California ADW Companies Get 30-Day Extension

Board holds off on two-year renewals due to lack of completed contractual agreements.

Temporary license extensions of 30 days to the state's four advance deposit wagering companies were approved by the California Horse Racing Board Dec. 16 after concerns were raised over a number of contractual agreements that were still outstanding as the year draws to a close.

Meeting at Santa Anita, the board unanimously approved the temporary extensions to keep the ADW providers operating until Jan. 30.

The ADW companies -- TVG, XpressBet, Twinspires and Youbet -- were seeking two-year license renewals but will need to return to the CHRB Jan. 20 at Santa Anita with their paperwork completed if they want to continue operating in California.

Among the contracts that were missing in some cases were horsemen, labor union deals and track hub agreements that set out the rate of compensation the ADW providers receive on wagers placed by California  residents. A hub agreement is required for an ADW provider to receive contractual compensation for races conducted outside of the state.

Board members also wanted assurances that the ADW providers would return the full 2% or 3% increase in California takeout going into effect on exotic wagers that is intended to enhance overnight purses. TVG and XpressBet representatives said they will comply, but Twinspires vice president Brian Blackwell said that "discussions were ongoing."

Chairman Keith Brackpool later told Blackwell that the controversial takeout increase, approved through state legislation earlier this year, was necessary and that he expected any hub agreement to reflect Twinspires support of the decision as well.

"There is a great deal of debate … about whether an increase in takeout will help," Brackpool said. "We had to do something. The increase in purses promotes the possibility of fuller fields. If we have fuller fields, it will benefit the entire horse racing industry, including ADWs (through stronger handle). We (industry representatives) looked at each other and decided that the only way this is going to work is if we all jump together. You don't get to decide separately."

Blackwell said he was not involved in the discussions but would convey the board's concern.

Churchill Downs Inc. owns both Twinspires and Youbet, which it took ownership of earlier this year.

Scott Daruty, representing track owner MI Developments and XpressBet, said TVG has executed its hub agreement for the upcoming Santa Anita season and that XpressBet would complete its contract in the next 24 hours. Twinspires, because of its issue over the takeout legislation, was being held up.

"I'm absolutely amazed that we can be sitting here on the 16th of December in this situation," said board member Jess Choper. "This isn't a second or third-grade playground."

As part of his motion granting the one-month extension, Brackpool required that the ADW providers have a valid hub agreement in place by Jan. 1 or they would not be able to take wagers on California races.

The takeout increase also came up in a dispute with the California Thoroughbred Trainers over the wording of the legislation authorizing the overnight purse hike.

Alan Balch, executive director for the CTT, said that modifications in the language of the bill, SB 1072, "could have serious unintended consequences." He pointed particularly to the backstretch pension plan the CTT oversees, which takes its slice of the takeout off the top of the purse account.

The board resolved the issue for now by passing a motion stating that the increases set forth in SB 1072 be used "solely" to augment overnight purses and nothing else.

In other action, the board tabled a proposal for random drug testing of jockeys and harness drivers in favor of a future regulation that would extend random testing to other racetrack employees as well.

It approved an increase in the California Marketing Committee budget from .2% to .25% from satellite wagering handle to allow it to pursue a new promotional "branding" program. The bulk of the increase, estimated at $350,000, would go to fund the project.

The board agreed to take a fuller look at the funding situation for the San Luis Rey Downs training center, which is being threatened by a shutdown due to dwindling resources from the state's vanning and stabling program. The board may consider a change in the formula for funding off-track training sites at its Jan. 20 meeting.

Attorney Rod Blonien, a horse racing lobbyist, told the board the Commerce Casino mini-satellite wagering facility in Los Angeles County is presently averaging $88,000 a day in handle. Blonien said the card club wants to expand its horse racing operations to a separate building, which it plans to renovate assuming it gets a two-year license renewal next month.

"On the big days we just can't accommodate everyone who wants to come," he said.