Horsemen Eye Legal Action to Recover Revenue
by Tom LaMarra
Date Posted: 1/24/2006 6:43:12 PM

The National Horsemen's Benevolent and Protective Association may look for ways to pursue legal action to stop signal piracy and recover what they believe is their fair share of revenue from wagering on Thoroughbred racing.

The full National HBPA board of directors is to consider Jan. 25 a resolution offered by the Louisiana HBPA, which president Sean Alfortish said is willing to take the lead on the issue. The National HBPA executive committee approved the resolution during its Jan. 24 meeting.

"The resolution would take the first step in stopping piracy," Alfortish said. "We need to find out how to go about recovering billions of dollars we've lost to illegal wagering over the years and continue to lose on a daily basis."

Under the resolution, HBPA lawyers would be asked to study the issue and seek legal remedies to reimburse horsemen. Alfortish, an attorney, mentioned a class-action lawsuit or seeking injunctive relief as possibilities.

The effort could go beyond what are typically termed "offshore" wagering outlets, officials said. Though it remains to be seen what type of legal action, if any, could be taken, several National HBPA affiliate representatives indicated horsemen have lost control over where signals--and revenue--are going, even in the United States.

Kent Stirling, executive director of the Florida HBPA, said Calder Race Course received $300,000 in host fees from the TV Games Network in 2004, but another account-wagering provider paid TVG, which has an exclusive contract with Churchill Downs Inc.-owned Calder, $600,000 for the rights to the signal. Stirling acknowledged the South Florida racing industry received about $1 million in source-market fees, but horsemen, at least, got nothing from the $600,000 rights fee.

"We're being stolen from from within our own country," Stirling said. "We need to broaden this to look at licensing fees."

Bob Reeves, a director of the Ohio HBPA, said his research showed that for the first nine months of 2005, five rebate shops handled $28 million on Ohio Thoroughbred racing. The outlets kept $6 million in commissions and paid $900,000 in host fees, $300,000 of which went to purses.

The outlets retained $22 million to pay winners, but came up short, he said, because of the bettors' high winning percentage. Reeves said the Ohio racing industry, which has some of the lowest purses in the country, had to send $5 million to the rebate outlets to settle the difference.

Ken Kirchner, senior vice president of product development for the National Thoroughbred Racing Association, said the about $1 billion in purses paid last year was roughly 6.5% of total Thoroughbred handle. He said even a 1% increase in the revenue split would add $150 million a year to purses.

Kirchner, who was on hand to speak during a panel discussion on simulcasts and horsemen's rights, noted account wagering now makes up about 15% of total handle, and its share increases 10% to 25% a year. He said that scenario would put increasing pressure on purse levels.

"You're in control of that product and have legal standing under the Interstate Horseracing Act," Kirchner told horsemen. "We need a decision on how to proceed in the international (simulcasting) arena. We cannot leave that decision to others."

The issue of revenue from handle is repeatedly addressed at National HBPA conventions. Some industry officials believe the current controversy is rooted in the first simulcast revenue splits agreed upon more than 20 years ago.

"If you're not getting your fair share or don't think you're getting your fair share, shame on you," said Ed Martin, president of the Association of Racing Commissioners International. "Why did you price the product the way you priced the product?"

The average simulcast host fee is 3%, or roughly one-third the revenue from an on-track wager.

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