And They're Off!
Century Downs Racetrack and Casino aims to revive the horse racing industry.
But is it a safe bet?
Alberta Venture, September 2015
“Luck is always in your favour, sometimes.”
That’s how the host of Betting Basics, a course at the brand new Century Downs Racetrack and Casino, explains a triactor wager to me and six other people who’ve never before bet on a horse. Sitting just across from the CrossIron Mills megaplex outside Balzac, 25 kilometres north of Calgary, Century Downs is hoping to attract two distinct audiences: the enthusiasts who stopped gambling after Calgary’s Stampede Park closed in 2008, and newcomers, like those sharing the lesson with me. The host’s line was an endearing slip of the tongue, but it also seems to articulate the predicament of horse racing in Alberta.
At the betting window near the racetrack entrance, I buy a $20 voucher for MBet, a mobile betting program, and connect to the casino’s Wi-Fi. I enter a PIN and account number and choose a horse for the first race.
Beginner’s luck isn’t enough for me, and I watch in real time as my account balance decreases. But my second bet is on Sing Like an Angel and rider Travis Cullen, a 22-year-old racing wunderkind from Manitoba. Sure enough, one minute and 53 seconds after the announcer says “And they’re off!” his horse places, and my MBet balance jumps.
I meet Paul Ryneveld, the GM of Century Downs, who walks through the judges’ room, the photo-finish hideaway (where a camera, aimed at the finish line, captures the horses’ exact crossing times) and the announcer’s booth. Ryneveld started his career in the concession stand at the now-defunct Longacres racetrack in Washington as a high school student. After taking the racetrack industry program at the University of Arizona in Tucson and working his way through facilities in Michigan, New Mexico, Washington and California, Ryneveld was the director of racing operations at Hastings Racecourse in Vancouver. But he kept an eye on the Alberta horse racing industry, curious about how it’d navigate through the recent turmoil, in which revenues plummeted and the agricultural community suffered. He was brought onto the project in 2013 when Century Casinos, whose worldwide flagship casino is in Edmonton, loaned $24 million to the United Horsemen of Alberta. Part of the agreement allowed Century to convert $11 million of that into a 75 per cent equity stake of UHA, which it took in March of this year. And after hearing that Century Casinos was partnering to complete the project, it was this very turmoil he was now responsible for taming. In fact, whether he knew it or not, the fate of the entire horse racing industry in Alberta needed him to pull it off.
Ryneveld takes me to the casino’s roof, from where we can see CrossIron Mills in the distance. He points to a section of land where ground has been raised for the foundation of a grandstand that never came to fruition, where the new racetrack was initially supposed to be.
“It was going to be the Taj Mahal of racetracks,” he says, citing the $250-million price tag – nearly 10 times the cost of Century Downs. The grandstand would have held 15,000 people.
“It would have gone bankrupt in a year,” he says.
With origins in Alberta as far back as 1882, it’s always been an agricultural sport, and bush tracks in the province spawned some of the world’s best jockeys, including Red Pollard, whom Tobey Maguire played in Seabiscuit. Today, Alberta’s 7,100 horses and 400 contributing farms and ranches generate nearly $400 million annually, and Racing Entertainment Centres, or RECs, have contributed more than $265 million to the Alberta Lottery Fund since 2002.
The industry is governed by the Racing Corporation Act, which in 1996 established Horse Racing Alberta as a not-for-profit regulator and issuer of licences. Eighty per cent of HRA’s income is from the revenue generated at RECs. Once a new track is licensed and becomes operational, HRA provides a grant based on plays: The more money spent on slots, the more the track receives. At an REC like Century Downs, where the provincial government owns all the machines outright, the operator gets 15 per cent of every dollar, HRA gets 51.5 per cent and the Alberta government gets 33.5 per cent.
In the 2013-14 fiscal year, horse racing received $26 million from the Alberta Lottery Fund. With the loss of Stampede Park, however, HRA’s revenues were slashed from $48 million in 2008 to $29 million in 2014. And much of the shortfall can be chalked up to the loss of the Calgary track. “You can’t lose a market of more than a million people and not have it affect you,” says Shirley McClellan, Horse Racing Alberta’s CEO.
Discussions surrounding a new track began as far back as 2002, when United Horsemen of Alberta won the request for proposal from HRA. Max Gibb, CEO of UHA, who had operated Lethbridge’s Rocky Mountain Turf Club for nearly two decades, was recruited by the horsemen after stabilizing RMTC’s finances and increasing the number of race days from 12 to 42. Initially brought on as chairman of the board and CEO, Gibb was tasked with raising an outsize sum of money for the new facility. “When we purchased the land, it was all about the racetrack,” he says of Century Downs. “Maybe it was too ambitious. In hindsight, we made mistakes.”
Ivanhoe Cambridge, developer of CrossIron Mills, approached Gibb thinking the property was ideal for a shopping centre. UHA spent $138 million on infrastructure – including six barns – and arranged for a bank to loan the remainder. As Ryneveld showed me from the roof of Century Downs, the original vision was nothing less than Olympic; one could have walked from the mega-mall into the lobby of a hotel, then through that into a casino and racetrack. The grandstand would have hearkened back to the golden age of horse racing, when crowds of 10,000 could be expected for your average Saturday, not just during the Canadian Derby. Construction began: Developers raised the foundation and installed six barns. But soon there were cracks in the proverbial edifice.
Gibb still has a copy of a letter from the County of Rocky View, saying he’d have water authorized for the facility by June 2006. But water issues held up development for 18 months, and by the time it was sorted out the recession was in full swing. And even though the bank had approved funding, it soon withdrew.
“The goal was to build a world-class racetrack, and times were hot then,” Gibb says. “It looked like the world was ready for something like that.” UHA had to sell a considerable amount of its land, and for a nominal fee they let nearby farmers take down five of the six barns piece by piece and haul them away on flatbeds.
On a chilly April 24, 2015, Rod Henessey rode his horse through a ribbon stretching across the finish line of Century Downs, heralding the facility’s opening. Hennessy, who runs his own stables and has been racing since the 1960s, had witnessed two partners leave the business, only to return when Century Downs opened. And after seeing so many people sell off their properties in Calgary – their stables, their horses and sometimes their homes – and move to Edmonton, he calls the opening “a lifesaver” for his business. “There were people who believed in horse racing all working together,” he says. “Slot revenue across the industry and province is going to go up.”
Gordon Empey, another longtime racer and breeder, says Stampede Park closing set off a precipitous decline in sales. “The horses we’d sold back when Stampede was still around could go for $40,000,” he says. “And that same type of horse two years ago would have been getting $5,000.” He says the purses shrank, transportation costs went up and trainers moved to B.C. or California. But because of Century Downs, sales are up again and people are returning.
Gibb, who got UHA out of creditor protection and kept the project alive, isn’t disappointed to see the original vision replaced with something more modest in scale and economically feasible. “I think this is a better economic model and it’ll serve the horse and agriculture community just the same,” he says. “I think that by accident, it will turn out to be a better project than our grandiose, Vegas-style, blow-your-mind-away plan.”
According to Ryneveld, Century Downs is already set to overtake the Calgary location as the second-most profitable location in Century Casinos’ Alberta portfolio. He achieved this by having realistic expectations and leaving room for future expansion, should the need arise. The floor boasts 550 slot machines and plenty of non-live tables, as per regulations around RECs. There are tables for off-track betting and walls plastered with high-res televisions, and under the Century Bets! subsidiary, fans can bet from locations in Red Deer, Calgary, Medicine Hat, Lethbridge and smaller communities across the province. The in-house restaurant has a panoramic view of the racetrack, where an apron featuring plenty of tables and 200-person-capacity bleachers brings you close enough to the horses to smell their sweat.
Ryneveld talks of building a rooftop patio, and says one of the casino walls can be removed and extended for future expansion. Soon there’ll be another barn, and thoroughbred racing – for which bets tend to quadruple – will return. He says that more young people are coming, and that on Father’s Day, exactly seven years after Stampede Park’s last race, Century Downs had its biggest crowd yet. Ryneveld and Gibb pulled off a feat of moderation, perhaps more impressive than one of brazenness.
By 7 p.m., the apron seems as full of young, well-dressed urbanites as of ranchers in Wranglers and Stetsons. And young people are racing, too. I ask one man, who’s there with both his son and grandson, if he ever bets on Travis Cullen. “All the time,” he says. “He’s won three times today already!”
Reflecting on the success of Century Downs, Gibb says, “It happened because people stuck with this project through thick and thin. It happened because we had the courage to start a racetrack.” And then to change course along the way. Sometimes, the second bet is the winning one.
Reprinted with permission from Alberta Venture.