OHRIA is the umbrella organization for the horse racing industry.  It seeks to further promote the horse racing industry as a vital part of Ontario's lifestyle, heritage and agricultural economy; to develop positions that are supported industry-wide; and act as the industry advocate on these positions for activities impacting the entire industry.

OHRIA represents all segments of the horse racing industry. Racetracks such as Ajax Downs, Clinton Raceway, Flamboro Downs, Fort Erie Raceway, Georgian Downs, Grand River Raceway, Hanover Raceway, Hiawatha Horse Park, Kawartha Downs, Mohawk, Quinte Raceway, Rideau Carleton Raceway, Sudbury Downs, Western Fair Raceway, Woodbine and organizations such as the Canadian Thoroughbred Horse Society (CTHS), Horsemen's Benevolent & Protective Association (HBPA), National Capital Region Horsemen’s Association of Ontario (NCRHA), Northern Horsemen’s Association (NHA), Standardbred Breeders of Ontario Association (SBOA), Standardbred Canada, Standardbred Horse Owners Panel (SHOP) and the Woodbine Entertainment Group.

OHRIA’s goal is to work diligently on behalf of and unify all stakeholders in the horse racing industry throughout Ontario.

The OHRIA Board is composed of representatives from the Canadian Thoroughbred Horse Society, Horsemen’s Benevolent and Protective Association, Standardbred Breeders of Ontario Association, For-Profit Racetracks, Not For-Profit Racetracks and Woodbine Entertainment Group.

About the industry

Horse racing is the 2^nd largest agricultural industry in the province and has been one of the few growth sectors in Ontario agriculture.

The industry’s link to rural communities is substantive and complex.  It has contributed to the diversification of many rural economies.

The industry generates over 60,000 direct and indirect jobs and $1.6 billion wages and salaries.

The average direct wage exceeds $50,734 annually – one of the highest industrial wages in Ontario

Every dollar of expenditure in this industry results in $1.22 in wages, interest, rent and profits.

All three levels of government benefit from horse racing:

-          Federal      - $455 million

-          Provincial - $1.2 billion

-          Municipal - $190 million (inclusive of slot machine revenues)

The horse racing and breeding industry in Ontario is credited with $2.1 billion of recurrent expenditures in 2004 dollars.  Almost 80% of the expenditures are in rural Ontario.

The annual expenditures on track operations, slot machines, breeding and the relevant associations sustain $2.6 billion in value-added income annually in Ontario.

Horse racing’s GDP contribution for direct activities was $738 million in 2003, over 22% of the total GDP of agriculture in Ontario.  Including the indirect industry expenditures, this would be equivalent to 48% of the agricultural GDP.

The racetrack slot program generates more revenue for the government than the government-owned casinos.

THE ONTARIO HORSE RACING AND BREEDING INDUSTRY

IMPACT OF RACETRACK SLOT PROGRAM ON INDUSTRY

Introduction

The industry/government partnership through the racetrack slot program has reversed the decline of horse racing and been a catalyst for rural economic development.

This being said, the industry and government must work together to sustain the positive impacts of the program and manage some of the challenges facing the industry.

Background

The objective of the racetrack slot program is to “…promote live horse racing in the province and subsequently benefit the agricultural sector in Ontario through support for the horseracing industry…ensuring that program benefits are maximized to the horse racing industry”.  

The industry negotiated with the government for two years to get a fair financial arrangement for allowing slots at racetracks.  The 20% revenue share to horse racing industry is shared equally between the racetrack operator and the horse people and represents the same revenue arrangements the industry has on pari-mutuel wagering.

This is the lowest share to the horse racing industry of any racetrack slot machine program in North America.

While the government cites that $1 billion in revenues has flowed to the industry from the slot program, the horse racing industry demonstrated its strong commitment to the program through its investment in new capital upgrades to launch the slots.  Unlike others in the gaming sector, the racetrack operators contributed 50% of the capital investments to implement the racetrack slot program.  At the same time, industry expenditures have doubled from $1 billion to more than $2 billion annually since the introduction of the slots. 

Five Year Analysis:  1999-2004

The cooperation between the industry and government has paid off.  Without the revenues from the slot machine program, the industry would be 53% of the size it was in 1998.

Purses, which drive agricultural employment and expenditures in direct and indirect services, have increased by 135% since 1998.

The number of jobs generated by horse racing has increased by 33% from 45,000 to 60,000 since the introduction of the racetrack slot program:  that’s twice industry projections.  Many of these jobs in the industry employ individuals with marginal employment skills.

The number of licences issues by the Ontario Racing Commission increased over 39.5% from 22,024 licensees in 1998/99 to 30,722 licensees in 2004/05.

The infusion of slot revenues into purses has attracted high quality horses from different jurisdictions, making Ontario’s product offering a higher level of horse racing.  Many foreign horses are stabled in Ontario which increases the agricultural links of the industry in Ontario.  Top quality Ontario horses have been repatriated back from other jurisdictions, due to the increased purses.

The placement of slots at racetracks has been a cost effective operation as they are co-located with other forms of gaming – horse racing.

While slot revenues have increased, the economic activity generated by the industry, competitive challenges, such as increased gaming competition, particularly by internet gambling, has limited the growth of pari-mutuel wagering. 

Challenges going forward

OHRIA is confident that with continued cooperation between the industry and government, the challenges facing the industry will be addressed to ensure the economic sustainability of this important agricultural sector.

Agriculture forms much of the backbone of rural Ontario – both economically and socially.   When farm families are forced out of business, other businesses in rural Ontario suffer.  Rural communities also suffer when farmers and their families have to relocate to urban areas.

Slot earnings per day have leveled or declined in certain locations since the initial introduction of slots at racetracks.  The cannibalization of slots on pari-mutuel wagering, which was forecast by the industry, has occurred.  Track surveys have revealed that core racing customers now spend as much as 40% of their wagering dollars on the slot machines.  This, combined with the negative impact of illegal internet gaming and increased regulatory costs, is undermining the industry as a whole.

Reduced revenues have a resulting impact of lower industry revenues and purses.  While these are challenges facing all of the industry, racetracks on border communities are facing their own unique challenges.

Illegal Internet Betting

The internet has had an enormous impact on Canadian society generally, and business specifically.  The horse racing industry has not been excluded from feeling the impact of this tremendous development.

The growth of illegal internet gaming sites at home and abroad has become a serious threat to the future viability and integrity of both the horse racing industry and government-operated gaming.  These illegal operations not only cannibalize provincial gaming revenues, they pose an economic threat to licensed Canadian gaming and racetrack operators and to the thousands of jobs generated by these industries, plus their associated economic activity.

In Canada, Section 202 of the Criminal Code is very explicit about the prohibitions of gambling.  However, off-shore operators view the legality of Internet gambling in Canada as a gray area.  With little or no enforcement of the Criminal Code some on-line operators choose to believe that on-line gambling is legal in Canada.

The Canadian horse racing industry has been negatively impacted by the massive growth of on-line bookmaking operations which have not been granted regulatory approval in Canada.  These illegal internet operators, who take bets on horse racing, do not incur the costs of a racetrack to conduct and support live racing, nor do they contribute to the horseperson’s purse account.

Licensed racetracks are unable to compete with their significant infrastructure and overhead costs.  Horse people are faced with declining purse revenue that threaten the viability of their investments in the agricultural sector.  The illegal internet operators are taking customers from the legal industry without any law enforcement response.

The horse racing industry seeks enforcement by provincial and federal authorities of existing laws.  If unenforceable, governments should take necessary steps to amend the legislation and regulations so that Canadian businesses will not be undermined by the continuation of illegal activity.

Conclusion

Despite the many challenges facing the horse racing industry, OHRIA remains optimistic that ongoing cooperation with three levels of government will ensure that the positive impacts of the slot program for both the industry and rural economies continue into the future.