Where have all the gamblers gone?

CHAMPAIGN — When an off-track betting parlor opened at Jupiter's at the Crossing in southwest Champaign in October 2008, the facility was a big hit.

Horse racing enthusiasts placed more than $1.3 million in bets during the first nine weeks of the OTB's operation and another $7.4 million during 2009, its first full year of operations.

But money spent on horse racing at the Champaign OTB has declined since that time, with $5.3 million bet in 2010 and $4.5 million in 2011, according to the Illinois Racing Board.

The executive director of the Illinois Racing Board and critics of gambling on horse racing trace the decline to a number of factors, including the loss of novelty, competition from casinos, competition from Internet wagering and the economy.

Personnel at the Champaign OTB at Jupiter's at the Crossing referred all questions on this issue to Randy Olech, chief operating officer for Balmoral Park, which has the license for the Champaign OTB. Olech did not return several calls from The News-Gazette for comment.

John W. Kindt, professor of business and legal policy at the University of Illinois, said it isn't unusual for gambling revenue to decrease at OTBs as time goes by.

Kindt cited a 1999 report by the Gambling Impact Study Commission, a group created by Congress, that concluded that the percentage of people gambling for entertainment (those who are not pathological or problem gamblers) generally goes down the longer an OTB is in operation.

Kindt defined pathological gamblers as people who show symptoms similar to drug addiction when it comes to gambling. He defined problem gamblers as people who show symptoms that they are well along the path to becoming addicted gamblers.

"The percentage goes down as the novelty factor wears off," Kindt said. "Pathological and problem gamblers only have so much money to spend, and after a certain period of time, the entertainment gamblers don't care as much."

Kindt said that multiple studies reported in the 2009-2012 United States International Gambling Report, produced in large part at the University of Illinois, confirmed the research reported by the Gambling Impact Study Commission.

Kindt noted similar patterns at Champaign's original OTB in the former Zayre building and its successor at The Brickhouse in Urbana, which closed following the 2008 Kentucky Derby.

Both facilities saw their revenue decline as time went by.

Illinois Racing Board Executive Director Marc Laino said the setup at Jupiter's at the Crossing is an example of the racing industry's efforts to promote the sport for "entertainment" wagerers.

He said Jupiter's combination of food, drinks and various games creates an atmosphere that brings potential customers to the OTB for wagering on horse racing.

"We are trying to adapt to changes in demographics," Laino said. "The stand-alone OTBs are no longer feasible because of the declining handle."

The handle is the amount of money received by an OTB for betting purposes.

In Champaign's case, Laino said, the Balmoral Race Club, which owns the OTB rights for our area, entered into an agreement with Jupiter's to operate the OTB in their building.

"We are seeing the industry entering into joint-venture agreements with existing bars and restaurants," Laino said. "The concessionaire benefits from the added flow of customers from the OTB, and the OTB benefits from the patron base from the restaurant or bar."

Anita Bedell, executive director of the Illinois Church Action on Alcohol and Addiction Problems, said the growth of riverboat casinos in Illinois and other casinos in neighboring states has drawn some wagering dollars away from OTBs.

Bedell said many of the people who used to bet on horses at OTBs and in person at racetracks have switched to playing slot machines.

"When people have opportunities to gamble on slots rather than horses, they tend to chose slots," Bedell said. "All you have to do is put money in a slot machine, and you can gamble. You don't need to study the history of the various horses."

Laino agreed that the growth of casinos has affected spending on horse racing.

"There is so much new competition for the gambling dollar today compared to 10 to 15 years ago," Laino said. "The implementation of casino wagering certainly has impacted racing gambling negatively."

Laino said wagering on horse racing peaked in Illinois in 1996 and has declined since that time.

In 2009, Illinois gamblers began playing the ponies without leaving their homes when the Illinois Racing Board gave approval to online betting on horse races.

Laino said the result has been decreased attendance both at racetracks and at OTBs.

"There has been a cannibalization across the board at all 'brick and mortar' wagering facilities as a result of the authorized online wagering," Laino said, "It is more convenient for people to bet at home and not get dressed to go to the OTB."

Laino said that online betting has increased the overall wagering handle in Illinois.

He said the downturn in the economy may also have been a factor in decreased spending on horse racing.

"It may be attributable to the recession," he said.

Kindt and Bedell said the issuance of video gaming licenses for bars and veterans and fraternal organizations could hurt attendance at OTBs even more.

"The OTBs are going to go belly up because the addicted and problem gamblers are going to be drawn to the video gaming machines instead," Kindt said.

"The video gaming machines are like slot machines," Bedell said. "You touch the screen and place your bet. It is simpler than betting on horses."

Meanwhile, the recent decline in OTB revenue has also meant a decline in money for Champaign County and the city of Champaign, which both receive a portion of the OTB's revenue.

Both governments saw their share reduced from more than $74,000 in 2009 to $45,290 in 2011, according to the Illinois Racing Board.

Molly Talkington, budget officer and financial services manager for the city of Champaign, said the city puts its share of OTB money into the general fund to pay for police, fire, public works and other services.

"The decline in OTB revenues is a concern to the city, especially in the past few years since there were multiple revenue sources that were declining or stagnating," Talkington said.

But Champaign County Administrator Deb Busey said she isn't too concerned about the decline.

"We have a $32 million budget, so a $50,000 revenue line doesn't get a lot of attention," Busey said.

Laino said he remains optimistic about the future of OTBs, including the one in Champaign.

"The future is good for OTBs - as long as we have a thriving racing program in Illinois, we will have a solid, sustainable OTB system in Illinois," he said. "The license holder has not indicated they have any indication of pulling out of Champaign."

Income and payouts at Champaign OTB

 

Year Amount wagered Payout to city Payout to county Payout to bettors2008*$1,321,465$13,215$13,215$1,004,8772009$7,458,397$74,584$74,584$5,568,5432010$5,319,575$53,196$53,196$4,039,2772011$4,528,979$45,290$45,290$3,434,539

 

*OTB opened on Oct. 23

Source: Illinois Racing Board

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vcponsardin wrote on September 23, 2012 at 9:09 am
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As an occasional "entertainment" bettor, I stopped going to OTB a couple of years ago when the economy crashed.  No point in throwing away money like that at any time, of course, but especially when things generally go sour.  Gambling is obviously a fools game.  No one comes out a winner.  Sure, we've all heard stories of people winning thousands, millions even, but those are very few and far between.  Studies have proven that people exaggerate their winnings and overlook their losses when retelling their gambling experiences.  If winning were that easy, Las Vegas wouldn't exist.  I drove through there last summer, in fact, and as I cruised down the strip looking at all the casinos I was reminded that not one cent of this opulence was paid for by donation, grant or federal aid.  Every single ounce of it was paid for by bettors' losses.  Hard-earned money just thrown away so Caesar's Palace could have yet another gilded doorknob.

aantulov wrote on September 23, 2012 at 9:09 am

Too bad all those small bars in Urbana encouraged by local old money interests poised to purchase their businesses did'nt study up on what happens to places that "invest" in these gizmos.


If they want to increase interest in horse betting perhaps they should invest in their clientele as human beings and sponsor so trips to see an actual live horse at a track .


Seems rather odd that cities officials would chose gambling to fund staples like police, fire, and schools rather than property taxes that stay the same.  But then Gerard could'nt dole out corporate welfare to multinational corporations. There is no list of how many multilmilllion dollar projects like the new hotel downtown, are getting a "tax free" card for the next 30 years! At least not one published on the city website or in the local newspaper...hint hint.

rsp wrote on September 23, 2012 at 3:09 pm

With property tax caps the cities and the counties and all of the other taxing bodies have gotten creative with fees and sales taxes, etc. to pay for the expenses of running government. Sometimes corporate welfare is worth it and sometimes it's not.