ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Monday, May 20, 1996 TAG: 9605200105
SECTION: VIRGINIA PAGE: C-1 EDITION: METRO
DATELINE: NEW KENT
SOURCE: DAVID M. POOLE STAFF WRITER
WHEN WILL HORSE RACING come to Virginia? Developers hope for races by next year.
A blink of the eye is all it takes to miss the short stretch of white fencing and "Colonial Downs" sign nestled in a clearing, just off Interstate 64 between Richmond and Williamsburg.
The fence and sign are the only visible indications of progress since Colonial Downs won the state's first license to operate a horse racing track two years ago.
Whether the New Kent roadside remains a piney forest or is transformed into a glimmering gambling oasis will be determined in the next 14 months.
The developers of Colonial Downs say they are confident that thoroughbreds will be thundering around a $40 million track by June 1997.
"Colonial Downs will bring world-class racing to the commonwealth of Virginia," says Arnold Stansley, an Ohio harness track operator who heads Colonial Downs.
But a track is no sure bet.
Stansley is preparing to sell bonds to finance Colonial Downs at a time when the pari-mutuel industry is in a funk. Competition from state-run lotteries, casinos and other forms of gambling have stagnated betting revenues. Several recent start-up tracks in other states have been forced into bankruptcy.
Stansley also has yet to consummate a deal with Maryland tracks to create a two-state racing circuit, one of his chief selling points to the Virginia Racing Commission. Colonial Downs has yet to reach an agreement with horsemen's groups on purse accounts, which will determine the quality of racing at Colonial Downs.
Racing Commission members have grown increasingly frustrated with delays, which Stansley blamed on legal appeals by a competitor who wanted to build a track in Northern Virginia. Stansley had said the lawsuit made it impossible to sell bonds and move forward.
With the resolution of the lawsuit this month, the clock has begun ticking on a commission-imposed deadline for Stansley to open Colonial Downs by July 18, 1997.
"He has run out of excuses. He either has to perform or get out of the state of Virginia," said state Sen. Kenneth Stolle, R-Virginia Beach, a vocal critic of Colonial Downs.
Off-track betting is key
Colonial Downs is betting that it can buck industry trends and gambling competition that have forced new tracks in Texas, Alabama and Minnesota to scale back or shut down altogether.
"There's a market in Virginia - it's horse country. Done right, it can be a success," said Brett Stansley, Arnold's son who oversees the Virginia project.
Colonial Downs is hoping to avoid overly optimistic revenue projections and lavish clubhouses that have haunted most tracks that opened in the last decade.
The Colonial Downs track was designed to begin on a modest scale, with room for future expansion. The $40 million facility will cost about half as much as ill-fated tracks in Birmingham, Ala., and Houston.
"It's tough to crack the nut with an $80 million facility," Brett Stansley said.
Colonial Downs is patterned after Trinity Meadows Raceway near Fort Worth, Texas, one of the few successful horse tracks built in the last 10 years. Arnold Stansley holds a 9 percent stake in Trinity Meadows.
Trinity Meadows has pinned its success on increasing revenues by giving bettors a year-round chance to wager on races simulcast from venues around the nation.
Video wagering accounted for 80 percent of the $117 million in wagering at Trinity Meadows last year. The track's 139-day meet of live racing with thoroughbreds, quarter horses and other breeds generated the remaining 20 percent, according to the Texas Racing Commission.
The Virginia track is expected to generate three-quarters of its wagering income from simulcast races. In February, Colonial Downs opened an off-track betting parlor in Chesapeake, the first of six planned around the state.
Stolle said he understands that the economics of modern horse racing make simulcasting essential to the operation of a track.
But the Republican lawmaker said he suspects that Colonial Downs will try to cut corners on the track or limit the number of live racing days to maximize OTB profits.
"That is what he has done in other states," Stolle said. "He runs a third-rate track and makes money in other areas. In essence, we're going to have a race track in Virginia so Arnold Stansley can make money from satellite facilities."
In its application, Colonial Downs projected 102 days of thoroughbred racing and 50 days of harness racing between June and October.
Arnold Stansley has left open the possibility of cutting short the maiden season.
Earlier this year, the General Assembly passed a Stolle-sponsored bill that requires Colonial Downs to invest current OTB profits in the New Kent track. Colonial Downs also cannot open any more satellite facilities until he reaches an agreement to set aside a percentage of bets for prizes to attract quality horses.
Thoroughbred owners and trainers want a guarantee of $150,000 in purses per day, or about 5.25 percent of total money bet. Colonial Downs is offering about 2.7 percent.
Brett Stansley said he hoped to reach an accord with horsemen's groups soon, so Colonial Downs could open more OTBs and begin building purse accounts.
"Like it or not, we and the horsemen are partners; we're in the same bed," he said.
Will other gambling follow?
Even if Colonial Downs opens all six OTB facilities, simulcast revenues may not be enough to ensure the world-class racing Arnold Stansley has promised for New Kent County.
Some track owners have begun looking for other forms of revenue, such as slot machines, to draw patrons and build purse accounts.
There is the possibility that one day even Kentucky's Churchill Downs - the temple of American horse racing - may resemble a casino.
"There's a growing belief at many race tracks - and Churchill Downs is one of them - that simply changing the way you market your product is not enough to compete with casinos," said Alex Waldrop, senior vice president at Churchill Downs.
Delaware tracks have installed slot machines, a move that raised purse accounts to levels that can attract higher quality horses. Maryland tracks appear headed in the same direction.
There is a possibility that Colonial Downs, even with daily purse accounts at $150,000, would not be able to draw the top quality horses in the region.
Colonial Downs said a proposed Maryland-Virginia circuit would reduce direct competition. Under a tentative agreement with Joe DeFrancis, Maryland Jockey Club president, Maryland would close tracks at Laurel Park and Pimlico during the Colonial Downs season.
But thoroughbred owners say there is no guarantee that horses running in Maryland would come to Virginia if prizes were higher in Delaware or elsewhere.
Brett Stansley said Colonial Downs has no plan to ask the General Assembly for permission to install casino-type games in order to remain competitive.
"I don't think Virginia is really keen on that idea," Brett Stansley said.
Proposals for floating casinos in Richmond and Hampton Roads have gone nowhere in the legislature in recent years.
However, Stansley would not rule out a casino request in the future. "The only thing you can count on in life is change - so I'll never say never."
Colonial Downs alluded to slot machines in a document related to an April 12 agreement to sell a 50 percent share in the operation to casino operator Jeffrey P. Jacobs of Cleveland.
The document stated that Stansley and Jacobs would negotiate the sharing of revenue from "any additional form of gaming" approved by the General Assembly.
Ernest Oare, a member of the Virginia Racing Commission from Warrenton, said he would not support slot machines at Colonial Downs.
But he said the casino issue underscores the challenge Colonial Downs faces in getting its track up and running.
"In racing's heyday, it was the only show in town," Oare said. "Now there's so much competition for that gaming dollar that wasn't there, even 10 years ago."
The Associated Press contributed to this story.
LENGTH: Long : 154 lines ILLUSTRATION: GRAPHIC: Map by staff. KEYWORDS: HORSE RACINGby CNB