Offshore Hub Plan Officially Endorsed by National HBPA

The National Horsemen's Benevolent and Protective Association has officially put its weight behind a plan for an offshore hub that would accept wagers from foreign countries and funnel them to a common pool from which racetracks and horsemen would derive revenue.

The National HBPA board of directors endorsed the proposal Feb. 4 during its winter convention in New Orleans and also formed a committee to look out for its interests should the plan progress. With representatives of about 30 affiliates in the room, the motion passed unanimously with no discussion.

The National HBPA won't own the hub, president John Roark said. The horsemen's association will have non-voting preferred stock in SimulTech, a shell company that will own and operate the hub.

The proposal was submitted to the National HBPA by Stevenson and Associates, a simulcast and wagering consultant for industry participants including racetracks and horsemen's groups. The National HBPA is in the midst of a three-year contract with Stevenson and Associates for advice on wagering-related issues.

The National HBPA began pursuing the hub plan in earnest last year in part because it believes tens of millions of dollars in revenue is falling through the cracks because of unregulated simulcasting, particularly in foreign countries. The hub would be formed to develop simulcast revenue from the Caribbean, Central America, and South America, and perhaps the South Pacific.

Roark named a three-man committee -- Mike Ballezzi and Joe Santanna of Pennsylvania, and Larry Hillis of Washington -- to negotiate the agreement and report back to the National HBPA Executive Committee April 7. Roark said the National HBPA probably would receive "an annual fee based on stock participation," but that he would leave that up to the committee.

"We decided we should not have any ownership in the corporation," Roark said. "The National HBPA won't have any say over how the company operates. We're serving in an endorsement and advisory capacity. With our endorsement, (the company) will be able to go to horsemen's, racetracks, and governments and say, 'We've got the endorsement of the largest horsemen's group in the country.' "

Because of confidentiality agreements, Roark couldn't discuss some of the details. When asked who would derive the most revenue from the proposed hub, he acknowledged it would the investors in SimulTech, not the National HBPA. Apparently, Stevenson and Associates will solicit those investors, and it isn't clear whether the names of those investors would be made public.

"I can't invest because it's a conflict of interest," Roark said. "They'll solicit the investors, and we'll have a right to know who they are."

Companies that offer rebates would not be permitted to invest in SimulTech, nor would the company itself offer rebates through the hub. In addition, the hub wouldn't accept wagers from United States residents to avoid competition with exiting entities.

Roark said the National HBPA could withdraw its endorsement should it believe the investors aren't operating in the best interests of horsemen. In addition, he said if another company or organization was to come up with a similar plan that vetted out, the National HBPA would endorse that one, too.

Barkley Porter of Stevenson and Associates said the focus now would be on determining "what variables would be in the business model." He said the company has been investigating the hub concept for a number of years.

A press release said the international hub, to be located in an as-yet-named foreign country, would commence operations this spring, but it wasn't clear if that timetable was practical. In its first 12 months of operation, SimulTech would focus "all efforts on gaining market share in the international territories with mass marketing campaigns and product awareness," the release said.

In an unrelated matter, Porter said a lawsuit by Racing Services Inc., the troubled North Dakota betting company, against Stevenson and Associates was dropped. It involved betting outlets in Mexico.