Horse racing in Georgia?

Dean Reeves loves horse racing. He makes no bones about it and anyone who witnessed the hugely successful campaign of Mucho Macho Man, who carried the white, green and gold silks of his Reeves Thoroughbred Racing operation, knows how serious he is about the game.

Reeves Thoroughbred Racing, which he runs with his wife Patti, is going strong. They won the finale Sunday at Gulfstream Park with Caicos Express, are optimistic for the 2015 campaigns of horses like U S S O’Brien and W V Jetsetter and they’re planning to breed a small group of broodmares to Mucho Macho Man when the 2013 Breeders’ Cup Classic winner begins his stud career next month at Adena Springs in Paris, Kentucky.

Reeves also heavily invested in an initiative to bring pari-mutuel wagering – specifically Thoroughbred racing – to his native Georgia. He serves as president of the Georgia Horse Racing Coalition, which describes itself as “a group of leading business executives who love horse racing who understand the value that pari-mutuel wagering and the horse racing industry could bring to Georgia through jobs, tax revenue and tourism.

This Is Horse Racing’s Tom Law caught up with Reeves, who serves as CEO of Reeves Contracting and kept a 20 percent interest in Mucho Macho Man’s breeding career, to talk about the initiative and where things stand as of Wednesday.

This Is Horse Racing: Let’s get right to it, where are you right now in the process?
Dean Reaves: At the moment Rep. Harry Geisinger has filed his bill to allow pari-mutuel wagering in Georgia. We have to do a constitutional amendment to legalize pari-mutuel wagering. His bill … will get some amendments to it, but what we call enabling legislation may very well be done next year.

Our goal this year is to get the constitutional amendment passed. To do that we have to have a two-thirds vote in the House and the Senate, that will put it on the ballot November 2016 for the people to vote on. We feel like that’s our biggest hurdle, to get the House and the Senate to two-thirds vote and get that passed. If that doesn’t pass we’re not going on the ballot and we’re out of business anyway.

I think Monday or Tuesday Sen. Brandon Beach will file the same application for a bill for the constitutional amendment in the Senate. That’s where we are as far as the political side.

TIHR: Those two steps are obviously important, but what is the next move?
DR: Most likely it will go to the Senate first, they will have hearings and we’ll go in there and plead our case. From there hopefully it comes out of the hearings, gets a positive response, goes back to the regulated committee it came out of and then gets assigned to a vote at the floor. That’s the process.

TIHR: What are your chances?
DR: We have a really strong senator in Brandon Beach that is going to lay this out there in the Senate. He has told me that he has had no opposition from his people in the Senate. He will probably get several senators to sign the bill with him. I feel pretty good about getting it through the Senate.

We’re getting a lot of play here with regard to coverage in the newspapers and on TV because there are not a lot, other than transportation, of bills laying out there that are going to have any sort of controversy at all. So we’re probably going to get a lot of airtime. And really, people are for it. So I don’t think people are going to come in to bash us.

It’s going to be a tough go. We’re not there when the guy mashes the button, so we’ve still got our work cut out for us but it’s got as good a chance as ever.

TIHR: And you’ve lined up some lobbyists to help.
DR: We have the two top lobbying firms in the state working for us. GeorgiaLink and a gentleman named Roy Robinson. (Arthur) “Skin” Edge and (John) “Trip” Martin are from GeorgiaLink and they are a very powerful lobbying form. And Roy Robinson enjoys a great reputation down there. That’s where we’re headed with it.

TIHR: It’s well documented that the Thoroughbred industry is going through some retrenchment, tracks are closing, fewer numbers of foals are born year after year, yet you are proposing opening a racetrack. Why?
DR: That’s a great question. For us, we feel like we’ve got the benefit of looking back at this industry over the last 10 years, seeing what went wrong, where the errors were made. I have no problem saying this: I think it’s been beneficial with what the industry has gone through. Like the housing industry when the market dropped. People had to reflect on size of the house that they built, the type of product material, everybody had to get better. The horse racing industry, I get bothered when people tell me it’s a dying industry. I disagree. One thing I tell them is people are not going to Keeneland in September and in three weeks spending a million dollars to have pets. And then to turn around a month and a half later and spend another $500,000 buying broodmares and so forth.

The industry is there, we just went through an economic downturn that probably has helped us in that tracks that probably don’t need to be running and were losing money don’t need to be in business. The ones that are are doing it right. Gulfstream Park had a record year for 2014. The strong ones that survive, they are very successful. What we believe is modeling after Saratoga or Keeneland, where we’re going to have a boutique meet with a smaller track because today you don’t need the large track. Most of the money is bet over the Internet, 87 percent of the money will come from outside the state of Georgia.

TIHR: A city like Atlanta is certainly appealing for racing, considering its passion for sports.
DR: We’re putting a sports venue in Atlanta, which is the hub of the southeast. It’s amazing that horse racing is not here. This town is getting a brand new, $1.2 billion Atlanta Falcons football stadium, it’s a nearly $1 billion Atlanta Braves baseball stadium. This is a sports town that is brand new. For us to get a new horse racing venue, where we bring in, whether it’s 10, 15, 20 days in the fall and the spring and have top world-class racing, horses and purses to match, much like Saratoga, I think we’ll be very successful.

TIHR: Best case scenario, you do get approval, where do you see a tie-in? Where will you draw horses from?
DR: For Atlanta, our great weather is really September, October. The fall here is just fabulous. It’s very dry, very little humidity. We want to attract the guys that finish up at Saratoga and decide I can go to Atlanta for a profitable meet where the purses are good and then move on down to Florida and be ready to go there when they get started in earnest in December. We may pick up some from the Mid-Atlantic area and then conversely we would try to pick them up on the way back. Gulfstream is going to close the first of April and I tell you, middle of April to May, I know there’s some conflict with Keeneland but not everybody would go to Keeneland, some might stop at our place on the way back to New York.

TIHR: Do you have a certain part of Atlanta, or elsewhere in the area where the track would be located?
DR: I have not pinpointed a location. This past summer I met with representatives from the city of Augusta, Macon, Savannah, Columbus, they all would like to have the track. Augusta really would like to have it and they would like to tie in the Masters in April with horse racing. They were very excited about the potential. Does that mean we go some distance halfway between Augusta and Atlanta? Possibly. Do we go to the westside of Atlanta? Could be there. The reason I haven’t laid it out there is if we get this passed, then I really feel like it gives me an opportunity to go to some of these outlying small cities and really get some tax breaks, where they may offer things if we come in there. Like Cobb County, when we met with them, they said, ‘we’ve got like 250 acres over here, we’d like you to put it there.’ Maybe they give us a 100-year lease and we don’t even have to go buy the property. If I keep the carrot out there for all these cities and counties, then once it’s passed I can see what my best opportunity will be. But I have to be cognizant of the fact that I need to stay and gain the people and the wherewithal of Atlanta. We really don’t have that spot yet.

TIHR: What’s the biggest obstacle to getting this done?
DR: The hardest part is getting it to the floor of the House and the Senate. I don’t think there are enough groups out there, whether religious or animal rights or anything, we just have not had that kind of impact. I’m sure some of them will come to the hearings, but at the end of the day that’s just not going to carry that much weight. We already have the lottery here in Georgia. It’s not like we’re bringing something new and saying, ‘good gracious we don’t have gambling.’ We do. It’s a huge deal. It becomes political. These politicians, first and foremost, are concerned about getting reelected. …

I’m really disappointed that some of them don’t come from a business background, because this is the only revenue-generating bill that will come to the House and the Senate this year in the state of Georgia. Everything else is an expense. So if you’re struggling to cover the cost of the HOPE Scholarship and if you want to increase teacher pay and if you want to help transportation, if you want to do all these things, where are you going to get the money? If somebody is standing over there saying, ‘we’re going to hand you 10, 15, 20 million bucks a year, for you to put it where you think you need it,’ I don’t see the rub.

That money is just off the handle. That doesn’t count the tax you get from claims, the tax you get through town, the gas, the jobs it creates, the farms that start growing hay and straw, the feed, all of the ancillary things that are out there, that doesn’t count any of that. That’s probably millions more in direct revenue. We have a letter from Craig Fravel from the Breeders’ Cup that they’d consider the city of Atlanta going forward. That’s a $60 million impact to the state.

If you’re sitting there and your job as a representative or a senator I feel like you’ve got to say, ‘let the people vote on it, if they want it it’s a revenue generator.’ What’s worse, you pull into a 7-Eleven convenience store, go in and buy a $5 scratch off lottery ticket and you’re done in 10 seconds? Or you take your family to the races, you get in for $5 and you bet $2 a race if you want to. That part is frustrating to me. At the end of the day it boils down to this being a political vote and the struggle in the last 10 years has been getting it to a vote on the floor. That’s where the issue is.

TIHR: You mentioned a magic political catch phrase, ‘economic impact.’ Do you have an overall annual economic impact figure if there was a racetrack in Georgia?
DR: We spend a lot of time going back through what we think will come through the handle. We’re looking at something, and I know this is a big spread, but between 4,000 and 8,000 jobs that this would create. We’ve got about $20 million from the handle, so with everything else overall it’s probably closer to $50 million to $70 million.

TIHR: Back to Georgia’s HOPE Scholarship Program, can you discuss that and a possible tie-in.
DR: Many years ago when they passed the lottery. The profits, the nets, would go to fund the HOPE Scholarship. That enabled kids that had met certain criteria in their grades in high school, that they would get free admission into college in the state of Georgia. What’s happened over the years is the kids got better on their grades and became eligible for the HOPE Scholarship. Now the lottery is struggling to have the funds available to pay the number of kids that are entitled to free tuition. That’s why we felt like these funds, the money coming from the handle, somewhere between $10 and $20 million a year, that it would go to an education fund. Then the governor and the chancellor would say, ‘we want this to go direct to the HOPE, to shore that up,’ or it goes somewhere else for education.

TIHR: There is no casino gaming as part of the bill, but there is an Internet-gambling component. We’re talking about advance deposit wagering, right?
DR: We’ll have to have ADW. We’re not going to do any gambling on the Internet with regard to somebody betting football or other sports. … We’re not promoting Internet gaming per se, we’re just going to have it where a person can have an account and bet the racing. Like in many states. We’re not breaking ground on this.”

TIHR: So back to an earlier question, what’s the next step? Where do you see the next bit of progress?
DR: I expect to hear next week that Brandon Beam has filed. I expect to start getting more newspaper and TV coverage. I think it will move along in the Senate to a committee and a time will be set up for hearings.