Slot Machines have been touted as the savior for the racing industry and their presence has greatly enhanced racing in West Virginia, Iowa, Delaware, and New Mexico. In 2002, the revenue from slot machines was $146 mill at Prairie Meadows (IA) and $224 mill at Mountaineer (WV). That is respectively $271 and $226 per machine per day. Total revenue from slots is almost twenty times larger than revenue from horse racing at each track (and noisy flashing machines are less costly to maintain). Slot machines are cash cows. Who are the winners? Racetracks gain slot revenue. Horsemen gain higher purses. Breeders gain payments to state breeding development funds and higher purses for races restricted to state-bred horses. The state gets a big cut as well. But have slot machines been as good to horseplayers as they have been to the tracks, owners, and breeders?

Has the quality of racing improved?

Yes. Delaware offers daily average purses and (arguably) higher quality racing than rival Maryland. The West Virginia tracks have moved from being remote outposts that were the last stop for old claimers to glitzy racinos with big purses and large competitive fields. For claiming races, the purses at the West Virginia tracks are the best in the country and the result has been full fields and an active claim box.

Have the costs for bettors declined?

No. Delaware has takeout rates of 17%/19%/25% (one horse/two horse/three plus horse wagers). Moutaineer and Charles Town have rates of 17.3/19/25. Sunland is even worse with 19/22/25. Prairie Meadows is the best with 16/19/22. The average takeout rate at slots tracks is similar to rates at many tracks that are struggling to get by without them. Of course, what incentive do these tracks have to lower takeouts? Their focus is, and should be, on the slot player who is responsible for funding the tracks/owners/breeders/state.

A side note: The takeout on slots at PrM is 7½% and at Mnr is 8½%.

Have there been notable gains in live handle?

No. Slots players don’t play the horses. Research has found racino slots are a substitute for horse betting, the opposite of industry expectations (or at least hopes). The following table lists handle on live races from on-track customers. For reference I have included Gillespie County Fair, a tiny track that runs eight racing days where patrons sit in  an open air metal grandstand in the stifling Texas heat. (and it is one of my favorite tracks).