Geary Considers Options in ADW Situation
The owner of Ellis Park said he is willing to work with horsemen on revenue-sharing plans for wagering signals, but hasn’t ruled out eventually closing the Kentucky track if an equitable long-term agreement isn’t reached.
Ron Geary said June 24 he hasn’t received consent from the Kentucky Horsemen’s Benevolent and Protective Association for distribution of the track’s racing signal for its meet that starts July 4. The Kentucky HBPA and horsemen’s groups in other states have withheld consent to several tracks in a series of nasty battles over revenue sharing of advance deposit wagering made through Internet and telephone outlets.
Geary, who said he is “sympathetic” to the horsemen’s pitch for more revenue, said he has offered a couple of alternative plans to the Kentucky HBPA in informal discussions, including a phase-in of staggered higher revenue over a five- to 10-year period.
“We’ve discussed that, but they haven’t given me any formal notification either way,” Geary said. “I am optimistic and hopeful that for the sake of continuance of Ellis Park, we will be able to meet some kind of agreement.”
Marty Maline, executive director of the Kentucky HBPA, acknowledged there have been discussions with Geary on the new revenue-sharing plan, which asks for a one-third share of takeout from ADW wagers be used for purses.
“Yes, we are aware it will adversely impact them,” Maline said of a scenario where consent isn’t granted. “We hope serious discussions will begin – they are like two weeks away from starting. Unfortunately, there’s not been a whole lot of movement.”
Geary, who in March told The Blood-Horse Ellis Park lost $2 million in 2007, said without wide-ranging signal distribution to all major ADWs, he projects 2008 revenue will decline 15%. Geary, who in the same March interview said he would consider selling the 231-acre property located in Henderson as a last resort, said he has had no further definitive thoughts on closing the track.
“I’m not making any decisions on that until I get the (horsemen’s consent) letter,” he said. “And then, I will have several options. One, I will appeal to their board if they do to little Ellis Park what they did to Churchill Downs.”
The Kentucky HBPA withheld consent for the Churchill Downs signal to go to a select group of high-volume ADWs, resulting in a 10% drop in handle. The track responded with a 20% purse cut, and filed a federal antitrust lawsuit against various horsemen’s groups and individuals.
Maline said the Kentucky HBPA is aware of the “tenuous” economic challenges facing Ellis Park, and that Kentucky could be without live Thoroughbred racing for part of the summer if Geary closes up shop. He said the track already will be facing stiffer competition from Indiana tracks, which will eventually be bolstered by slots revenue and expanded racing dates, and from Illinois tracks, which could receive additional funds from casino gaming. But he said the Kentucky HBPA can’t make an exception in the case of Ellis Park.
“We can’t suggest a different scenario to Ellis than we can with any of the racetracks,” Maline said. “It would have to be in line with what we are proposing for Churchill Downs, and, eventually, Keeneland or Turfway (Park). Everyone is recognizing this as a growth segment.”
Geary said he is looking forward to the prospects for the upcoming meet, because he had worked out a settlement with Churchill Downs Inc. in which Ellis Park is allowed to negotiate signal rights to all ADWs. Geary purchased the track from CDI in 2006, but was restricted from using such ADWs as TVG and Youbet.com in 2007 when the TrackNet Media Group venture of CDI and Magna Entertainment Corp. was launched.
“I am pleased to say that we now have agreements with TVG and Youbet,” said Geary, who blamed the ADW restriction for a 10% decline in handle last year. “This gives us our best shot. I wanted the widest distribution possible.”
Ellis Park also received $2 million from CDI as part of the settlement, according to the racetrack company’s most recent quarterly report.
Geary said he has not spoken with anyone from the Thoroughbred Horsemen’s Group, the national consortium of 18 horsemen’s associations. The THG, which was formed last December, is negotiating signal agreements with several tracks on behalf of several horsemen’s groups, including the Kentucky HBPA.
Bob Reeves, the president of the THG, said the national group is not yet involved in negotiations with Ellis Park. “They have not yet asked us to represent them in negotiations,” Reeves said of the Kentucky HBPA. “But recent history suggests that they will.”
Geary said while the tracks and horsemen are feeling the pinch, the industry may suffer as bettors move on to other forms of entertainment.
“We just had a national handicapping tournament and I spoke with several players,” he said. “They just said, ‘We can’t bet.’ It’s very disappointing to them. Eventually, you will lose some customers, and some of them won’t come back.”
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