California horsemen and Hollywood Park reached a tentative agreement Oct. 10 that allows the track to operate its 40-day autumn race meet, but a stalemate over host fees to be paid by account wagering companies for interstate bets remains unresolved.
As a result, it is increasingly likely that there will be no out-of-state advance deposit wagering on Hollywood's races during the stand, which runs Oct. 29 through Dec. 21.
The impasse between the track and horsemen was made public during the California Horse Racing Board meeting Sept. 18.
Drew Couto, president of the Thoroughbred Owners of California, said a reduction in purses of 4.7% at Hollywood is in store unless the four licensed ADW providers in the state -- TVG, XpressBet, Youbet.com, and Twinspires -- agree to pay a higher percentage for the interstate signal.
"While that's not an insignificant amount," Couto said, "I think that it pales by comparison to what some tracks have experienced ... during the current economic conditions."
Couto said that ADW totaled $1.5 billion in handle nationally in 2007, with California accounting for about $600 million of that amount.
"We're not going to impact wagering in California whatsoever," he said. "Outside of California, it is what it is."
Jack Liebau, president of Hollywood Park, disagreed, saying he was concerned about how the account wagering entities will respond. "If the ADW companies find that their margins (for profit) are too slight, they may decide to stop taking wagers on Hollywood all together."
He added, "This is not a dispute between TOC and Hollywood Park. It's about what the ADWs are willing to pay, and across the country, they have not been willing to pay what the THG/TOC have demanded."
Liebau, who is also chairman of Youbet.com, was referring to the Thoroughbred Horsemen's Group, a 19-member association that includes the TOC. Couto is vice president of the THG.
At Churchill Downs, purses were cut 20% during the spring meet when ADW companies refused horsemen's demands to increase rates, Liebau noted.
"Hollywood Park and the horsemen want to get as much as they can from their signals, that's only natural," he said. "But what we don't want to see is an ADW stoppage and we end up like Churchill."
Couto said that horsemen, tracks and customers are benefiting as the national group pursues its stated goals: a non-exclusive availability of racing signals and an equitable distribution of revenues between the ADW providers and those responsible for the live product. He called them "noble objectives."
Meantime, the California Thoroughbred Trainers called a meeting at Hollywood Park on the morning of Oct. 10 to assure members that an agreement had been reached and that Hollywood would race as scheduled. The meeting was attended by Richard Shapiro, chairman of the CHRB, and Couto.
Ed Halpern, the CTT's executive director, said that some horsemen heard that the track might close down training and force them out if there was no racing.
"We explained what the situation was, what the likelihood was," Halpern said. "From my point of view I was thinking that (closure) was unlikely, but it was a possibility."
Hollywood had refused to go along with the original TOC agreement because it failed to properly account for total ADW revenues. The percentages were needed in order to implement an accurate overnight and stakes purse schedule for the meet, Liebau said.
Now there are three different schedules, he said, depending on if ADW remains the same as last year, whether there is no interstate ADW revenue, or whether there is no ADW at all.
Hollywood will use all four ADW providers at the upcoming meet.
The CHRB had agreed to conduct a special hearing over the disputed operating agreement, but that would be unnecessary assuming the tentative contract is signed. The board, during its Sept. 18 meeting, approved Hollywood Park's application conditioned upon the completion of the horsemen's agreement, which is required by law in order to operate a race meet. In addition, the CHRB was prepared to consider extending Hollywood's fall dates to the current Oak Tree meeting at Santa Anita.