River Downs

River Downs

Christine A. Wittmer

Racetracks Fire Back in ADW Conflict

The ongoing conflict over ADW revenue has some racetrack operators to speak out.

At least two racetrack operators aren’t pleased with recent developments concerning advance deposit wagering revenue, and one indicated closure of his track isn’t out of the question should the conflict continue.

When contacted for comments on their plans to add Ohio State Lottery-operated keno games at their facilities in early August, Charlie Ruma, owner of Beulah Park, and Jack Hanessian, general manager at River Downs, seized on the ADW conflict. They told The Blood-Horse racetracks are paying the price as horsemen seek a greater share of revenue from ADW providers.

On May 1, the Ohio Horsemen’s Benevolent and Protective Association pulled its permission for River Downs to send its signal to ADW providers. The Thoroughbred Horsemen’s Group, which has 18 member associations, handled negotiations.

River Downs cut purses roughly 15%, and thus far, business is down about 20%.

“If they want to put us out of business, they’re doing a good job,” Hanessian said of the horsemen July 9. “I’m so disgusted the way things have been going. It’s the wrong time in the life history of horse racing to be doing this stuff. We’re all fighting for survival.”

Hanessian contends loss of ADW handle alone has cost River Downs $150,000 in purses at the meet thus far. “I hope this gets resolved,” he said. “These are hard dollars we’ve lost, and we can’t get them back.”

Ohio HBPA executive director Dave Basler questioned Hanessian's figures. He said that based on last year's numbers, about $75,000 in ADW handle has been lost this year.

Basler also noted River Downs, through a decision made with other racetracks that are members of a cooperative, didn't have the Belmont Park signal for a month this spring. That cost the purse account about $3,600 a day, he said.

“These guys are going to kill the industry,” Ruma said July 10 of the THG, whose president, Bob Reeves, is an Ohio HBPA board member. “They are biting off the hand that feeds them.”

Ruma, who has dealt with Reeves in past negotiations, said he has no time for Reeves. Much of the conflict stems from a still-active lawsuit involving the Ohio HBPA rescinding its approval for the Beulah Park signal to be sent to a Pennsylvania harness track.

“We told (Reeves) to stuff it,” Ruma said. “We said, ‘You think the Ohio signal is worth something? We don’t. See you later.’ The THG has never contacted me as Beulah Park. All they’ve done is shut me out. I will shut down that racetrack, will go to the Ohio State Racing Commission (for relief), and if I’m turned down, I don’t care.

“They want to play games, but I don’t want to play anymore. I’d be better off not racing.”

Basler contends Ruma has been contacted. He said THG negotiations haven't been an issue with Beulah Park thus far, because the track's live meet ended in early May.

"We never shut out Beulah Park," Basler said.

Basler said because on-track business at Beulah Park has tanked, the best way to increase handle on its races is through off-track means, including ADW. "That's what we're trying to accomplish through the THG," he said.

Ron Geary, owner of Ellis Park in western Kentucky, said July 2 he would close the track after a judge refused to stop the Kentucky HBPA from withholding approval for the Ellis Park signal to go to ADW providers. The track did close briefly; Geary and the Kentucky HBPA announced July 5 they had an agreement whereby horsemen would get at least 6% of ADW revenue for purses. Ellis Park begins its summer meet July 11.

Reeves, when contacted July 10, said he wouldn’t address Ruma’s comments in detail.

“There’s nothing new,” Reeves said. “He has said before he would close the track and close the barn area. We just get fed up with it. How much money does ADW really mean to Beulah Park? That’s what everybody is missing. At Ellis Park, we did move the needle. We’re not trying to squeeze money out of our racetrack partners. The THG is trying to deal with advance deposit wagering companies, and as the THG does this, racetracks will be third-party beneficiaries.

“The THG would never have been formed if racetracks had addressed the ADW model. We’re trying to work with our racetracks.”

The THG, formed in December 2007 to negotiate pari-mutuel contracts for horsemen’s groups that request assistance, is supported by “small administration fees” paid by member associations, Reeves said. THG manager Wilson Shirley is the only paid employee, he said.

Reeves said supportive groups have offered financial assistance to the THG, but he didn’t offer specifics.

After Beulah Park and River Downs sold the AmericaTAB account wagering system to Churchill Downs Inc. last year, they opened an ADW called BetPad, which has its wagering hub in Oregon. Ruma said earlier this year, California horsemen yanked the Hollywood Park signal from BetPad.

Ruma said he was paying Hollywood Park an 8% host fee. That left roughly 15%, but 12% went to ADW expenses, he said.

“How the hell can you afford it?” Ruma said. “The one thing that hasn’t been said is ADW companies have a lot of costs.”

Such figures have not been publicly detailed by ADW providers. The THG and other groups have said they believe ADW concerns are profiting at the expense of racetracks and horsemen’s groups that provide the product.

As for keno, which all seven Ohio racetracks are expected to launch Aug. 4, the impact on horse racing is expected to be minimal at first. The tracks will install ticket machines and offer the games on television screens every four minutes from late morning past midnight.

As lottery agents with Class D-4 liquor licenses, the tracks will get 5.5% of every dollar. If a track takes in $1 million a year in keno bets, for instance, it would get $55,000, plus any bonuses for paying out cash prizes.

Ruma said Beulah Park would spend “a couple hundred thousand dollars” converting its paddock lounge to a keno parlor.

“It’s not going to be a huge moneymaker like a slot machine, but it will bring more traffic to the racetrack,” Ruma said. “It also enhances the racetrack’s position in dealing with the lottery in the future for a potential trial with slot machines the lottery would own and operate.”

Currently, there are no plans for horsemen, through purse revenue, to benefit from keno, track officials said.

“No, it won’t help purses,” Hanessian said. “If it’s really successful, maybe we can work something out. But right now, we’re having an awful season.”

Ruma agreed. “We’re not talking to the horsemen,” he said. “There is no negotiating with anybody right now. I won’t deal with them until this lawsuit is out of the way. You can’t deal with people you don’t talk to.”