Horse racetrack owners complain that the state is schizophrenic about their industry, erecting statutory and bureaucratic barriers to it operating profitably, while throwing special favors at particular tracks in the form of subsidies and selective tax breaks (see "'Schizophrenic' State Planning"and related stories in Michigan Capitol Confidential). Further, they say it's unfair that they must compete for gambling customers against a government lottery with sales outlets in every convenience store.
The reality is, if the state weren't schizophrenic about gambling itself, and just allowed a free market to operate in this area with no subsidies or byzantine regulations and restrictions, there probably wouldn't be any racetracks, period.
(Also, state lotteries wouldn't get away with net payouts that are by far the lowest of any form of gambling, but that's another story.)
For the most part, racetracks only exist in the 21st century because for years they were the only form of legalized gambling. Take away the betting, and all that's left is an archaic relic of a bygone era when horses were the primary means of transportation and everyone was passionate about who had the fastest mount.
If there were a free market in gambling, people would bet on competitions that excite passion today: Football, basketball, NASCAR, American Idol TV shows, political elections, etc. If there had been a free gambling market in the past, most horse racetracks would have disappeared decades ago. At best, people would bet remotely on a few showcase races like the Kentucky Derby or the Irish Sweepstakes. There certainly wouldn't be half a dozen or so tracks scattered around this state.
It's hard not to sympathize with racetrack owners trying to live with their regulators and sometime-sugar-daddies in state and local governments, but if the state weren't schizophrenic about gambling these operations almost certainly would have been out of business decades ago.