THG to Racetracks: Let's Meet on ADW

The Thoroughbred Horsemen’s Group is calling for a meeting with the Thoroughbred Racing Associations to discuss advance deposit wagering revenue given ongoing conflict between horsemen, racetracks, and ADW providers over equitable revenue splits.

The THG, emboldened by an agreement between the Kentucky Horsemen’s Benevolent and Protection Association and Ellis Park by which the track is giving horsemen at least 6% of ADW revenue from handle on the track’s races, issued a release July 9 saying an even split of ADW revenue benefits horsemen and tracks. The group took issue with statements by Chris Scherf, executive vice president of the TRA, after Ellis Park owner Ron Geary announced July 2 he was closing the track.

The THG has 18 member horsemen’s associations that have contracts with 52 tracks in North America.

"No one has ever seen horsemen with the resolution they have right now to fix what everyone knows is a broken simulcast model,” THG president Bob Reeves, an Ohio HBPA board member, said in the group’s release. “We’re seeking the right answers for both the racetracks and the horsemen. We need places to run our horses just like the racetracks need horses to run.”

The THG challenged the TRA statement, reported by The Blood-Horse July 3, calling it “highly critical of horsemen.”

In his statement, Scherf said: “I deeply regret Ron Geary, a racetrack owner with great love of the sport and an overwhelming desire to serve the pari-mutuel wagering public, has been forced to close Ellis Park, an esteemed member of the TRA since 1974 and a western Kentucky attraction for more than 80 years. I’m also gravely concerned about the circumstances surrounding this serious and unnecessary development. Racetracks and participating horsemen share a common interest in distributing their simulcast signal as widely as possible for the best possible revenue return, which Ellis Park clearly had done.

“Unfortunately, some horsemen’s groups believe their share can be increased beyond prevailing market rates by forcing the tracks to agree to a minimum pricing structure set forth by a new, third-party organization. Tracks have been unwilling to pursue this approach because of legitimate business and legal concerns.

“Before additional damage is done to the racing industry, horsemen and racetracks must see the difference between short-term gains and a long-term strategy to be developed jointly. One side dictating to the other clearly will not work.

“I strongly suggest horsemen’s groups end the strategy currently being employed by some. Instead, it would be in everyone’s best interest for individual horsemen’s groups to evaluate each simulcast agreement on its own merits and not unreasonably withhold consent, while at the same time working with the racetracks for the future improvement of the pari-mutuel business model.”

In response, Reeves said horsemen have been “forced to push for changes to ensure the support of live racing because racetracks have not taken any action.” He called for TRA executives to meet with the THG so “meaningful discussions about improving simulcast economics could begin immediately.”

Reeves suggested that Scherf include a “balanced discussion” on the topic during the International Simulcast Conference Sept. 29-Oct. 1 in St. Petersburg, Fla. The TRA is one of the event's hosts.

“The horsemen have been waiting on our racetrack partners to fix the account wagering problem,” Reeves said. “We urge the TRA leadership to sit down and talk with us; we would welcome such an opportunity. Someone needed to start this process of changing the simulcast model; horsemen are the pioneers.”

On July 10, Scherf said the TRA would have no further comment on the matter.

Geary closed Ellis Park after a judge failed to issue a restraining order to keep the Kentucky HBPA from blocking the Ellis Park to ADW providers. Horsemen and Geary held negotiations that led to an agreement July 5, one day after the scheduled opening day of the summer meet. The meet will begin July 11.

The turnaround led to speculation the Kentucky HBPA had made concessions in the deal, but the organization’s executive director, Marty Maline, said that wasn’t the case. The Kentucky HBPA did offer to trim dates and purses and consider other financial compensation to support the meet, but they weren’t necessary, he said.

“We really wanted it to work at Ellis, but not if we had to give up the ADW fight,” Maline said. “(The deal) is where we needed to be. We told the THG, and it conforms to (the model) they have been seeking. We’re just hoping now that horsemen show their support for Ellis by running their horses.”

Support of the 2008 meet and success of the new ADW deal appear critical for Ellis Park. Maline noted that in 2009, two Indiana racetracks with slot machines are expected to expand their Thoroughbred meets; Indiana Downs would add two weeks in July, and Hoosier Park about two weeks in August. That will create a large overlap with Ellis Park, which now relies heavily on horses from those tracks.

“Next year, we figure a lot of people will be focused on Indiana, and might be less inclined to focus their full stable on Ellis,” Maline said.

The Kentucky HBPA, along with the THG, is preparing for talks with Turfway Park, which opens its meet Sept. 3. Maline acknowledged “every track is a little bit different” when it comes to ADW deals.

Turfway has an exclusive arrangement with TVG, which also broadcasts its races live. Ellis has deals with about 10 ADW providers.

“I think Ellis Park and Turfway understand the situation,” Maline said. “When you own your own ADW, it’s a tougher sell.”

Churchill Downs, whose parent company Churchill Downs Inc. operates its own ADW, called TwinSpires.com, failed to strike a deal with the Kentucky HBPA on ADW for its spring meet that ended July 6. Churchill in turn cut purses 20%, which horsemen at the time claimed wasn’t necessary.

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