A Renaissance for Horse Racing in Canada

1 April 2002

In the 1970s, horse racing was truly the sport of kings in North America. The standard of living was relatively high for most residents, and consequently there was a significant amount of disposable income to be spent on entertainment and gambling.

At that time, however, the only legal means to bet was at a Las Vegas casino, bingo hall or horse race. The prosperity combined with the excitement that was being generated in horse racing with notable stars of the track like Secretariat, Seattle Slew, Spectacular Bid and Affirmed meant it was no surprise that anyone who was anyone went to the horse races. Many celebrities often owned their own horses. Remember Jacklin Klugman in the 1979 Preakness Stakes?

Circumstances gradually changed in the 1980s as new, more innovative forms of betting emerged. A recession at the end of the decade meant the standard of living for most North Americans fell dramatically. This combined with a lackluster decade for thoroughbred racing gradually caused horse racing to be viewed by many as passe. The glamour that was once there for horse racing no longer existed--families who once looked to the race track as a fun family outing started going to ball games or theme parks and turned their backs on the once grand sport. As could be expected, profits for the racetracks started to dwindle, and many tracks had to close their doors. The introduction of the Breeder’s Cup helped generate interest for a week or two but that excitement did not continue for long.

This development was no more evident than in Ontario, Canada. The Ontario Jockey Club, now known as Woodbine Entertainment Group, operated three thoroughbred tracks. Woodbine was the predominant track near the Toronto International Airport, Greenwood was the grand daddy of tracks in downtown Toronto and Fort Erie was a "B track" that operated in Fort Erie, Ontario, just a short drive from Buffalo, New York. Economics and decreasing attendance forced the Ontario Jockey Club to sell Fort Erie and the Greenwood property and concentrate all its thoroughbred operations at Woodbine.

In 1995 the Ontario Jockey Club was looking for a new president and CEO to turn things around. David Willmot, the owner of one of the most prominent thoroughbred racing and breeding farms in Canada, Kinghaven Farms, was the man for the job. The OJC’s board of directors, instead of looking outside the organization for a high-profile name in the marketing industry, looked inside the horse racing industry and found someone with a solid background and a desire to see horse racing flourish in Canada. No doubt the belief was that such a person, because of their vested interest and knowledge of the industry, would be the best solution.

And indeed the results were promising. After losing money every year since 1989, the Ontario Jockey Club just about broke even in 1995. It lost some money in 1996--a consequence of massive improvements to the track to accommodate the Breeder’s Cup--but it has made money ever since. In fact, profits now are almost at a record. John Siscos, a media director at Woodbine Entertainment Group, said in the organization they call it a renaissance. But this renaissance can almost exclusively be attributed to the innovations of Willmot.

Instead of simply trying to guess what fans wanted in horse racing, he asked them directly. The responses were varied: lower parking fees to a nicer-looking track to a lower take on the stakes wagered at the tracks. Some requests were possible and some were not. But all the information was valuable, and when the Ontario Jockey Club found out it was going to be awarded a slots-only casino at the racetrack, Willmot used the suggestions he received to revamp the track. The company spruced up the track with a layout that even Las Vegas casinos would be envious of and eliminated parking and admission fees.

Most importantly, Willmot offered many more betting options. Superfectas, pick 3’s, exactas and trifectas on every race were only implemented after David Willmot took over. In addition, simulcast agreements were put in place to entice fans. Betting on races from New York, California and Kentucky was something horse racing fans in Canada could only dream of in the 1980s. In the 1990s it was reality. Woodbine’s signal is now shown in horse tracks throughout the United States. In 2001 more than $275 million was wagered by Americans on horse racing from Ontario tracks.

One of the final pieces of the puzzle was expanding operations to allow fans to bet on the races from restaurants, bars or the comfort of their own homes via telephone or the Internet. The company therefore set up teletheatres throughout Ontario where fans could bet on the races. It also introduced Horseplayer Interactive (www.675bets.com), a telephone account betting system. HPI permits accounts from residents anywhere in North America, and about 3,000 accounts belong to Americans.

The company also has introduced a Thoroughbred Racing Network that allows fans to watch race feeds on their TV sets via digital feeds. TRN was introduced in other North American states with poor results, and the U.S. arm of TRN was forced to suspend services due to lack of interest. But in Canada, TRN has been a success--thousands of customers have signed up with their cable or satellite companies to get the program.

In the last two months of 2001, Canadians who had a digital signal were allowed free access to TRN. Prior to the free programming, only hard-core fans signed up as viewers. Since the free programming began, the number of subscriptions has increased dramatically. According to the Canadian Cable Television Association, there are 7.5 million Canadian households that could someday have digital cable and access to TRN.

The thinking and motivation are clear. While Woodbine Entertainment Group would prefer that customers came to the track to bet on the races, introducing them to horse racing in any form can only help grow the industry. And if the customer is opposed to actually attending the track, he or she can watch the races on TV or through digital streaming on the Internet. In the past, the belief in the marketing industry was that if a company had a good product it could “create demand” through advertising, promotional campaigns, etc. That ideology was quickly replaced with the knowledge that customers will only purchase a product if they truly want it. Demand cannot be created, and Woodbine has realized that to its benefit.

What’s next on the agenda for Woodbine Entertainment Group? According to Brian Armstrong, vice president of operations, the company has plans to offer online wagering for horse racing as soon as the practice is approved by the government. Internet wagering is not currently legal in Canada. The Canadian Pari-mutuel Association has argued that betting on the Internet is no different from betting on the phone. Willmot said in the Toronto Sun on Jan. 10, 2002 that he expects Internet wagering to be available within 6 months. No doubt this could be a sticky issue for the few thousand Americans that have Horseplayer Interactive Accounts. With the attorneys general in the United States trying to do all they can to curtail Internet wagering by Americans, it would seem hypocritical to turn a blind eye to Canada by allowing Americans to wager via the Internet on Canadian pools. Horse race wagering is seen differently by U.S. federal government than other types of betting, but it still could be a touchy issue.

Willmot has identified one area of concern for Woodbine Entertainment Group: offshore wagering on the Woodbine product. The company believes that this “illegal pirating of the Woodbine signal” will be harmful to Woodbine and indeed the entire horse racing industry. At present the company and the Canadian and Ontario governments are monitoring the situation. As the U.S. government has learned in its fight to stop offshore wagering, there is little anyone can do to prevent an activity that is legal in the country where that activity is taking place.