ADWs Lose Presque Isle Downs Signal

ADWs Lose Presque Isle Downs Signal
Photo: Coady Photography
Presque Isle Downs is the latest track to get caught up in the battle over revenue sharing of online and telephone wagering companies, as signals to many advance deposit wagering companies were cut off May 11 due to lack of agreements with the Pennsylvania Horsemen’s Benevolent and Protective Association.

Handle on the May 11 card, not including separate pool wagering, dropped to $194,954 after an opening day handle of $729,219  May 9, according to statistics compiled by The Jockey Club Information Systems. Average daily handle during last September’s inaugural 25-day meet at the Erie-area track was more than $585,000.

Joe Santanna, who is president of the Pennsylvania HBPA, said the horsemen didn’t withhold consent for the ADW signals, but said the group only would grant approval for entities that sign licensing agreements based on the revenue sharing plan being promoted by the Thoroughbred Horsemen’s Group.

“I am unaware that any have done so,” said Santanna, who is also treasurer of the THG, which includes 18 horsemen’s groups across the nation.

Horsemen using THG as a collective negotiating agent had previously shut down signals to various ADWs for Churchill Downs and Calder Race Course, which are owned by Churchill Downs Inc.; Lone Star Park and Thistledown, which are owned by Magna Entertainment Corp.; and River Downs, which is independently-owned.

The development at Presque Isle Downs was not mentioned during owner MTR Gaming Group’s May 12 conference call discussing first-quarter financial results. The Blood-Horse was electronically cued for a question during the question-and-answer period with analysts, but was not recognized. A later query to MTR Gaming’s corporate office about Presque Isle Downs was referred to director of racing Rose Mary Williams, who did not immediately return the call.

During the conference call, MTR Gaming president and chief executive officer Ted Arneault answered several questions from analysts about Presque Isle Downs and claimed the export handle was doing very well.

“We had a tremendous, tremendous (off-track) wager Friday night,” he said. “And I can tell you from being there, the place was absolutely jammed. Presque Isle is really, really looking good.

“I know that won’t last if we don’t get bigger fields,” he continued, noting small field sizes that averaged 6.5, 6.3 and 5.9 on the May 9-11 cards. “So that’s our primary emphasis. We are just in competition with other tracks that are at their peak right now.”

Companies such as TVG, Youbet, and Premier Turf Club were informed of the signal situation just a couple days prior to May 11 cut-off.

TVG general counsel John Hindman said the company will be communicating its position directly to the Pennsylvania HBPA.

“We view it as problematic for several reasons,” he said without elaborating. “It appears that the horsemen are acting against their own interests, as well as against the interests of the race fan.”

Joe Riddell, a partner in Premier Turf Club, which operates a cash-rewards outlet in North Dakota, agreed the betting customer is being left out of the equation.

“We are sitting here fighting amongst the horsemen and the bricks and mortars while ignoring our customers,” he said. “Why don’t they have an equal say at this table? While we are trying to fight this battle, let’s try to figure out how we do all of that to satisfy the three entities that have to have a stable platform. This platform has to be built on three legs and not on two.”

As is the case with other tracks, the signal exclusion at Presque Isle Downs is not extended to high-volume offshore rebate shops such as Elite Turf Club and Racing & Gaming Services.

“We are attempting to look at this in a segmented fashion,” Santanna said. “This is a substantial undertaking. It has to start somewhere. And it has to end somewhere.”

THG-affiliated groups are pitching a revenue model that asks for a one-third share of takeout realized from ADW wagers. TrackNet Media Group has repeatedly said the proposal is economically infeasible, and Riddell said he in many ways agrees with that assessment.

“I agree with Scott Daruty’s statement that the (THG model) does not fully address the issues, and it needs to be worked out,” he said, noting comments previously made by TrackNet’s president. “I want to see the horsemen succeed. I want to see the racetracks succeed. And I also want to see our customers to be invited back into the process and kept in.”

Santanna said the current revenue model in regards to ADWs needs to be fixed, and that horsemen are willing to be “temporarily inconvenienced for permanent improvement.”

 “I still don’t understand how the person selling the product is losing money,” he said, speaking of horsemens' return on investment in breeding, buying, training and owning horses. “(Horsemens’) revenues don’t equal their costs. And the product is at economic peril. If we can narrow the gap between purses earned and the operating expenses involved in owning a horse, we will continue to have folks interested in buying horses and putting on the show.”

The Pennsylvania HBPA, which has about 2,500 members, also negotiates signal agreements with Penn National. Santanna said Penn National already has an agreement in place with horsemen that won’t expire until 2011.

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