1. ONTARIO HORSE RACING Industry Information Meeting Country Heritage Park | Niagara Room Thursday, July 24, 2014

2. WELCOME

3. ONTARIO HORSE RACING Industry Information Meeting Country Heritage Park Thursday, July 24, 2014 AGENDA 1:00 Elmer Buchanan Welcome and Introductions 1:15 John SnobelenOHR Presentation: The Business of Horse Racing 2:00 Elmer Buchanan Industry Feedback 2:30 David Reimer Developing an Industry “IT Roadmap”

4. How Ontario’s Horse Racing Industry is Funded

5. REVENUE

6. The revenue is driven by three main sources: 1.Commissions on Wagering* 2.Pari-Mutuel Tax Reduction* 3.Horse Racing Partnership Funding Program THE BUSINESS OF RACING REVENUE *Based on an estimated $825M Ontario wagering

7. THE BUSINESS OF RACING REVENUE

8. COMMISSIONS

9. The commissions earned from horseplayers provide foundation funding for the industry. THE BUSINESS OF RACING COMMISSIONS

10.  PARI-MUTUAL TAX REDUCTION “PMTR”

11. PMTR is money that the industry receives from the reduction of the government’s share of the tax on wagering. PMTR provides funding for a variety of industry initiatives. THE BUSINESS OF RACING PARI-MUTUEL TAX REDUCTION PMTR Allocation%$ Million HIP Levy3.0024.75 Horsepeople & Associations0.403.30 Racetrack Operations1.2510.31 Customer Benefits1.5012.38 Regulatory Levy (ORC)0.756.19 Total6.9056.93

12.  HORSE RACING PARTNERSHIP FUNDING PROGRAM HRPFP” HORSE RACING PARTNERSHIP FUNDING PROGRAM “HRPFP”

13. A significant source of funds is the direct contribution to racing from the Ontario government. These funds total $100 million per year. The majority of the Partnership Funding is allocated to Purses. THE BUSINESS OF RACING FIVE-YEAR PARTNERSHIP FUNDING PROGRAM

14. THE BUSINESS OF RACING HORSE RACING PARTNERSHIP FUNDING PROGRAM

15. THE BUSINESS OF RACING HORSE RACING PARTNERSHIP FUNDING PROGRAM

16. 2013 OMAF Funding Traditionally, funding for racing was split about 50/50 between operational funding and purses. In 2013 the temporary funding model put about $60 million into tracks allowing 100% of commissions to go to purses. Public funding of racetrack operations was a short-term solution due to its potential to reduce motivation to maintain and grow pari-mutuel wagering. The long-term solution needed to accomplish two things; focus the entire industry on increasing commission revenue and provide certainty to horsepersons and breeders. THE BUSINESS OF RACING FIVE-YEAR PARTNERSHIP FUNDING PROGRAM

17. The mix of operational and purse funding is a crucial ingredient in the model. The new model balances incentives to grow commissions, while providing horsepeople and breeders with certainty on race dates and purse levels. THE BUSINESS OF RACING FIVE-YEAR PARTNERSHIP FUNDING PROGRAM

18. THE BUSINESS OF RACING FIVE-YEAR PARTNERSHIP FUNDING PROGRAM

19. 1.Ajax Downs 2.Clinton Raceway 3.Flamboro Downs 4.Georgian Downs 5.Grand River Raceway 6.Hanover Raceway 7.Mohawk Racetrack 8.The Raceway at Western Fair District 9.Woodbine Racetrack THE BUSINESS OF RACING FIVE-YEAR PARTNERSHIP FUNDING PROGRAM Core Racetracks

20. THE BUSINESS OF RACING FIVE-YEAR PARTNERSHIP FUNDING PROGRAM Core Racetracks Core racetracks collectively generate 92% of the wagering in Ontario. They receive about 73% of partnership funding. Ajax Downs *| Clinton | Flamboro | Georgian | Grand River | Hanover | Mohawk | Western Fair | Woodbine *While Ajax is a core track, it is funded out of FAR support.

21. THE BUSINESS OF RACING FIVE-YEAR PARTNERSHIP FUNDING PROGRAM Core Racetracks Ajax Downs | Clinton | Flamboro | Georgian | Grand River | Hanover | Mohawk | Western Fair | Woodbine In exchange for this funding the core tracks agree to guarantee 758 race days and over $121 million in purses. RacetrackRace DatesExpected Purses WB, TB133 $ 57,000,000 WB/Mo, SB222 $ 40,100,000 Ajax27 $ 2,500,000 Western125 $ 7,500,000 Grand River48 $ 2,880,000 Flamboro132 $ 7,920,000 Georgian40 $ 2,400,000 Clinton15 $ 562,500 Hanover16 $ 600,000 Core Total758 $ 121,462,500

22. THE BUSINESS OF RACING FIVE-YEAR PARTNERSHIP FUNDING PROGRAM Core Racetracks Ajax Downs | Clinton | Flamboro | Georgian | Grand River | Hanover | Mohawk | Western Fair | Woodbine The core racetracks accept the risk of generating increased revenue from wagering. This keeps the people with the most direct relationship with horseplayers, the tracks, focused on increasing the wagering on Ontario races.

23. 1.Dresden Raceway 2.Hiawatha Horse Park 3.Kawartha Downs 4.Lakeshore THE BUSINESS OF RACING FIVE-YEAR PARTNERSHIP FUNDING PROGRAM Regional Racetracks

24. THE BUSINESS OF RACING FIVE-YEAR PARTNERSHIP FUNDING PROGRAM Regional Racetracks Dresden| Hiawatha | Kawartha | Lakeshore Regional racetracks face a different challenge than Ontario’s core tracks. Regional tracks offer important grassroots racing opportunities but these races attract less wagering than the core product. To support grassroots racing, the Partnership Plan provides funding with more flexibility. While core tracks can only use Partnership Plan funds for purses the regional tracks can use this funding for operations and purses. Hiawatha is utilizing existing purse underpayments prior to receiving purse funding.

25. THE BUSINESS OF RACING FIVE-YEAR PARTNERSHIP FUNDING PROGRAM Regional Racetracks Dresden| Hiawatha | Kawartha | Lakeshore

26. 1.Fort Erie 2.Ajax Downs 3.Rideau Carleton Raceway THE BUSINESS OF RACING FIVE-YEAR PARTNERSHIP FUNDING PROGRAM “FAR” Racetracks

27. THE BUSINESS OF RACING FIVE-YEAR PARTNERSHIP FUNDING PROGRAM FAR Racetracks Fort Erie| Ajax Downs | Rideau Carleton F ort Erie Racetrack, A jax Downs and R ideau Carleton Raceway are unique in the Ontario racing mix. Each offers racing that does not fit with the overall program: Fort Erie offers Thoroughbred racing at a venue that does not receive OLG rent Ajax is the only track that offers Quarter Horse racing RCR offers a mix of Standardbred racing at a location that precludes regular interaction with core tracks. To meet these needs, the Partnership Plan provides these tracks with operational and purse support geared to their unique needs.

28. THE BUSINESS OF RACING FIVE-YEAR PARTNERSHIP FUNDING PROGRAM FAR Racetracks Fort Erie| Ajax Downs | Rideau Carleton

29. The Business of Racing How Ontario’s Horse Racing Industry is Funded

30. Questions Feedback

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