Has Barred Couple Hit a Dead End?

Has Barred Couple Hit a Dead End?
Photo: Charles Town Races
Dick and Janene Watson are fighting ejection from Charles Town Races & Slots

Dick and Janene Watson were at the forefront of the rebirth of Charles Town Races when video lottery terminals began operating in the mid-1990s. But they haven’t been able to race their horses for the track’s gaming fueled-purses for more than two years, and perhaps might never get the chance again.

The husband and wife, both in their 70s, have been on the outside looking in, and they take some responsibility for a situation track owner Penn National Gaming Inc. said is the reason it banned the couple from what now is called Charles Town Races & Slots. The Watsons repeatedly have attempted to get reinstated with no success.

One of the few remaining options hit a wall Jan. 9 when the West Virginia Racing Commission said it couldn’t tell PNGI to allow the Watsons back on track property even though the regulatory agency licenses Charles Town and granted 2008 owner/trainer licenses to the couple. The basis for that decision is a racetrack’s right, as private property, to exclude whoever it wants for reasons other than discrimination.

“Regardless of what we want to do, our hands are tied,” WVRC chairman Fred Peddicord told the Watsons after the commission met in executive session in Charleston to discuss the case. “You have the right to race, but they have the right to ban you. We don’t have control over Penn National in who they will eliminate from their track or not eliminate from their track.”

PNGI claims the exclusion stems from events in 2004, when the Charles Town Horsemen’s Benevolent and Protective Association sued Dick Watson, then the president of the group, largely for allegedly misusing funds. On June 14 of that year, the Charles Town HBPA issued a release saying Watson admitted to making personal loans; using an HBPA vehicle at his farm; paying retirement benefits, bonuses, and vacation funds to his wife, who at the time was executive director of the HBPA; using HBPA money to pay personal bills, and later repaying the money; and failing to provide audit reports to the HBPA board.

At the time, Watson said the civil suit--he never was charged with a crime--had been mediated and settled. The Charles Town HBPA then expelled Watson and his wife for more than two years; they were officially eligible to rejoin the HBPA Jan. 1, 2007.

There was a catch, however. To again become members of the association, the Watsons had to run one horse at Charles Town under the rules of the association. To date, they have been unable to do so because of the ban by PNGI.

According to testimony during the Jan. 9 racing commission hearing, Dick Watson ended up paying back $3,000 to the Charles Town HBPA. He repeated his apology of almost four years ago.

“I would like to apologize to everybody in this room and the Thoroughbred industry impacted by my actions of several years ago,” Watson said. “I will long be sorry for what happened. I had a couple of lapses in judgment, and I did some things I shouldn’t have done.

“I still don’t believe I did anything absolutely banned by the bylaws (of the horsemen’s group), but I admit I didn’t follow the bylaws. There were people that would have loved to see me prosecuted.”

Is he a target?

Watson, an outspoken advocate for horsemen’s rights, is perceived by some to be arrogant and abrasive, though in reality, he’s passionate and opinionated. Watson believes--and other horsemen privately agree--he is perceived as a nuisance and a threat by racetrack management and some horsemen, and circumstances surrounding the 2003 Charles Town HBPA election would support that contention.

In 2003, Watson devised a plan to expand Charles Town’s six-furlong racing surface to 6 1/2 or seven furlongs to make it more forgiving for horses. The surface itself, at times deemed unsuitable and unsafe for racing, would have been replaced as well.

(In 2005, the existing track was resurfaced, and less than a month later, multiple racing days were lost because of recurring problems.)

Under Watson’s plan, while the expansion project was under way, live racing would have moved across the street to defunct Shenandoah Downs, which in 2003 remained a training center. It has since been demolished.

The project would have cost $7.6 million, which PNGI and the Charles Town HBPA would have split. The HBPA agreed to pick up the cost--about $1 million--to get Shenandoah ready for limited racing in 2004.

At the time, Charles Town had a $6.8 million purse underpayment even though purses had been raised twice that year.

Some members of the HBPA expressed concern about the relocation plan, expansion of the surface, and the cost. A seven-furlong track could have lured more out-of-town stock and increased competition for Charles Town-based horses.

Later in 2003, Watson lost the HBPA presidency to Ann Hilton in a heated election he believes was used to discredit him. Only a few months into 2004, Hilton took a leave of absence, reportedly due to health reasons, and then stepped down. She was replaced by Wayne Harrison, who has since left the Charles Town HBPA board.

Harrison and vice president David Walters resigned from the Charles Town HBPA board in Jan. 1, 2006, reportedly for personal reasons.

Hilton’s election in late 2003 immediately changed the course of the HBPA. The Charles Town expansion plan was dropped and the $6.8-million purse underpayment was used up in about six months as purses jumped to record levels. Purses were then cut and bordered on an overpayment.

PNGI moved ahead with its plan to demolish Shenandoah and its remaining barns. It built a three-furlong training track on adjacent property.

Watson, after signing his letter of apology to the HBPA board in the summer of 2004, claimed the organization employed a campaign of “lies, half-truths, innuendos, and character assassinations” that began in 2003 and carried through the election. Still a member of the HBPA at the time, he called for a special election for president between himself and Harrison, claiming rank-and-file members supported him.

Soon after, the expulsion order was issued by the HBPA board.

An operation in disarray?

Watson, despite his forceful nature, appeared to have a civil relationship with management at Charles Town, or at least a regular dialogue. He has often mentioned what he called cordial conversations with Peter Carlino, president of PNGI, about ways to improve the racing experience at Charles Town.

Watson and his wife, when they were HBPA officials, regularly took it upon themselves to publicize racing at the track, and initiated an owners’ night program. They became quite active in the National HBPA, which adopted a resolution honoring their contributions to the organization and the national racing industry.

Randy Funkhouser, the prominent West Virginia owner/breeder, took over as Charles Town HBPA president when Harrison resigned. Funkhouser and management have been on the outs for months. Historically, the track and horsemen's group have had poor relations, and hundreds of millions of dollars in revenue hasn't turned things around.

The situation with Funkhouser came to a head in 2007, when PNGI pushed for table games at Charles Town in a Jefferson County referendum. Some special interest groups opposed the measure, the only one of four in the state that was defeated. The Charles Town HBPA took no position on table games--something observers believe made a big difference in the outcome.

When the VLT referendum passed in the mid-1990s, horsemen--including Watson--were squarely behind it.

“They have done nothing to hurt Penn National,” Elaine Hagy, a member of the Charles Town HBPA board, said of the Watsons, with whom she is friends. “If they had been able to be members of the HBPA, I’m sure Penn National would not have lost the vote on table games. But they’re hurting Penn National now (by not being involved).”

The Jan. 9 WVRC meeting portrayed a Charles Town racing operation in turmoil. The track currently has no racing secretary, and hasn’t for about a month, so general manager Richard Moore has taken on the responsibility of writing the condition book.

Company officials said they are interviewing candidates for the racing secretary’s position, and that the racing office is functioning adequately.

Lenny Hale, hired by the Charles Town HBPA as executive director last year, told regulators 17 accredited races--those for horses bred in West Virginia--were changed or dropped from the book. State statute mandates a certain number of those races be offered.

“We’re not looking for punitive action,” Hale said, “but we would like to see this corrected. We feel there was a violation of code in the January condition book.”

Moore said horsemen didn’t reply in a timely fashion with suggestions for the condition book. He also said eight accredited races were “repetitive,” so he made changes.

“There are two state-bred races every day,” Moore said. “I didn’t violate any code. (The horsemen) just didn’t get exactly what they wanted.”

Said Hale, who has worked at many major racetracks across the country in executive and racing office positions: “What we really want is a little more cooperation. I have never encountered such a difficult time in dealing on simple matters. We didn’t even know who was writing the condition book at one point.”

That comment raised a few eyebrows given the importance of the condition book to racing and the fact Charles Town in 2006 paid $44.1 million in purses largely because of VLT revenue. And under West Virginia law, live racing and the right to operate gaming machines are linked.

On two occasions in the past year, the placing judges at Charles Town were fired--once for posting the wrong numbers after a race, and another time for not being in the room during an entire race. And earlier in January, the state veterinarian walked out after the third race, forcing a 40-minute delay until a vet could be found.

Chris McErlean, vice president of racing for PNGI, declined comment on racing operations at Charles Town Jan. 10 pending consultation with company officials. McErlean is based in Grantville, Pa., where PNGI is putting the finishing touches on its rebuilt Penn National Race Course, now called Hollywood Casino at Penn National.

Meanwhile, the West Virginia Thoroughbred Breeders Association is trying to rebound from alleged financial malfeasance, Renee Moore, a member of the organization's board, told the racing commission. Moore and others are working to correct the problems, also brought on by poor recordkeeping.

"We had some embezzlement," Moore said. "I can't say much about it, but it is under police investigation. Hopefully, for all the bad that has happened, we'll be a better organization for all our work."

The association oversees the millions of dollars in state-bred awards paid to owners and breeders whose stock races at Charles Town.

It’s the law

In their presentation to the commission--the Watsons had no legal representation--Janene Watson detailed attempts to be reinstated at the track. She said the situation began Sept. 13, 2005, when management told the Watsons to remove their horses from the grounds.

Janene Watson said a track official told her the reason for the ejection was that she and her husband “alienate management’s relationship with the HBPA.” The couple subsequently requested six times in 2006-07 to be reinstated. Twice they were told no, and the other four times they received no response, she said.

During a 2005 WVRC  hearing, Janene Watson recalled that a lawyer for PNGI stated it wouldn’t be a lifetime ban. She also said the Watsons were under the impression the ban would last for a year.

Mark Dellinger, an attorney representing PNGI, outlined the company’s position to the racing commission. He said Charles Town Races & Slots has statutory authority to eject patrons and horse owners.

Dellinger said the Watsons, while involved with the HBPA board, held “positions of fiduciary duty and trust." He called the offenses cited by the HBPA in its lawsuit against the Watsons “grievous acts of misconduct.”

“There is a substantial amount of public integrity that must be maintained by those in the horse racing industry,” Dellinger said. “That type of conduct is certainly sufficient to warrant a lifetime ban. (PNGI) never indicated it would be a lifetime ban. My client is willing to review it on an annual basis.”

Dick Watson questioned the seriousness of the company’s focus on integrity. He told the commission there are trainers racing at Charles Town whose horses have had drug positives; an individual allegedly involved in an attempted murder was seen saddling a horse one night; and another licensee indicted on drug charges was allowed access to the property.

“They are not the keepers of the integrity of the racing industry,” Watson told racing commissioners. “That authority rests with you.”

Janene Watson cited state regulations that give the WVRC plenary, or absolute, powers. She requested the commission use those powers to get her and her husband reinstated, but it’s not that simple, according to a longtime equine attorney.

“The law of exclusion is pretty straightforward,” Alan Foreman, chief executive officer of the Thoroughbred Horsemen’s Association and an attorney who has tried many horse industry-related cases, told The Blood-Horse Jan. 10. “Racetracks have a common-law right to exclude people as long as there’s not a depravation of civil rights. But exclusions are very rare--you don’t see it happen very often.”

Foreman said that reasons for exclusions aren’t generally given; a party may have to defend the reason and could lose its common-law rights. He cited the banning of jockeys at several tracks in late 2006 as a case in which track officials did nothing except cite a ongoing investigation.

Foreman said there have been cases that have examined whether licensees have greater rights in exclusion cases, but the law is the law.

“Racing commissions have been reluctant to step in unless they adopt a regulation that requires it,” Foreman said. “Some horsemen’s groups have agreements with racetracks concerning their licensees. I hate to call it a trend, but tracks are starting to exercise regulatory authority and bypassing regulators.”

Making ends meet

PNGI, which owns and operates 19 casinos and racetracks in the United States and Canada, is poised to be acquired by two investment companies. Company shareholders approved the takeover, valued at about $8.9 billion, in late December.

The Charles Town operation has proven lucrative for PNGI. In 2006, Charles Town produced $485.1 million in net revenue, more than the company’s Argosy Casino, said to be the most successful riverboat casino in Indiana.

The West Virginia government now heavily relies on VLT tax revenue from four racetracks to support its budget, and Charles Town is a key driver of that revenue.

While racing commission members were behind closed doors discussing the exclusion case Jan. 9, Dick Watson said to a meeting attendee: “Why is a multibillion-dollar company worried about one little guy like me?”

As the months have passed, and the Charles Town HBPA board has changed yet again, the Watsons have regained support from some fellow horsemen. The HBPA presented the WVRC with a letter of that support.

“We have discussed the situation several times,” said Harold Shotwell, vice president of the Charles Town HBPA and an owner/trainer. “The HBPA never endorsed the eviction of the Watsons from the racetrack. The majority of horsemen at Charles Town would like to see them come back.”

It doesn’t appear that's going to happen any time soon in light of the commission’s decision. When asked after the verdict came down what he planned to do, Dick Watson said: “Go hire a lawyer, I guess.”

In the meantime, the Watsons are attempting to make ends meet and maintain their horse operation, but they indicated it hasn’t been easy. Janene Watson said the couple, who live on the outskirts of Charles Town, sold their farm and now keep their horses on other property.

They have about 20 horses, all of them West Virginia-breds. Seven of them--three 2-year-olds, three 3-year-olds, and one 4-year-old--are currently being broken even though they can’t race at Charles Town. The couple was forced to sell their older horses, she said.

Janene Watson said racing at Mountaineer Casino, Racetrack & Resort on the other end of the state isn’t an option because she believes the state’s tracks honor each other’s bans. Penn National, located roughly two hours from Charles Town, probably isn’t an option, either, given the track’s ownership. And their stock would have serious trouble competing in Maryland, she said.

In addition, the state’s Thoroughbred breeding industry is concentrated around Charles Town, which offers most of the state-bred races in West Virginia.

“We can’t afford shipping our horses or moving,” Janene Watson said. “This is our home. All we want to do is have the availability to make a living.”

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