Electronic Gaming Boosts Economy in West Memphis, Hot Springs

(To see a comparison of revenue generated by electronic gaming at both Oaklawn and Southland, click here.)

Electronic gaming likely kept Arkansas' two racetracks alive, the tracks' managers say.

More than that, it has brought more tourist dollars to West Memphis and Hot Springs, according to economic development officials in those cities.

In the 1990s, both Oaklawn Park, the horse racetrack in Hot Springs, and Southland Greyhound Park in West Memphis worried they might succumb to competition from newly opened casinos in Tunica, Miss. Gamblers were enjoying electronic gaming – like slot machines – and shunning horse and greyhound racing.

The protracted decline of each could have hurt the economies of their home cities, economic development officials said. Both racetracks, however, have since moved into electronic gaming.

In 2000, Oaklawn started offering instant racing, which is effectively the same as betting on traditional horse races but uses historic results with horses under different names to allow bettors to wager. The track could install instant racing because it falls under the same guidelines as pari-mutuel wagering, which includes simulcasting. Simulcasting allows Oaklawn visitors to bet on live racing at other horse racing facilities.

In 2005, the state Legislature passed a proposal sponsored by Sen. Bob Johnson, D-Bigelow, allowing each track to expand offerings of electronic games if local voters approved – and they did.

Southland launched a $40 million expansion of its electronic gaming floor in 2006, and Oaklawn will unveil a $30 million expansion of its electronic gaming area in May.

Southland reported revenue of almost $35 million from electronic games for January; Oaklawn reported revenue of $18 million for the same month, according to the Arkansas Department of Finance & Administration's racing commission.

Betting on the Future
The 2006 addition of electronic gaming at Southland – owned by Delaware North Cos. of Buffalo, N.Y., and renamed Southland Park Gaming & Racing –  has allowed the track to gain back market share once thought lost, said Troy Keeping, the track's president and general manager. The expansion of gaming has had a major impact, Keeping said. The track supported the legislative measure "to keep Southland a viable business in West Memphis," Keeping said.

"In fact, I think it positions us better in the sense that we have greyhound racing and gaming," Keeping said.

Visitors from surrounding areas – especially Memphis – can visit the venue and choose to play blackjack, poker, eat at the buffet, enjoy live entertainment or bet on any of the live races with which Southland has a simulcasting contract, Keeping said.

The track employs almost 500 people, Keeping said. The annual payroll, including benefits, reaches almost $15 million, he said.

Oaklawn's management is also chipper about what the future might hold.

"As good as purses are today, they could be even better," Eric Jackson, Oaklawn's general manager, said. "We are the phoenix of American racetracks. The racing industry – and I know this sounds self-promoting – but it is marveling at Oaklawn Park."

With the new revenue adding millions of dollars to purses offered at the track, many of the premier thoroughbreds are choosing to race at the park. Attendance at the track is remaining steady, while other tracks around the nation are experiencing declines, Jackson said. Charles Cella of St. Louis owns Oaklawn Park.

Feeling the Effect
Economic development officials in each community supported the expansion of electronic gaming and say the effects are now apparent.

"The people coming here, any of the money they would have spent on gas, what they spent in town, it adds up real fast," Ward Wimbish, director of West Memphis' office of economic development, said.

When Wimbish visits Southland for chamber or Rotary meetings, which both take place at Southland, the impact is evident, he said.

"I know its front parking lot, where it at one time was pretty sad looking, it's pretty full now," Wimbish said. "We see them coming in from Memphis; especially when the gas prices are up, it's a whole lot easier."

The city has also contracted with Memphis' transportation department for about eight years to bring bus service into West Memphis, Wimbish said. The service runs four bus routes, with one stopping at Southland.

"You'll see that ridership has increased on that bus route," Wimbish said.

Southland's quick expansion into electronic gaming paid off immediately, Wimbish said. The slower introduction at Oaklawn has meant the full impact will not be known for some time, said David Byerly, president and CEO of the Greater Hot Springs Chamber of Commerce.

Whereas Southland unveiled its $40 million addition as soon as it could, Oaklawn has gradually introduced the gaming devices in Hot Springs. On May 1, the racetrack will unveil its expansion of its gaming floor. Hot Springs will not experience the true effect of expanded gaming for another year or two, Byerly said.

"It'll be even more dramatic when they have established the expansion," Byerly said. He did not want to speculate about how the expansion will affect the Hot Springs business community, but he expects business owners to see a positive effect, one likely to grow.

Byerly said the chamber's members consider Oaklawn a major factor in each year's success.

"It's a common thought among many of the chamber's smaller members that a large majority will do upwards of 60 percent of their business during the racing season," he said. Racing runs for 54 days and spans about four months from January to April each year.

"I think it puts a tremendous amount of dollars into the economy," he said.

Attendance at the track topped out at between 675,000 and 700,000 visitors during the 2008 racing season. Oaklawn's attendance is up about 4 percent so far this season, the track reports. The track also draws large crowds to watch and bet on many of the year's biggest horse races, like the Kentucky Derby, Byerly said.

The track now draws visitors throughout the year with the electronic games, he said. And as the facility grows, the number will likely increase.

"I don't think we've seen the answer [to the question of the impact] yet because even though we fill a parking lot, until a new product comes to market and comes to capacity, we don't know what that impact will be," he said. Whatever the extent, it will be good for local business, he said.

Competition From Tunica
Both tracks' fortunes have changed dramatically during the last two decades.

"In the 1990s, there was a question of whether Oaklawn would survive," Jackson said. "Tunica just about put us out of business."

By the 1990s, the "American consumer" had shifted to electronic gaming and away from racing, Jackson said. Over a period of years after gambling was introduced in Tunica in 1992, Oaklawn lost about 40 percent of its business, Jackson said. Attendance during the track's 1990 live season was 1.14 million, Jackson said. By 2000, attendance had fallen to 646,000, he said.

Tunica's competition coupled with Southland's dependence on greyhound racing left the West Memphis track fearing for its future as well.

"It's helped the business by diversifying our products so we could recapture some of our market from when gaming expanded in Tunica," Keeping said. Southland was one-dimensional in the 1980s, Keeping said. The park hit its peak during the decade, Keeping said. Since the 1980s, most forms of racing have declined, he said.

The industry has shifted away from horse racing, and racing in general, Jackson said.

Oaklawn also saw the shift, but by attracting better talent with bigger purses, the losses have been staunched, Jackson said.

"If you were betting in the late 1990s, you'd have bet against us," Jackson said.

A Comeback

Momentum began to change with the new millennium. Oaklawn turned the corner in 2000 and 2001 with the implementation of instant racing, Jackson said. AmTote International Inc. of Hunt Valley, Md., helped Oaklawn develop the instant racing games, Jackson said.

The increased revenue has bolstered Oaklawn's horse racing business. A contract with the organization for horse owners of America dictates that a percentage of any revenues produced at Oaklawn go to purses, Jackson said. To date, electronic gaming has contributed more than $17.6 million to Oaklawn's purses – a fact the track proudly displays on an electronic sign that greets visitors.

"The purses started going up, and the horses started coming back," he said.

By 2004, the track's management and owners said Oaklawn would not only survive, but would thrive, Jackson said. The track might even return to its heyday of the 1970s and 1980s, Jackson said.

The track has about 350 instant racing machines and 125 electronic "games of skill," Jackson said. With the May 2009 opening, the track will have the capacity for about 1,000 machines, Jackson said. The track will mainly add electronic games in the expansion, though the additions will occur gradually, he said.

"Our 3-year-old races have become the most important triple-crown prep races in the nation," David Longinotti, Oaklawn's assistant general manager, said.

Since 2004, horses that raced at Oaklawn have placed third or better 16 times in triple-crown races.