WEG CEO Jim Lawson on the Future of Woodbine

Now that Toronto city council has given approval for a billion-dollar casino expansion project at Woodbine Racetrack, Jim Lawson said racing customers will feel some short-term pain for long-term gain.

“We’re in a transition here,” said Lawson, the CEO of the Woodbine Entertainment Group (WEG). “The gaming partners have moved in and started construction on the east side of our grandstand. It’s going to be disruptive for some time, so we’re going to do our best to be sensitive about it, in terms of accommodating our customers, but there are going to be some changes and some construction and change is hard sometimes. We’re going to have to get through it. It’s disruptive to our employees, our guests, but we’re planning it out and hopefully it will be as seamless as possible. The people that come out will see the graders and bulldozers.”

Brookfield Business Partners and Great Canadian Gaming Corporation, will invest between $1 billion and $1.5 billion in the casino expansion at Woodbine. Lawson said it will be a huge opportunity to attract people to horse racing, even in the winter months when there’s no live horse racing on site. On April 12, WEG standardbred racing moved to its permanent home at Mohawk Racetrack (now renamed Woodine Mohawk Park). The Campbellville, ON track will be home to year-round harness racing leaving Woodbine Racetrack dark to live racing in the winter.

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“The projections are bringing six million to 12 million people to this Woodbine site per year. We’re confident we’re going to be able to, through our own branding and restaurants and simulcast area, to take advantage of that in what would otherwise be some dark months. I think that will help us a lot,” Lawson said, adding that the thoroughbred meet will likely be expanded up to Christmas beginning as early as 2019.

“We’re racing a week later this year on the thoroughbred side, but we’re planning on extending it as we get into this so that we’re running two or three days a week until Christmas. That will take care of our food and beverage so we don’t lose the Toronto Christmas market,” Lawson said.

As for the casino, Lawson said WEG is trying to attract new customers to racing by building a new simulcast zone.

“We’re working on planning the new simulcast zone with new restaurants. There’s a lot going on, but hopefully we’ll look back and everyone will see this as extremely positive,” he said. “The plans here are extensive and we have our project management team working very closely with our guest experience team, just to make sure that our customers come first.

“We’re now talking about a billion-and-a-half dollar investment right in the backyard of Woodbine here, with entertainment and music, a concert two or three nights a week and entertainment, it’s going to create all sorts of jobs, including jobs for our own people in the food and beverage area. That’s what has allowed us to consider this, because we can guarantee the jobs to our people here in the off months because there’s such expansion here.”

Lawson said Brookfield and Great Canadian’s expansion of the existing slot machine hall involves the second and third floors of the grandstand on the eastern side of the building.

“Ultimately, that expansion will integrate into a hotel. There’s a new elevator going in that will connect the hotel with the first, second and third floors of the gaming expansion. It’s going to be pretty cool, but it’s going to take some time,” Lawson said.

As for racing, Lawson said construction has begun on the new turf course that is replacing the standardbred oval.

“We started construction in earnest on the new turf course and probably by Queen’s Plate day we’ll have turf down in the stretch anyway,” Lawson said. “I’m excited about the new turf course coming in. I think it will help to address one of our biggest challenges, which is this horse supply issue. We’ve got another year of this, but when we can add a second turf course and start to card five or six races a day on the grass, I think we may see some horses show up here from the United States because they can pretty much guarantee running for good purses on the turf and hopefully that goes a long way.

“It will allow us, in theory, to double the number of races, but it’s going to be something better than that because the E.P. Taylor turf course is old and… doesn’t take moisture the way it should. What this new turf course has done is that it has let us put in sophisticated drainage. We’re spending a significant amount of money to add fiber to this grass, which will bind it together better and will help it drain better. The expectation is that we could have substantial rain that, on today’s course, would go to ‘good’ or ‘yielding’, might be ‘firm’ on the new turn course due to the consistency of the draining and the fiber. It’s really an advantage from that standpoint. Also, for our customers and for horses and horsemen, it’s just a different angle with tighter turns. Some people will love that, but it’s definitely a new wagering perspective. You know, do you bet a horse who has just won on the wide, sweeping turn on the (E.P. Taylor course), then all of a sudden you’re going seven furlongs around two turns on the grass, so it’s going to be exciting and fun.”

Lawson said low breeding numbers and declining horse supply are among a number of major challenges facing the industry.

“The low breed numbers have certainly leveled off, both breeds were challenged and what that results in is horse supply (problems)… We are challenged, maybe more so on the thoroughbred side than the standardbred side, because of the Canadian dollar and the competition and immigration policies. We’re having trouble recruiting U.S. horses up here. It’s become more difficult than ever, so horse supply is certainly a big issue,” Lawson said, adding breeders and owners are crucial to solving the problem.

“Without breeders and owners, we don’t have an industry,” he said. “Our revenue comes through wagering and we’re similarly challenged on the wagering side with online gaming and all the alternatives there are today.”

WEG is well-positioned through its subsidiary Ontario Racing Management (ORM) to tackle the industry’s challenges, Lawson said. ORM has been entrusted by the government to direct horse racing for the entire province. Lawson is also at the epicenter of that process as the recently-elected interim chair of Ontario Racing (OR), which will work with ORM.

One of the things Lawson said he and others are working on is revamping the Key Performance Indicators (KPI) OR uses to signal the health of the industry. Most recently, OR has been using four KPIs — gross bet on Ontario racing, tickets sold at racetracks, number of starts per race and number of unique starters. All but gross bet are down. Lawson said a recently-announced 19-year funding agreement with the province of Ontario that could provide nearly $2 billion in total funding — some $105 million per year — through 2038 would include new KPIs.

“I think you’ll see under the new funding agreement that there are eight key performance indicators,” Lawson said. “Those have been revamped and all I can say is that there’s a new era in terms of performance indicators… We’ve worked hard to try to make them more relevant.”

Meanwhile, OR is also undergoing a transformation to an 11-member board that Lawson expected at press time to be completed sometime in May.

“It’s been quite detailed, as a result of the funding agreement negotiations, who will be on that board. It’s five racetrack position and five horsemen positions, plus one independent chair,” Lawson said. “Clearly, I don’t qualify to be an independent chair, so we will have to put an independent chair in place, once we get this new OR, with new structures and new bylaws, up and running in May.

“A board of 11 is large and it’s going to be hard to manage as it is. In an ideal world, you’d have a board of seven or eight. It is a difficult topic with some people, but I think the government is satisfied that there’s fair representation of all the different constituents and I think people have done their best to achieve that.”

Despite the challenges facing horse racing, Lawson said he anticipates a bright future.

“We’ve never worked harder at Woodbine in terms of guest experience, innovation and technology and marketing. I believe Woodbine is a leader in this and becoming world recognized as a leading technology racetrack, as well as marketing and innovation,” Lawson said, adding the long-term funding deal was a necessary first step in terms of stability for the entire province’s horse racing industry. He said he expects the deal to survive June’s provincial election regardless of which party ends up governing.