Caliente Girds for New Threat: Off-Track Betting

The Caliente Race Track has seen worse. It has weathered the Great Depression and the resumption of horse racing in California. It survived the repeal of Prohibition in the United States and a disastrous fire.

Through it all, the celebrated track has remained a mainstay of this border city’s image and economy for more than a half century, a somewhat exotic place whose name, for many, still conjures up images of storied thoroughbreds, tantalizing tangos, and passels of boozy Hollywood types heading south in chartered trains and custom-made cars for a weekend of extended reveling and wagering.

“Yes, we’re worried; we’re real worried,” said Jorge Hank Rhon, the 31-year-old general manager of the track and all-around animal enthusiast who has overseen a far-reaching track improvement program in the last two years. “But we’re not going to let this die. Caliente won’t die.”

The new threat is the introduction in Southern California of “satellite wagering”--popularly known as off-track betting--which began at the Del Mar race track in San Diego on Wednesday. Under this arrangement, similar to off-track betting programs elsewhere in the United States, off-season visitors to Del Mar can place bets on races occurring at other Southern California tracks, notably Hollywood Park and Santa Anita, whose meets will be broadcast live to Del Mar via satellite and will be seen on television monitors.

The new betting scheme figures to cut into the so-called “foreign book” business operated by Caliente. Such foreign-book operations, attracting mostly U.S. residents, have become an important industry in many Mexican border cities, where Americans have long traveled for good times, divorces, cheap booze and sundry other services more readily available south of the border. Caliente, a more-than-$100-million-a-year business that employs about 2,000 people, relies on the foreign-book operations as its single largest moneymaker--and its only profitable one, according to track officials.

Under the foreign-book system, patrons can place bets on races at various U.S. tracks while visiting Caliente-run betting parlors at the race track here, or at other sites in downtown Tijuana, Ensenada, Tecate and Rosarito Beach. Inevitably, the most heavily bet races in Tijuana are Southern California contests that are now to be seen on monitors at Del Mar.

“This is big trouble for Caliente,” said Tom West, a professional handicapper of the old school (“I lost a wife because of the horses”) who was found on a recent afternoon poring over back racing results at a hopelessly cluttered table in the bustling foreign-book betting parlor at the Tijuana track. “This is going to be like a release from 40 years of bondage. You know what kind of torture it is to wait on those border lines on the way home?” asked West, who expects his Solana Beach-based handicapping business to expand substantially with increased business from Del Mar.

West spoke on a recent afternoon above a constant din and amid a seemingly anarchic bustle uniquely associated with a race track--and, possibly, the floor of the Stock Exchange. In the long rectangular room that houses the foreign-book operation on the track grounds, bettors scanned the odds-board and focused on various color monitors. That day, there was televised racing from the Philadelphia Race Track, the Meadowlands in New Jersey and the Oak Tree meet at Santa Anita, as well as betting on non-televised races from a number of tracks, including Aqueduct in New York, Laurel in Maryland and Bay Meadows in Northern California.

Some conversational tidbits:

“Who do you like in the eighth at Philly?”

“Ya know, it’s a privilege to watch these Jersey races.”

“Losing that exacta’s gonna kill me.”

“Can you believe that animal? Tell me?”

It’s a much different atmosphere from the lawn-chair and Frisbee crowd so evident at Del Mar during the racing season. The foreign-book clientele is more akin to the cigar-chomping patrons of off-track betting parlors east of the Hudson River.

“I feel welcome here,” said one elderly lady, a regular at the foreign book, who enjoys the democratic atmosphere. “At Del Mar, you feel that if you’re not a member of the turf club they don’t even want you.”

They want you here.

Track’s Only Profitable Enterprise

Caliente’s foreign books earn about $2 million in profits a year, making it the track’s only profitable betting enterprise, according to Hank, the general manager. The track’s direct horse racing business loses more than $1 million a year, Hank said, and the greyhound racing only breaks even. Caliente, Hank added, is only beginning to make a slight profit after years in the red.

While conceding that Caliente is likely to lose some business because of satellite betting at Del Mar, Hank insisted that it is not a death knell for the historic Tijuana track. In fact, Caliente has recently expanded its foreign-book operations to a site in Rosarito Beach and is planning on opening another parlor in a new shopping center within walking distance of the border.

“I have to fight this,” said Hank, whose shoulder-length black hair, dreamy eyes and informal style make him appear more like a 1960s rock-music impresario than a race track manager. “I have no choice.”

Hank likes to cite the foreign book’s “advantages”: There is no entry charge (Del Mar patrons will pay $2 each); clients can bet on races from more tracks; patrons can revel in a kind of bettor’s fantasy, wagering on faraway contests while watching and betting on live greyhound and horse races at Caliente, and, of course, the allure, the ambiance--the sheer exotic value of a trip to the betting room in Mexico.

As one client, Darlyne Lambert of Chula Vista, put it: “You can lose your money here as easily as anywhere else.”

For major bettors, in particular, there is one other selling point: Unlike bets placed at Del Mar, wagers placed at the foreign books do not go into the general betting pool, and therefore do not affect the odds. Thus, at least in theory, a big spender, particularly one with every bettor’s dream--a hot tip on a long shot--may be more inclined to cruise south of the border and discreetly place a bet in Tijuana. Caliente takes out a 1% house deduction on all winnings from the foreign book, but taxes aren’t deducted. (At U.S. tracks, taxes are deducted from large winnings on the spot.)

At Caliente, Hank said, there are 28 bettors who wager between $5,000 to $10,000 a day at the track. “They have free drinks, Champagne, food, whatever they want,” Hank said of the high rollers.

But while Caliente does have strengths, critics say the foreign-book operation also has some serious drawbacks.

A major complaint aired by customers interviewed here was the inconvenience of driving to Mexico and waiting in line at the border inspection facilities before returning to the United States. “That drive back is a killer,” one U.S. bettor remarked.

‘Just Not Good Service’

There are also technical difficulties: Bettors spoke of equipment breakdowns and limited video capacity that occasionally leave patrons missing the final odds--or even missing races and the names of winners. Nothing makes these folks angrier.

“It’s just not good service,” said John Sullivan, a bettor and former horse owner from San Diego who was on hand at the newly opened Rosarito Beach foreign-book operation. “I’ve seen times when the race has just gone off the screen with absolutely no explanation. If they really want to compete, they’re going to have to improve service.”

Caliente officials agree that service must be upgraded; the track is in the midst of a $10-million improvement program, Hanks said. Since he became general manager in August, 1985, Hank has had the facility painted, built a new Jockey Club, remodeled the Turf Club, improved technical capabilities and generally upgraded the facilities. He has also extended use of the track grounds, hosting the Miss Mexico Beauty Pageant and a rock concert.

Hank, who is married and the father of two sons and a daughter, owes his rather lofty position at such a young age to family wealth and connections: His father, Carlos Hank Gonzalez, a former governor of Mexico state and mayor of Mexico City, lent his substantial financial backing to the track in 1979 and is now the facility’s majority shareholder. The younger Hank, who has a degree in industrial engineering, does have considerable experience with animals and with private entrepreneurship--he owned a chain of pet stores in Mexico, ran shows by exotic birds and dolphins, and now raises thoroughbreds.

Flair for the Dramatic

He also continues a celebrated tradition of Caliente managers with a flair for the dramatic. Housed in glass display cases in his offices on the race track grounds are some singular pets--large boa constrictors and pythons. During a recent morning, his helpers fed live rabbits (raised by Hank) and rats to the snakes while Hank discussed his track’s future in his low-key manner. Next to him sat a grumpy large Rottweiler named Kafka who, Hank explained casually, bit the last U.S. journalist to stop by.

“I’ve always loved animals,” said Hank, seated behind his desk in an office in the administration building next to the track parking lot, where Hank’s baby-blue Maserati and Mercedes (convertible) sit ready for action.

Proudly, Hank pointed out that he once owned North America’s largest private collection of big cats, some of which are now housed in glass display cages at the track entrance, along with parrots, macaws, cockatiels and other exotic birds from his former collection. “I just bought 10 camels,” Hank added, his interest perked up by the topic. “They’re in the stables now. I hope to race them.”

Most likely, few eyebrows would be raised. Caliente has long been an institution that stretched the limits.

When the ‘20s ‘Still Roared’

The current track is actually the successor to an earlier facility built here in 1916--deep into the Mexican Revolution--by a prizefight promoter from San Francisco. At the time, horse-betting was illegal in California. In 1929, when Tijuana was still a remote border outpost, the new race track began operations amid a carnival atmosphere, a stunning addition to the recently opened Agua Caliente casino complex, itself a gold-gilded and chandelier-studded vision of Moorish, Mission, Italian Renaissance and other architectural styles erected on the site of a former hot springs. The inaugural handicap was emceed by Al Jolson, who was accompanied by his wife, Ruby Keeler.

“At Caliente,” a track history says, “the ‘20s still roared.”

Indeed, even as the Great Depression deepened, Caliente thrived. It was the time of Prohibition, after all, and no such restrictions applied in Tijuana. Celebrities from Charlie Chaplin to Jack Dempsey to Al Capone were said to have visited; the glamorous track was used as a setting in a number of Hollywood films. Famous jockeys and horses--including the legendary Seabiscuit and Phar Lap--made the trip to Tijuana. The track still claims numerous horse-racing firsts, including the first use of the photo finish, and the first regular use of running loudspeaker race descriptions.

Alas, the glory days began to unravel as the 1930s progressed. The repeal of Prohibition and the resumption of horse racing in California were serious blows, but the truly devastating news arrived in July 1935, when Mexican President Lazaro Cardenas outlawed casino gambling. Soon, the glamorous Agua Caliente complex was ransacked and burned down; only a few remnants remain.

Glitter Diminished

At the track, racing continued, although the glitter was much diminished. After World War II, U.S. prosperity and enlightened management led to a steady resurgence; in 1970 a typical Caliente touch gained headlines: Capuchin monkeys in jockey silks rode the greyhounds in what the track history refers to as an “epic” race. But in August, 1971, it all came to a smoky end: A fire destroyed the stands and paddock.

Racing resumed at the new, $12-million race track in May, 1974, although profits were reportedly slow to materialize. Today, Hank, a connoisseur of the track’s colorful history, is betting that Caliente--with its fresh coat of bright sunset-orange paint--will continue to hold its allure for Americans, despite the presence of year-round wagering at Del Mar.

If he is wrong, the blow to Tijuana’s economy could be severe. There has been speculation that the prospect of a Caliente shutdown could put pressure on the Mexican government to legalize casino gambling in border areas--a move that could potentially threaten business at Del Mar. But such a drastic step is clearly speculative and well in the future; Hank would rather dwell on the present.

“We’re not going to let Caliente die,” a confident Hank repeated, stroking the slumberous Kafka as he lay curled up behind the desk. “There’s magic here.”