Executive Summary:

• In May 2013, the Minister of Agriculture and Food, the Honourable Kathleen Wynne, requested the Horse Racing Industry Transition panel provide a concrete plan for a long-term sustainable horse racing industry in Ontario, effective April 1, 2014. The panel consists of three former Ontario Cabinet ministers. This document is a draft plan, for consultation. After considering responses from stakeholders and the public, the panel will produce a final plan.
• The panel was retained in June 2012 to make recommendations on how the Ontario government could help the horse racing industry adjust to the end of the Slots at Racetracks Program (SARP). In its two reports, the panel found that dependence on slots revenue – a funding source unrelated to wagering by horseplayers – had divorced the industry from its customers and spurred artificial and unsustainable growth. As a result, much of the industry today is built on racing that is not attractive to the consumer. This has to change. At the same time, the panel found that a sustainable horse racing industry requires a measure of public funding, though much less than SARP.
• The panel concludes that the path to success lies in aligning economic interests. The panel recognizes that gaming in Canada is a highly regulated industry. We therefore acknowledge that the final plan for horse racing in Ontario must comply with all existing laws, regulations and authorities.
• To firmly link the industry with the horseplayer and fan, the panel now concludes that future public funding for horse racing should be based on a dollar-for-dollar match with the industry commission on pari-mutuel wagering. In this way, public investment will reinforce rather than undermine the dictates of the market.
• The panel observes that nearly two thirds of pari-mutuel wagering in Ontario is on foreign races. On the other hand, Ontario tracks export their live-racing signals to other markets, netting about $20 million a year from wagering outside the province.
• The panel finds no public interest in using government funds to encourage wagering on foreign product. A major aim of the plan is to strengthen and promote live racing in Ontario – that is, races actually run in the province. Live racing generates more economic benefits in terms of jobs on the track, on the farm and in spinoff industries than do simulcasts of races in other jurisdictions. In distributing matching funds to the industry, the panel therefore proposes to use a formula aligned with the commissions earned from wagering on live Ontario races and also reflecting exports. The government will invest in success as defined by the marketplace. It will not subsidize failure as SARP did by supporting racing that does not attract customers.
• To govern a reformed industry, the panel recommends the creation of a new market-driven central body – Ontario Live Racing (OLR). OLR would consolidate all industry revenues and share them among industry partners on the basis of consumer demand for live Ontario racing.
• The panel has been asked to facilitate a more integrated relationship between horse racing and the Ontario Lottery and Gaming Corporation (OLG). The purpose of integration is to align the interests of the horse racing industry and the OLG to enhance gaming revenue to the province and provide a stable base of funding for live racing in Ontario.
• In the panel’s view, non-track betting (including wagering at off-track betting sites, telewagering and online wagering) is essentially a gaming activity. The panel therefore proposes that all non-track wagering should be administered by the OLR and willing racetracks with input and, where appropriate, direction from OLG, through mutually beneficial relationships. This structure would provide for the use of OLG expertise in optimizing the non-track wager and facilitate the introduction of race-themed gaming products (historic racing, race-based lotteries, etc.). Integration should give the OLG an incentive to expand non-track wagering and introduce new racing-themed products, generating more revenues for the government and the industry.
• As a further step to boost investment in Ontario live racing, the panel also proposes to direct industry commissions from on-track and off-track wagering to OLR. In addition, OLR would take charge of the savings from Ontario’s pari-mutuel tax reduction.
• OLR would distribute the consolidated industry revenues – including all public funds and pari-mutuel commissions – to the three breeds based on their share of wagering on live Ontario racing.
• As the linchpin of a new industry governance structure, OLR would take on the current non-regulatory roles of the Ontario Racing Commission – including coordination of the racing calendar and direction of horse improvement programs. OLR would also organize the common marketing and branding of Ontario horse racing.
• The new governance structure would include three breed-based divisions: Standardbred Live, Thoroughbred Live and Quarter Horse Live. These organizations would develop the racing calendar, conduct live racing, encourage fan participation and operate horse improvement programs within their respective breeds. As well, they would work with the respective horsepersons group and tracks to arrange a split of purses and track operating costs.
• Structural changes are necessary to optimize the industry’s operations. This especially so in the standardbred sector, which was the most reliant on SARP and most affected by its termination. The panel urges creation of a world-class racing circuit to embrace all premium and signature standardbred racing in Ontario. Designed to appeal to horseplayers and fans, the circuit would be hosted at five tracks located within a commercially practical shipping distance.
• The horse is the heart of the racing industry. The panel believes that the existing Horse Improvement Program has overemphasized purse support for races that are restricted to Ontario horses. Recognizing successful results in unrestricted competition might provide more of an incentive to improve Ontario breeds. The program should be redesigned with a focus on developing quality and rewarding excellence.
• The panel recognizes that several racetracks have entered into multi-year agreements with the government. We therefore acknowledge that the final plan for horse racing must comply with these agreements, except as mutually agreed.
• The panel looks forward to constructive consultation with stakeholders and the public on how Ontario horse racing can take responsibility for its own future.

View the full document at: http://www.omafra.gov.on.ca/english/about/transition/consultdraft.htm