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OLG bets on horse racing to help Liberals rebrand

A well-trained horse obeys the jockey’s command. Obedient bureaucrats yield to politicians holding the reins of power.
June 15, 2015
By Martin Regg Cohn

When it comes to horses, think branding.

Not branding with a hot iron, which has fallen out of favour.

No, it’s all about branding with a catchy logo - the modern way of imprinting people who gamble on horse racing.

That, at least, was the big bet by OLG - until the Star’s Robert Benzie started asking questions about how much it would cost in cold cash for a warm and fuzzy rebranding exercise.

The last time Ontario Lottery and Gaming renamed itself in 2006, taxpayers lost a hefty stake: Removing the word “corporation” from its logo cost us $6 million in development and consulting fees.

This spring, OLG was banking on yet another name change as a way of lassoing horse racing into its target market:

“Refresh OLG’s brand, based on consultation with the industry, to reflect the integration of horse racing within its mandate, including changing the OLG name to include a reference to the new mandate,” according to an April document.

Why would the drones at OLG keep going in circles? Isn’t that what horses do at the track?

Just as a well-trained thoroughbred obeys the jockey’s command, so too obedient bureaucrats yield to politicians holding the reins of power.

A spokesperson has since clarified that the rebranding has been aborted, but the back story speaks volumes about how politicians play the game.

The trail begins in 1998, when the Progressive Conservatives wanted to bring gambling slots and video lottery terminals into bars. With the Internet in its infancy, the public disapproved, so the government found a seemingly win-win workaround: team up with a horse racing industry that was already in decline by giving them a percentage of the slots.

A sweet deal, but unsustainable. As gambling revenues grew exponentially, the racetracks were richly rewarded - not with fixed rental rates, but an escalating cash flow that bankrolled 17 racetracks across the province (more than in any comparable jurisdiction in North America).

Supporters claim the industry employs more than 60,000 people in breeding, grooming, stabling and racing. But at what cost?

At a time when Ontario is trying to reinvent itself - with a reinvigorated auto industry, or renewable energy, or information technology - why bolster horses and buggies? The cash flow from slots amounted to $345 million a year, a wildly disproportionate two-thirds of horse racing revenues.

And what about the opportunity cost, the economic concept that considers the price we pay for forgone opportunities? The de facto subsidy for horse racing exceeded the money spent annually on water safety in Ontario. How much more could be allocated to schools, hospitals and infrastructure if not for the horse and buggy industry?

Under pressure to balance the budget, Dalton McGuinty made the uncharacteristically gutsy decision to rein in a horse racing sector run amok. The rural backlash was ferocious, and the opposition Tories made hay of the featherbedding they had put in place years before.

Taking over as premier in 2013, Kathleen Wynne decided to cut the Liberals’ political losses by throwing more money back at the tracks. Throwing McGuinty under the bus, she rode to the rescue of horse racing with a $500-million program to placate the industry.

“We lost that battle,” a Finance Ministry official shrugged after Wynne cracked the whip.

Perennially short of cash, the government is now selling Hydro One. And telling teachers there is no money for pay raises.

That’s the opportunity cost.

Despite the financial sacrifices, the premier’s pacification program hasn’t paid political dividends for her party. Rural voters rejected the Liberals in the 2014 election and remain hostile today.

Like a gambler unwilling to admit defeat, Wynne is determined to win big again. Hence her latest crusade to give horse racing a higher profile at OLG.

But make no mistake about the motive for the makeover. It’s more about remaking a dying Liberal brand than reviving an ailing horse racing industry.

Belatedly, OLG realized the absurdity of spending millions of dollars on a name change, but here’s one they can have free: Ontario Lottery, Gameplaying and Horsing Around Corp.