California Defers ADW Rule Change
by Jack Shinar
Date Posted: 10/16/2008 8:59:30 PM
Last Updated: 10/17/2008 3:31:34 PM

After more than a year of discussion, the California Horse Racing Board has deferred any action on a proposed rule that would prohibit advance deposit wagering companies from making exclusive wagering agreements with Thoroughbred racetracks in the state.

During the CHRB's meeting Oct. 15 in Arcadia, chairman Richard Shapiro said he didn't think a proposed rule from the agency's staff on prohibiting ADW exclusivity was sufficient to end the practice. He instead appointed new commissioner David Israel to form a committee, one that would include representation from the four ADW companies that are licensed in the state, to craft a rule change.

"I believe the proposed rule before us doesn't close all the possibilities," Shapiro said. He added that the new rule needs to place the burden of eliminating exclusive clauses or contracts on the racetracks as well as ADW companies, while at the same time allowing for flexibility in a case where an exclusive agreement would work to the benefit of the industry.

Whatever the committee comes up with, it is unlikely to be approved and implemented in time to have any effect on upcoming license renewals. The current licenses for the four companies -- TVG, XpressBet, Youbet.com, and Twinspires --  expire Dec. 31.

The board's deferral came after a long presentation from Drew Couto, president of the Thoroughbred Owners of California, supporting the organization's argument that horsemen and tracks are being shortchanged by the ADW providers, especially with out-of-state wagers placed on California bets.

Shapiro polled the CHRB commissioners individually, and they unanimously supported the concept of eliminating exclusivity so that all licensed ADW companies could take wagers on all California Thoroughbred tracks. An eight-month experiment allowing such an arrangement ended this summer with industry insiders and most of the ADW companies saying that non-exclusivity is the best way to maximize revenues from account wagering and serve the betting public.

Craig Fravel, executive vice president of the Del Mar Thoroughbred Club, told the board that long-term existing exclusive agreements between TVG and Del Mar, Fairplex Park and Oak Tree Racing Association end this year, giving control of their content back to the tracks.

"The market will sort itself out" in the next three to six months, he said, urging the board to hold off on locking itself into a new rule that could have unintended consequences.

TVG's general counsel John Hindman said his company opposes the rule as it was proposed, but said TVG would like to participate on the CHRB committee on drafting a new proposal.

A letter to the CHRB from attorney Ronald Turkovsky on TVG's behalf argued that what the CHRB proposed was "fatally flawed from both a legal standpoint and a policy standpoint." He said that it conflicted with the federal Interstate Horseracing Act as well as state ADW legislation as it was approved last year and would not achieve the board's goal of ending exclusivity.
 



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