Colonial Downs fallout: New Kent County will lose hundreds of jobs, along with six figures in annual tax revenue

Tidewater Review

After 17 years, Colonial Downs will shut down Nov. 1, leaving 281 employees without jobs and costing the county at least $400,000 this year in lost tax revenue when the thoroughbred season was scrapped.

“I'm sad to see it close down. I am going to have to find another second job,” said Colonial Downs Mutuel Supervising Teller Paige Roberts, who also works at McDonalds in West Point. “Money is going to be tight for awhile.”

The 65-year-old New Kent resident has been with the racetrack since the day it opened in 1997 and has over the years built a camaraderie with her co-workers.

“From day one it has been the most wonderful job because I've met some great people and I am going to miss that,” Roberts said.

Roberts has also expressed concern about how the track closing will impact her as a New Kent resident.

“Not only have I lost a job, but I'm pretty sure the county will have to make up for losing money,” she said.

The county's $400,000 deficit primarily comes from a loss of revenue from the track's eight Off-Track Betting facilities, according to County Administrator Rodney Hathaway. He added that although “there would also be a loss of revenue in our admissions tax, business license tax, sales tax, and possibly real estate tax and personal property tax,” he could not reveal exactly how much the county stands to lose for the entire season.

“We will have a much better idea of the exact financial impact on the county in January when we really start working on the Fiscal Year 2016 budget,” Hathaway said. In the past, Hathaway has said that staff will review tax increases, but always make every attempt to be fiscally responsible to its residents.

Track management recently estimated an average of 2,000 people on average visited the track on race days . Race fans will now have to travel at least 100 miles to watch horse racing.

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Colonial Downs owner Jeff Jacobs tearfully announced to the Virginia Racing Commission (VRC) last Wednesday that he will surrender the track's para-mutuel owners and operators licenses Nov. 1, meaning the track and its Off-Track Betting facilities will close as well. “I would like to see quality thoroughbred racing thrive and Colonial Downs move toward its full potential, [but] after 17 years we cannot continue on any other basis. Virginians deserve nothing less,” Jacobs said in a statement of the track's tumultuous relationship with the Virginia Horsemen's Benevolent and Protective Association (VHBPA) since the track opened in 1997.

Last week's VRC meeting was scheduled to discuss the track's proposed 10-year signed contract with the start-up Old Dominion Thoroughbred Horsemen's Association (ODTHA), which formed last month. The contract called for an eight-week thoroughbred season next year with three days of big purses. In order to host thoroughbred racing at the track, Colonial Downs must have a signed contract with a horsemen's association. In the past, Colonial Downs worked with the VHBPA but they were unable to come to an agreement on the number of races in the 2014 thoroughbred racing season.

Jacobs side-stepped any discussion at the VRC meeting. In delivering his statement , he said that he gathered from private conversations with the racing commission that there was little to no support for the new horsemen's group.

“I was very disappointed that Colonial Downs chose to turn in its licenses at last Wednesday's meeting of the Virginia Racing Commission,” said VRC member Stan Trout, who lives in New Kent. “Colonial Downs has been the centerpiece of New Kent development and progress for 20 years. When racing was first proposed in the late 1980s, timber was still the county's major industry. Colonial Downs took the first step to bring change.”

Although the racing community and local officials were shocked by Jacobs' announcement, a plan to restore racing in New Kent County is already in motion. 

According to VHBPA executive director Frank Petramalo, his organization recently partnered with the Virginia Thoroughbred Association and Virginia Gold Cup to form the Virginia Thoroughbred Alliance. The idea is to temporarily use steeplechase facilities for steeplechase and flat track, or flat areas used for thoroughbreds not jumping such as in steeplechase. “We are looking for alternatives to Colonial Downs,” Petramalo said. Other options for thoroughbred racing include tracks in Charlottesville, Montpelier, Middleburg and Warrenton.

According to Petramalo, the group's long-term goal is to become a 501c3 non-profit, purchase the Colonial Downs track if Jacobs decides to sell, and put the money back into the racing industry.

Jacobs said last week that he planned to keep Colonial Downs and maintain it, and had no immediate plans to sell it. A property assessment performed in 2014 values the land and improvements at nearly $27.5 million. That's up about $800,000 over the 2012 assessment.

Petramalo remains hopeful. “It's important that we get back to a place where we are not having someone economically trying to control us and keep us from racing the way we need to. We want the racing industry to survive and changes need to be made to make that happen.” He added that Jacobs' insistence on a shorter season would prevent horsemen from turning a profit.

According to Petramalo, horsemen favor a longer season because owners pay at least $7,500 for their crew, transportation, tack and feed, and lodging each thoroughbred racing season, without a guarantee their horses will run. A longer season, he explained, usually means owners can typically guarantee that each horse will run in three or four races.

“With less races, there's less chance of running your horse and getting [your] money back,” Petramalo said.

According to Debbie Easter, executive director of the Virginia Thoroughbred Association, higher purses and shorter seasons often yield lower quality horses, especially when held around the same time as other big races. “If there is a $1.5 million race at Belmont the weekend before, and a $1 million derby at Colonial Downs the next weekend, what do you think is going to happen? she asked rhetorically. “For one, the horses that race are probably not going to be Virginia horses, and second, they won't be the top quality horses. We could probably bring those same horses in with lower purses, which would make more economical sense.

Easter said that by developing funds and giving back to the racing industry, the alliance could create jobs once again for New Kent residents. “We would love to put people back to work and revitalize racing in New Kent County.”

When the VHBPA and Colonial Downs failed to sign a 2014 thoroughbred season contract, four of eight OTB facilities in the state closed. Those that remained open were prohibited from taking bets on Virginia thoroughbred racing. Now that the track is closing, all eight OTBs will shut down permanently. Colonial Downs still operates EZ Horseplay wagering online, which has been popular since it started a decade ago.

Race fans like Tad Bergman would allike to see the races start again, but not at Colonial Downs. “As a race fan I feel cheated. When we voted to legalize wagering on horse racing we did it with the anticipation of having the opportunity to enjoy the excitement and camaraderie of spending a day at the racetrack with family and friends." 

“Unfortunately, it appears that Colonial Downs out of state ownership has decided it is only interested in advancing it's Internet wagering website and has abandoned all prospects of live racing here in Virginia,” Bergman said.

“I personally will never wager on Colonial's Internet site and would encourage others to do the same. They don't deserve our support,” he added.

“It's the largest wagering company in Virginia and it doesn't require a OTB site,” Petramalo said.

Although forfeiting his license was always an option, Jacobs' announcement stunned the 200 people at the VRC meeting.

According to Darrell Wood, director of marketing for Colonial Downs, when the track hosted thoroughbred racing it had 330 seasonal employees and 280 full-time employees, including the 125 employees at OTBs.

Larry Clark, New Kent's assistant director of finance, said the track brought in $188,000 less than projected this year because the debate halted thoroughbred betting off-site. As a whole, Clark added, the track's revenue to the county has been steadily declining since 2007.

Clark said Colonial Downs brought in $793,000 in 2007, and less than half that in 2013.

Colonial Downs spokesman Jay Poole said the track had a surge in visitors in 2013 because of the shorter thoroughbred season and higher purses. The purse for the Virginia Derby, the track's annual signature event, was $500,000 in 2013. It had gradually declined from its peak of $1 million in 2006 and 2007.

Colonial Downs is not the only racetrack in the U.S. to face financial hardships. “The horse industry is not like it was years ago,” Easter said last week. “It used to be the No. 1 spectator sport, but attendance has been sliding downward.”

Jacobs admitted some employees were surprised by the decision to close, even though they were told several weeks ago this was a possibility. He said he will pay their salaries until the end of the year.

Although the Virginia Thoroughbred Association and Colonial Downs have not always seen eye-to-eye, Easter agrees that the government will have to step up for the racing industry to survive in Virginia. “There needs to be more money flowing and in order to do that, we are going to have to have some legislature changes.” 

Martin can be reached by phone at 804-885-0040. 

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