National HBPA OKs Hub Plan, Wagering Report

The National Horsemen's Benevolent and Protective Association has adopted a memorandum of understanding with a company that plans to operate an offshore wagering hub, and it also endorsed a draft a report on pari-mutuel economics that suggests high-volume betting shops are important to the industry.

The National HBPA, which met July 21-25 in Portland, Ore., for its summer convention, signed off on a plan by SimulTech to launch a betting hub that would take wagers from foreigners on United States racing. Stevenson and Associates, an industry consultant that has a three-year contract with the National HBPA, devised the hub plan.

In accordance with a confidentiality agreement currently in place between the National HBPA and SimulTech, details of the deal will be released only when the final agreement is executed, the National HBPA said in a July 25 release.

As of mid-July, Stevenson and Associates was in the process of lining up potential investors for SimulTech. The company said in February the hub would be operational by the spring.

"They've sent out private placement offerings to about 10 possible investors," said Laura D'Angelo, an attorney for Stevenson and Associates. "They are in various stages of discussing investment (in SimulTech) with individuals and companies. They have a minimum amount of capital they'd like to hit."

A location for the hub hasn't been selected, she said.

The hub would be designed to develop simulcast revenue from the Caribbean, Central America, South America, and perhaps the South Pacific. The National HBPA has said it believes tens of millions of dollars in revenue is falling through the cracks because of unregulated simulcasting and signal piracy.

The hub calls for separate pools on U.S. racing. Currently, there is a 30% withholding tax on foreign wagers in merged U.S. pools, but the National Thoroughbred Racing Association is making headway in lobbying Congress to eliminate the tax. The pari-mutuel industry generally advocates common pools to maximize handle and return to bettors.

Meanwhile, the National HBPA board of directors continued discussions on issues tied to pari-mutuels, including tiered pricing, rebating, and account wagering. The board didn't take positions pending release of final recommendations of the National Thoroughbred Racing Association Wagering Systems Task Force, which will issue a report during the Jockey Club Round Table Aug. 15 in Saratoga Springs, N.Y.

The board did endorse a draft of a Cummings Associates report that looked at recent trends in pari-mutuel wagering. The report will be attached to the NTRA report, the National HBPA said.

The Cummings report concludes that "handle up, purses down" isn't a new phenomenon. It says "advanced distribution systems" such as inter-track wagering, off-track betting, and account wagering have added new costs, so less money is available for purses.

The report says takeout rates have played a role in the shift. On the subject of "incentive wagering service providers"--rebate shops--the report says the services "improve the competitiveness of the industry" and are "very different from the real pirates, Internet and telephone-account bookmakers."

The report says the industry must respond to price-sensitivity on the part of customers and must find a "diversified set of delivery mechanisms."