ADW Companies Get California Extensions
by Jack Shinar
Date Posted: 1/20/2011 8:32:18 PM
Last Updated: 1/21/2011 9:26:42 AM

Satisfied that owners were getting as much as possible for purses from a recent state increase in takeout on some wagers, the California Horse Racing Board granted three advance deposit wagering companies one-year extensions of their licenses during its Jan. 20 meeting.

The board stopped short of handing the companies full two-year extensions, with chairman Keith Brackpool saying that there needs to be "a necessary discussion" later this year on the relationship of the ADWs to the state's racing industry.

MI Development's XpressBet and Churchill Downs Inc.'s Twinspires were all extended to Dec. 31, while the application for Youbet.com, now owned by CDI as well, was withdrawn.

During its Dec. 16 meeting, the CHRB gave the companies temporary 30-day extensions. Board members were concerned about the number of contractual agreements that were still outstanding and whether CDI, in its multi-jurisdictional hub agreement negotiations, was refusing to pay its full share to California purses as provided in last year's takeout legislation. The legislation, which authorized increases of 2% or 3% on exotic wagers, was intended to go entirely for purses.

A hub agreement is required for an ADW provider to receive contractual compensation for races conducted outside of the state.

MID representative Scott Daruty explained that the legislation could not control how ADWs and satellite wagering outlets in Florida or New York handled out-of-state wagers on California races, but said negotiations were favorable. Daruty, who was part of the bargaining through an organization of 13 racetracks known as "Monarch," noted that all the ADW companies agreed to return the full amount on in-state wagers.

"On any (advance deposit) wagers taken from California residents, 100% of the takeout increase will be returned to purses," Daruty said. However, because of CDI's opposition, it was not possible to return 100% of the increase on out-of-state wagers to purses, he said.

Daruty sad he could not reveal what the rate was on out-of-state wagers, but said that more than half would be returned to purses.

The board approved TVG's license without further qualifications but okayed the licenses of Twinspires and XpressBet conditionally on the completion of labor agreements with the local pari-mutuel clerks' guild.

Under the motions approved, the contracts must be completed within 21 days or the CHRB will schedule a mediation session during its March meeting, Brackpool said. In addition, Twinspires was required to submit its hub agreement and simulcast contract with Monarch to the CHRB for review. The CHRB would have 10 days to approve it under the motion Brackpool proposed.

Board member David Israel opposed the extension to Twinspires and abstained from granting one for TVG and XpressBet.

In other action, CHRB counsel Robert Miller said the agency had found no evidence that the Thoroughbred Owners of California had misappropriated more than $1.1 million received from the NTRA in 2006. Horse owner Jerry Jamgotchian charged that the TOC had created a secret account with the money rather than place it in the organization's purse account.

"Suffice it to say that there was no misappropriation of funds," Miller said. "The funds in question were never intended for thepurse account."

Miller said a letter explaining the CHRB's full investigation findings would be forthcoming in one week.

The board approved for a 45-day public comment period a rule change that would eliminate the coupling of horses in cases where the same person or persons is involved in the ownership of more than one horse in a race. The new provision would also allow a horse to run for purse only when inadvertently removed from the wagering pool due to an error.

The CHRB also amended the 2011 license for Los Alamitos Race Course to reflect a 2% increase in handle takeout. The increase was approved last year but expired on Dec. 31.
 



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