Illustration by Victor Kerlow.

Two decades ago, nobody would have predicted that Toronto the Good might one day house a mega-casino. But that’s exactly what the Ontario Lottery and Gaming Corporation proposed earlier this spring, when chairman Paul Godfrey began pushing for an “iconic entertainment centre” on the city’s waterfront. The idea has proven controversial, and even the casino’s proponents are wrestling with two competing visions of the project. One idea—touted by entertainment giants like MGM—involves a sprawling complex with plush hotels and luxury spas, bringing some neon vitality to Toronto’s gloomy lakeshore. Many city residents, on the other hand, favour placing the casino at the suburban Woodbine Racetrack, far from the downtown core. Woodbine itself has been campaigning to win the contract, even though it may have to break pre-existing development agreements should it secure the deal.

If the racetrack sounds desperate, that’s because it is. As Ontario’s premier horse-racing facility, Woodbine is the flagship of an imperiled fleet. The once-mighty industry is facing the worst crisis in its history, brought about by new developments in the gaming sector—of which the Toronto casino is just the most recent.

With eighteen operational tracks and an internationally respected breeding program, Ontario has long been one of the underappreciated horse-racing capitals of North America. For the last fourteen years, though, the industry has survived on a strange but mutually beneficial partnership with the province. Known as the Slots at Racetracks program, it gives the racing industry 20 percent of the proceeds from government-run slot machines, in return for the tracks’ agreement to house the devices on their premises.

Then, in February, Ontario finance minister Dwight Duncan suddenly announced the end of the deal. Beginning in the spring of 2013, the profits that are now set aside for racing will instead be directed back into the government’s coffers; slot rooms will also be opened in more lucrative, non-racing venues, like the nascent Toronto casino. The policy shift may be good for the government, but it will have the opposite effect on racing. “We don’t know exactly what’s going to happen,” says John Gallinger, president of the racehorse registry Standardbred Canada. “But we do know that it’s going to get increasingly difficult for people to make a decent living in this industry.”

In April, on Good Friday, I went to Toronto’s Woodbine track with my friend Johnny Barbados, a lifelong horse-racing aficionado who binds books at the publishing company where I work. Johnny once won $30,000 in a single day, but admits that, over the long haul, his betting career has been revenue-neutral. Still, he keeps on hoping to make it big.

In its original location adjacent to the old city of Toronto, Woodbine was the Palais Garnier of racing centres, and the newer suburban facility—established in 1956—is still haunted by symbols of lost Victorian grandeur. In a nod to Gilded Age sensibilities, the balcony railings are painted to resemble ruffled yellow curtains, and among the patrons in hoodies, NASCAR jackets and sweatpants, you still see the occasional purist in coattails and a vest. Then there are the thoroughbreds themselves, as majestic as ever; their arched necks and muscular bodies, moving in graceful, synchronized lunges, recall Eadweard Muybridge’s iconic stop-motion photographs.

Despite the nostalgic flourishes, the place has been retrofitted with modern conveniences. Satellite betting enables patrons to wager on races as far-flung as South Africa, Hong Kong and Dubai. And one can easily bet on twenty different tracks at the same time. Inside the facility, patrons huddle over desks like stockbrokers, monitoring simultaneous off-track races on blocks of wall-mounted TV screens. The hushed ambiance of the satellite-betting rooms is juxtaposed with the festive atmosphere of the track, a reminder that racing isn’t just about spectacle—it’s about winning money, too. It always has been.

For much of the twentieth century, gambling was outlawed in Canada, though the legislation was muddled and poorly enforced. Horse racing was a glaring exception. In the late nineteenth and early twentieth centuries—a time when gambling was relegated to back-alley speakeasies—horse racing was at the top of its game. In Canada Learns to Play, sports historian Alan Metcalfe explains that, “At one time or another, every village, town and city witnessed horse racing.” In the absence of proper tracks, horses could be run on city streets, dirt roads, snowy riverbeds—even frozen ponds.

Horse racing did face threats during its golden age. The track’s biggest opponents were middle-class moralizers, who nearly succeeded in banning the sport during an epic, two-day parliamentary debate in 1910. But in the end, nobody could match racing’s defenders: the leisure class, retired military officers and self-made millionaires like rye distiller Joseph E. Seagram and railroad magnate William Hendrie. These men had sway, and they wooed their supporters by appealing to the Protestant work ethic. Unlike gambling, horse racing was about sportsmanship and prowess, they said. It was about training first-class workhorses to pull ploughs on the nation’s farms, and nimble thoroughbreds to populate Her Majesty’s cavalry. “The gambling spirit is altogether opposite to that of manly, honest betting,” wrote the Canadian Gentleman’s Journal and Sporting Times in the summer of 1875, summarizing the arguments of the elite, powerful lobby. “The true sportsman prefers to risk his money on the certainty of his own judgment.”

The racing industry survived for decades on arguments like these. As recently as the 1990s, Ontarians saw racetracks and gambling as morally distinct, to the extent that some proud racing municipalities adamantly opposed hosting casinos. But then Mike Harris became premier in the mid-nineties, and he began seeking new ways to make money for the province without undermining his Progressive Conservative government’s anti-tax stance. Harris took inspiration from states like New Jersey and Nevada, which pulled in veritable fortunes in gaming revenue, as well as the hugely successful Windsor casino, established a year earlier under NDP premier Bob Rae. But Harris’ ambitious 1996 proposal to build forty-four new mini-casinos provoked widespread outrage, and the rookie premier was forced to back off.

Instead, the government began to look for subtler ways to expand the gaming economy. The Tories reasoned that, while Ontarians didn’t want casinos just anywhere, they might agree to placing slot machines at racetracks, where wagering already took place. The Slots at Racetracks program was born. Less than three decades after sweeping federal legislation made provincial gambling legal, slot rooms were poised to become one of the welfare state’s largest revenue sources.

Although the Harris government sold the Slots at Racetracks arrangement as a subsidy for the horse-racing industry, its motivations were hardly pure. The province has a monopoly over lotteries, casinos and slot rooms, but it doesn’t profit directly from the tracks. So it stands to reason that the government was also looking for ways to lure racetrack patrons into its gaming chokehold. “Before, people came only for the races,” says Sue Leslie, president of the Ontario Horse Racing Industry Association. “Now, customers could turn right and head for the races, or they could turn left and go to the slots.” The tracks were soon hemorrhaging business to the mechanized competitors under their roofs. Still, as long as slot revenue was funneled back into the industry, it wasn’t cause for much concern.

By the early 2000s, Ontarians had become more comfortable with gambling than ever before, and government agencies like the OLG began ramping up their PR efforts. As tobacco ads were yanked from billboards and magazines, Lotto and gaming ads moved in to take their places. By 2000, 67 percent of Canadians saw gambling as the best way to raise government revenue, compared to the 19 percent who favoured increased taxation. Seventy-nine percent of Ontarians were participating annually in the gambling economy, the highest percentage in the country. Only eight years after Harris’ failure, Liberal premier Dalton McGuinty presided over the opening of the massive Niagara Fallsview Casino Resort, and later announced that gaming complexes were destined to become a permanent fixture of life in the province. This no longer seemed like a controversial statement. In an era when it’s more politically feasible to build a casino than to raise taxes on the rich, the Ontario government has decided that it doesn’t need to pay racetracks to house its game rooms.

Dermot Carty is the director of sales at Adena Springs, one of Southern Ontario’s most prestigious horse breeders. He’s a long-winded fast-talker, his Irish accent only slightly tempered by almost four decades in Canada. Unlike others in the industry, Adena Springs has the backing of a deep-pocketed patron: automotive tycoon Frank Stronach, who is to racing today what Joseph Seagram was a hundred years ago. But even Adena is facing severe cutbacks. “When I look into the future,” Carty says, “I see salary freezes, layoffs and decreasing investments. I don’t have much good news to convey to my staff.”

Carty is one of the estimated sixty thousand people in Ontario who rely on horse racing for a paycheck. Beyond the sport itself, there are a plethora of sub-industries that support it: breeders, groomers, trainers, jockeys and owners collectively comprise a $2 billion subset of the province’s agricultural economy. Over the past decade, Ontario breeders have made dramatic inroads into the international market, but they still rely primarily on local investors, since Ontario-raised horses usually run best in the province’s climate. Half of the revenue from the Slots at Racetracks program is directed to the breeding sector and its various subsidiaries. Removing this funding will decimate breeding operations across the province.

The racing industry has secured a “transitional subsidy” that may keep it on life support for a few more years, but details haven’t been hammered out yet and few in the industry are optimistic. As investments in their services plummet, breeders and trainers are either looking to get out of the business or move to the US. According to Carty, breeding a first-class horse can cost as much as $50,000 over several years. Many companies that have made such investments are now wondering if they’ll see any return on their money. Some are agonizing over whether to euthanize this season’s foals or sell them to slaughterhouses for a fraction of their worth. Few people are investing in racehorses because there isn’t much of a future to invest in.

Back at Woodbine, the stands are filling up. While Johnny and I wait for the third race of the day, he tells me about his strategy, an informed but intuitive process that he has devised over decades of regular visits. He shows me his journal, where he keeps tally of breeders, trainers and international track results in elegant tables. Although he consults his notes regularly, he also relies on hunches, and rarely bets on a horse without examining it at the walking ring downstairs. With horse racing, unlike roulette or blackjack, strategy is more than just a pretense.

The race itself takes under a minute and a half to complete, which is almost too fast for a rookie like me to follow. One can either watch the actual horses or focus on a crude computerized representation, in which multicoloured squares move gracelessly across the JumboTron. As the animals kick up dust, excitement in the crowd escalates. In the nineteenth century it was considered ungentlemanly to shout “thief, thief” when an opponent’s horse took the lead, but today nobody seems to mind when people yell. After the race, I check to see if I’ve won. It turns out that my horse placed third, returning a whopping $3 on my $2 bet.

As I exit the racetrack, I can’t help but feel that the decline of racing is a loss for Ontario culture. The track is a good place to be. It has the buzzing, conversational feel of a ball park or a bowling alley, and it’s one of the few places where parents with kids can still walk around with open beers. A minimum bet will cost you $2, and even if you lose, you’ll have had some entertainment for your money.

Before heading home, I walk into Woodbine’s slot room. It’s a windowless domain where the dissonant, synthetic chimes of roughly two thousand betting consoles drown out the exuberance of the crowds outside. The machines are decorated with bearded shamans, leggy Amazonians, sages, monarchs and dragons. In spite of the overblown imagery, patrons sit in silence, wearing the preoccupied, glazed look that adults have when they play videogames.

A hundred years ago, horse racing was at the forefront of liberal freedom in an otherwise prudish society. Today, it’s an antiquated tradition that’s struggling for survival against a slicker gaming industry—one operated by the same forces that once made it illegal. Upstairs at the races, I could almost trick myself into thinking that I was participating in history, that I had some kind of kinship with the customs of the past. But as I wander through the maze-like slot room, I know that I’m navigating a garish, dystopian future: the twenty-first-century casino state.