Churchill ADW Agreement Off the Table?

An agreement has reportedly fallen apart for signal distribution of the upcoming Churchill Downs fall meet to advance deposit wagering entities, according to horsemen representatives involved in the negotiations.

Rick Hiles, president of the Kentucky Horsemen’s Benevolent and Protective Association, said Oct. 16 his group felt it had an agreement in principle on an ADW deal, but the draft agreement ultimately presented by Churchill officials included conditions not previously discussed in negotiations.

“We wanted a non-exclusive arrangement where (the signal) would be available to all of the ADWs,” he said. “When it came out in a draft, it wasn’t the one we agreed to. They agreed to make it (broad ADW distribution) available, but then backed out.”

Attempts weren’t immediately successful in making contact with officials of Churchill Downs Inc., which normally declines to discuss ongoing negotiations. Hiles said the Kentucky HBPA was negotiating exclusively with Robert Evans, CDI’s president and chief executive officer, and Steve Sexton, CDI executive vice president and track president.

Horsemen and Churchill Downs Inc. have been battling over ADW revenues since the track’s spring meet, when signals were prevented from going out to Internet and telephone wagering operators. The impasse was instrumental in: Churchill eventually reducing purses by 20%, an estimated 11% drop in overall handle at the track, and a subsequent antitrust lawsuit still active in a Kentucky federal court .  

Hiles said the ADW revenue issue was the only one unresolved, as a 2006 contract signed with Churchill Downs covers remaining interests. And he is confident the meet will start on Oct. 26 as scheduled.

“We are not having any problem with Churchill Downs – it’s the Internet company,” said Hiles, referring to CDI’s ADW company, Twinspires.com.

Both the Kentucky HBPA and Kentucky Thoroughbred Association are using the Thoroughbred Horsemen’s Group as an adviser in the negotiations. The THG, which is a national collective of 20 horsemen’s groups, is advocating a basic one-third revenue share of ADW wagers for purses, a premise which is not widely accepted by either betting companies or racetracks.

In separate interviews, Hiles and KTA executive director David Switzer did not discuss what percentages were agreed to in principle by Churchill Downs for the fall meet, but indicated the revenue splits were not the reason for the most recent stand-off.

“That’s not what’s holding it up,” Hiles said.

But Hiles and Switzer both feel an agreement can be pulled together at some point. Both the Kentucky HBPA and KTA must grant consent for Churchill Downs’ signal distribution, per authority granted to them by the federal Interstate Horseracing Act.

“We are cautiously optimistic we will have something done in a week,” Switzer said. “It might get done in two weeks; it might get done during the meet. But we are hopeful it will get done.”

The timeline of Hiles is a little different. “It will get done before the (2009) spring meet,” he said.

Another sticking point in the negotiations involves a $3 million counterclaim the Kentucky HBPA has filed in the federal antitrust lawsuit. In part, the horsemen claim CDI has failed to properly fund purse accounts from wagers processed through Twinspires.com, which was launched in May 2007.

“They asked us to drop the lawsuit, and we refused to do that,” Hiles said. “We never discussed it in original agreement, but then they put it in writing. They put in several conditions that were never discussed.”

The federal antitrust lawsuit filed by CDI originally targeted the THG, Florida HBPA, and related officers of both organizations, over contentious negotiations at Calder Race Course. The Kentucky HBPA, the KTA, and certain affiliated officers were added later. The Florida defendants were dismissed from the lawsuit after agreements on future slots revenues and purse allocations regarding Calder were eventually reached.
 

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