,
and
o Pursuing simplified betting options with the Canadian Pari-Mutuel Agency.
• Explore various improvements to simulcast business, including
o New and enhanced presentation formats,
o New markets to distribute the Hastings and Fraser Downs signals,
o Use of B.C HPI simulcast customer database for marketing by TBC, BCLC and GCGC, and
o New forms of wagering distribution developed by BCLC.
• GCGC to undertake some facility upgrades at Hastings Park and teletheatres (budget not yet
finalized).
• Enhance high profile live events with increased entertainment components for audience (e.g.:
Marquee events, Friday nights).
• Explore opportunities with GCGC, should they become available, to make Hastings part of a
revitalized PNE that functions as community park/ events/ tourism package.
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Conclusion
The HRIMC seeks Ministerial approval to begin work on next steps, which the HRIMC believes will result
in further progress towards a revitalization of the B.C. horse racing industry.
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