Horsemen Told to Closely Guard Purse Accounts
Horsemen were told March 18 of the importance of keeping close watch of purse accounts, money from which sometimes ends up commingled with racetrack operating accounts or tangled in bankruptcy cases.
The discussion was part of the first day of the National Horsemen’s Benevolent and Protective Association winter convention in Hot Springs, Ark. The meetings continue through March 21, when the full board of directors will meet.
The forum’s goal was to encourage horsemen to work with their racetrack partners in monitoring purse accounts. It may sound obvious, but officials cited many cases in which there was little oversight and “cash” that wasn’t really there.
Craig Gegorek of Gegorek and Company, which provides consulting services to the horse racing industry and others, said “financial responsibility” includes regularly monitoring purse accounts. To drive home the point, he said the about 30 affiliate members of the National HBPA accounted for $600 million of the $1 billion in purses paid in North America in 2010.
“You’re running multimillion-dollar organizations,” Gegorek said.
Gegorek offered a few examples involving his clients. In one case, purse money was commingled with the racetrack’s operating account; the account, however, was overdrawn by $2.5 million, so the purse money was gone.
In another case, a track kept purse money in a separate checking account but was using the funds as “working capital.” Management claimed the money—about $8 million—was covered by a $10 million line of credit.
Ohio HBPA executive director Dave Basler said when he took the job about four years ago, he had to start from scratch.
“I found out we didn’t have the information necessary to tell if we were being paid the right amount (in purses),” Basler said. “It’s not complicated if you have the right information.”
The “right information” includes all simulcast contracts, because the percentage paid on pari-mutuel handle can vary from outlet to outlet. Basler said in one instance betting outlets that paid different host fees were lumped into one account because they all had the same signal disseminator.
Florida HBPA executive director Kent Stirling recounted the last season of Thoroughbred racing at Hialeah Park, where more than $350,000 in purse checks bounced the final two weeks of the meet.
“There are so many ways tracks can take money from you that you’re not aware of,” Stirling said.
On the flip said, Arkansas HBPA president Bill Walmsley and Oaklawn Park general manager Eric Jackson discussed the working relationship between horsemen and the track. Walmsley said Oaklawn provides monthly reports of how much purse money is generated through live racing, simulcasts, Instant Racing, and electronic games of skill.
“We get all the information we ask for,” Walmsley said. “We get more than we ask for. If (horsemen and racetracks) don’t cooperate, this industry dies.”
Horsemen’s representatives said they’d like to see racing regulators get more involved in monitoring things such as purses and handle. Some jurisdictions, they said, don’t even receive daily updates from racetracks and horsemen’s groups—even though the state derives tax revenue from handle.
“I don’t understand how regulators can regulate a business without adequate information,” said Bob Reeves of the Ohio HBPA.
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