Study: Oaklawn, Southland Racetracks' Impact on Arkansas Economy Near $900 Million

by Luke Jones  on Monday, Jun. 2, 2014 12:00 am  

Arkansas’ two racing and gambling venues, Oaklawn Park in Hot Springs and Southland Park in West Memphis, contributed almost $900 million to the state’s economy in 2012, or so a new study concludes.

The study, prepared by BaxStarr Consulting Group LLC of Chicago for official release this week, was commissioned because the venues believed their importance to the state’s economy hadn’t been adequately measured.

“We saw a lot of tourism statistics and stuff being issued from associations like the Arkansas Hospitality Association, Parks & Tourism, etc., and gaming was never mentioned from an economic-impact perspective,” said Troy Keeping, president and general manager of Southland. “We approached them and said we needed some type of independent data.”

Keeping said he wanted the state’s politicians and leaders to understand the venues’ economic impact “because it’s significant.”

“Oaklawn has fortunately been a pretty significant economic catalyst for a great many years,” said Eric Jackson, Oaklawn’s general manager. “Certainly it’s been a terrific tourism catalyst here in Garland County. That hasn’t changed much. We’re growing, fortunately. We’ve always been a major racing center, and now we’re developing some gaming business, too.”

Keeping said the findings validate some of the reasoning behind voting in favor of allowing the venues to have electronic games of skill, an addition that came in 2006.

The study measured economic impacts linked to racing and gambling ($703 million), taxes paid ($42.5 million), tourism ($120 million) and short-term construction ($30 million) for a total of $895.5 million.

BaxStarr measured direct impacts such as ticket sales, but it also measured indirect impacts such as purchases by the venues from other businesses, induced impacts made up of income spent by venue employees, as well as the venues’ support of secondary businesses such as the kennels at Southland and trainers for both horse and dog racing.

Broken down, Oaklawn had revenue of $88.6 million in 2012 and the study added $52.3 million of indirect and $78.9 million of induced impact. Southland had revenue of $162.7 million, $93.3 million of indirect and $144.8 million of induced impact, all for a total of $620.6 million between both venues.

The study added in money paid by Oaklawn for horse training and breeding ($66.3 million) and money paid by Southland for dog breeding and kennel operations ($16 million) for its total of $703 million. It then added in taxes, tourism and short-term construction numbers for the $895.5 million total.

BaxStarr also looked at employee impact, which it reported separately as a $74.3 million impact. For example, Southland in 2012 had 371 full-time hourly employees, 216 part-time hourly employees and 51 full-time, salaried positions with a total payroll of about $13.9 million. Oaklawn’s employment ranged from 400 to 1,500 depending on the time of year, and it had a payroll of $13.6 million in 2012.

“The wages of the employees at Oaklawn and Southland are spent in the economy in Arkansas on goods and services, at stores, etc.,” the report said, “and these create both indirect and induced impacts which are included in the model.”

Adding in the indirect and induced impacts resulted in BaxStarr’s $74.3 million figure.

Expansions and Future

BaxStarr’s study estimated that ongoing, annual impacts should be around $850 million “given relatively consistent construction activity.”

Currently, both venues have major ongoing construction projects.

Oakland is increasing the size of its gambling area by about 50 percent to the tune of $20 million, Jackson said. The project started in summer 2013.

“We can only do it when the horses aren’t here,” he said. “You can’t have jackhammers and horses in the same vicinity. But we got all the infrastructure done last summer and early fall before we had to stop. Right after the Arkansas Derby Day this year, in the middle of April, we jumped back on it.”

The expansion will bring more “player positions,” Oakland’s lingo for spots that can hold electronic games of skill, card games and so forth. The venue currently has about 900 player positions, and when construction wraps up in November, it will have closer to 1,400 or 1,500, Jackson said.

“We’ll also have some other amenities like a sports bar, a high-limits area, a bistro, things of that nature,” he said.

Southland is working on a 4,300-SF, $38 million expansion that will add space for about 500 more electronic games, Keeping said.

“We can potentially go up to around 2,000 games, but we’ll open somewhere about 1,750 to 1,800 games,” he said. “That gives us the ability to grow. We’ve been in a constant growth mode due to the proximity of the mid-South region. We draw heavily out of Jonesboro, northern Mississippi and obviously Tennessee.”

The expansion, he said, will also include a “branded restaurant concept” that Keeping hopes to announce in June.

But one thing that can’t be gleaned from the study is whether the state would benefit from having more venues like Oaklawn and Southland. Jackson said “it’s hard to say,” since the Arkansas Constitution currently bans any further gambling venues from being constructed.

But Keeping said more venues definitely wouldn’t help the state.

“If you follow Tunica, next to us, the Harrah’s Casino is closing, and the Tunica marketplace is shrinking because it used to be a retail destination. As gaming has expanded, it’s become much more local.”

He said that because of Arkansas’ small population and the presence of other gambling venues just across the borders, he felt that the laws “were codified in a right-sized manner given the long-term forecast of what’s happening in the industry nationally. So all this [study] says for a state of 2.5 million people … we’re generating almost a billion dollars of economic impact. If we continue to try and grow and add businesses, to a large extent, you would just take the same-sized pie and divvy it up.”

 

 

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