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Debate Ensues Over Indiana Downs Purse Fund

Slots revenue to purses was cut off in March for a few months.

When Indiana Downs didn’t card a scheduled $75,000 stakes May 26 due to a shortage of entries, red flags were raised as to whether there was another reason the race wasn’t run.

Cancellation of the J. Kenneth Self Shelby County Boys and Girls Club Stakes came on the heels of Hollywood Park and Golden Gate Fields on the West Coast not carding races the same week due to a lack of betting interests. But considering other Indiana Downs stakes have been run this year with five or six entrants, things just didn’t seem to add up.

Jim Hartman, who serves on the board of the Indiana Breed Development Advisory Committee and monitors the state’s purse accounts, speculated the sudden change may be because slots revenue that goes to the horsemen’s purse account was cut off in late March and won’t resume until the next fiscal year beginning in July.

“Without getting too complicated, there was a clause in the (slots) law creating an annual cap that few knew existed, and Indiana Downs didn’t plan accordingly,” Hartman said.

The law states that during the state’s fiscal year (July 1-June 30), horsemen’s money from slots cannot exceed $85 million (for all breeds), the amount for fiscal year 2009. In 2009, slots revenue reached $57 million.

The part of the law many horsemen overlooked is that during the second year of generating slots revenue, the cap on the funds becomes the amount the track earned in the first year, plus an increase depending on the consumer price index.

“(The consumer price index) didn’t add a significant amount; in fact, I think it was actually negative,” Hartman said. “Indiana Downs reached the cap in the latter portion of March. That means all the money from this point forward generated from the slots, which normally would have gone to horse racing or horsemen’s associations, will now go to the state, so it’s not available.

“This was something that caught a lot of people by surprise; now parts of the March, April, and May slots revenue will go to the state. They had originally planned on having a much bigger purse amount.”

Hartman said Indiana Downs projected $9.8 million early in the meet.

In spite of Hartman’s observations, Indiana Downs racing secretary Butch Cook said the horsemen’s purse account is in good shape.

“There’s no issue whatsoever,” Cook said. “The horsemen’s purse money, we’re fine with. (Not carding the $75,000 stakes) is just a case of not wanting to run a five-horse field.

“I was concerned about (the race) initially when we only got 19 nominations for it, and (trainer) Bret Calhoun had five nominations. There was actually one horse that someone had entered that had been running for $5,000. Management and I decided it wasn’t in the best interest of the track to run the race.”

There has been some friction the past year among racing interests in Indiana. The Indiana Horse Racing Commission is undertaking a “quality of racing” initiative, and some breeders have complained about purse levels for state-bred horses at Indiana Downs this year.

Indiana Downs reserves the right to cancel any stakes that has less than six entrants—the provision was included in the conditions for the stakes scheduled for May 26—but  Hartman  believes the reason the track canceled the $75,000 event is connected to the fact it now has less in its purse account than originally expected.

“I think they’re trying to manage the purse account from what they thought they were going to have,” he said. “If you add up from the horsemen’s purse account what they used halfway through the meet, it’s about $4.4 million. They’re on pace for about an $8.8 million meet. That’s $1 million less than what they projected, which is a 10-12% decline.”

“Why would you not want to card a stakes? You’ve got to card the races to get the confidence of the horsemen that you’re actually going to run them. I don’t know what they’re going to do moving forward.”

Hartman said he didn’t know how the lack of purse funds would affect what the track had planned for a Standardbred meet that runs from late July through early November. “If there were two-plus months of revenue that would not be available for the Standardbred meet, I’m assuming they would have some lower purses,” he said.

There is another factor: a horsemen’s trust account that was set up last fall by the Indiana Horse Racing Commission. The account, to which all purse money is now directed, was set up in order for the funds to be protected.

The fund went into effect in November; however, the money Indiana Downs earned from slots prior to that (about $3.3 million) was given to the track as an interest-free loan to be repaid by July 1.

“So they have multiple issues—less revenue than what they thought, and they have to pay back $3.3 million by July 1,” Hartman said. “Something has to give.”

Hartman said the reason Indiana’s other racetrack, Hoosier Park in Anderson, hasn’t struggled with the same issues as Indiana Downs is because its second year of slots revenue will be about the same amount as the first year, so there’s no cap involved.

The week of May 24, Hoosier Park announced its open stakes schedule for a Thoroughbred meet that begins in late July. The track made some cuts in 2009 but has expanded the schedule for this year.

The highlight is the $500,000 Indiana Derby (gr. II). The Indiana Oaks, not run last year, is back on the schedule as a $200,000 event and therefore will maintain its grade II status.

The $100,000 Michael G. Schaefer Mile Stakes and a new event, the $100,000 Wigwam Stakes, round out the open stakes slate.