Worth approximately $1.5 billion, Twinspires is the official wagering partner of the Kentucky Derby.

Anonymous sources told Bloomberg CDI has reached out to an adviser to solicit potential interest, but stressed that no final decision about its sale has been made.

CDI's share price rose to a high of $236.26 Thursday after the report was released.

Read more at Bloomberg.

The post Report: CDI Exploring Sale Of TwinSpires appeared first on Horse Racing News | Paulick Report.

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The bill, HB199, will be introduced before the House Commerce and Economic Development Committee at 1:30 p.m., local time. It was developed in concert by the NMHA, New Mexico Horse Breeders Association, and Jeff True, president and general manager of Ruidoso Downs.

“The overarching objective of HB199 is to Modernize and Digitize our Pari-Mutuel Domain and allow New Mexico residents to wager on horse racing (our New Mexico content) through the use of their own personal electronic devices, i.e., mobile phones,” Erhard wrote. “There are numerous positive aspects of this legislation, however three notable positive outcomes are as follows:

1. Allow further penetration into our pari-mutuel market, therefore creating more revenue for the state of New Mexico and its legendary horse racing industry.
2. Maintain the current level of on-track revenue.
3. Stop bet poaching by out-of-state ADW groups.”

For more information, the full letter to horsemen is available here.

The post New Mexico: Advanced Deposit Wagering Bill Would ‘Modernize And Digitize’ Pari-Mutuel Wagering appeared first on Horse Racing News | Paulick Report.

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The ARCI also amended its Totalizator Standards at the request of AMTOTE to provide some redundancy in the stop betting function utilized by racing officials to close betting upon the commencement of a race.

The specific rules that were added or modified are as follows:

• Amendment to ARCI-011-010 VETERINARY PRACTICES with a new subsection “C” Treatment Restrictions concerning the use of clenbuterol in Thoroughbred races;
• Amendment to ARCI-004-049-ADVANCED DEPOSIT WAGERING to add a new section “C” entitled “Advanced Deposit Wagering on Past Live Racing Products”;
• Amendment to ARCI-021-020 FACILITIES AND EQUIPMENT (D)(5)(6) which adds additional requirements on how racetracks manage track maintenance.
• Amendment to ARCI-024-010 DECLARATIONS AND DRAWING (C)(4) in regard to the use of hopples in qualifying races for Standardbreds.

The ARCI also amended TOTE STANDARDS SECTION 1.4(f)(2)(b) which enables totalizator companies to provide stop wagering functionality via remote capabilities.

The full updated version of the Model Rules document containing these revisions, as well as a new rule pertaining to use of the riding crop in flat races, will be published by Dec. 20, 2020. For more information on the Model Rules and about ARCI, please visit www.arci.com.

To review the Model Rules adopted on Dec. 4, please click here.

The post ARCI Approves Model Rule Updates Regarding Clenbuterol, Historical Racing appeared first on Horse Racing News | Paulick Report.

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In a nutshell, as compared to a comparable period in 2018, the number of races this year has declined 30%. Although the overall handle has declined 18.8%, purses have dropped more than 26%.

To discuss these findings, we spoke with Thoroughbred Owners of California (TOC) president and CEO Greg Avioli. Prior to joining TOC, Avioli served as president and CEO of The Stronach Group (TSG) and of Breeders’ Cup Limited. Prior to that, Avioli was the National Thoroughbred Racing Association (NTRA)’s COO and general counsel, and is the founding president of the organization’s political action committee.

The following Q&A is from a longer, more discursive conversation. Any edits have been done in such a way as to streamline extraneous portions. The remaining text has been edited only very lightly for clarity.

DR: What are your main takeaways from the data?

GA: We’ve seen a fundamental shift in the economics of the industry in California.

DR: What are the most noteworthy changes you see?

GA: I think it jumps off the page at you: For the projections for the whole year, you’re looking at purses generated in California, excluding Breeders’ Cup, dropping from about [$87] million in 2018 to around [$64] million in 2020. That’s a [near] 30% decline.

I do not expect to see the on-track generated purse levels or the OTB-network generated levels come back to where they were pre-COVID. I believe this now has some permanence to it.

DR: During the initial months of the pandemic, racing was pretty much the only betting game in town. Has the reintroduction of other sports into the marketplace impacted handle on racing?

GA: Of course. If you just look at Golden Gate as an example, during the early days when Golden Gate was one of the few tracks running, they had record handle for them–as much as $4 to $5 million a day. Now that you have the return of most of the other major sports, it has returned to its traditional $1- to $2-million-a-day range. That’s the case, order of magnitude, with all of racing.

More recently, it was a bit of a shock to folks within the industry to see the [roughly] 50% reduction in total handle for both the Derby and the Preakness. If those had been run earlier in the year during COVID, I expect those declines wouldn’t have been so great.

The advent of sports wagering in the major population markets of New Jersey, Pennsylvania and Illinois, coupled with the return of live sports, has definitely resulted in a decrease in the overall rate of ADW handle. But [ADWs are] still going to have a fantastic year.

DR: How do we fix the hit to purses, though? As Pat Cummings of the Thoroughbred Idea Foundation (TIF) has said, the splits on betting need to be reviewed. At the same time, he warns that a takeout hike would only “hasten racing’s handle decline.” Do you agree with him?

GA: I believe that both need to be reviewed. I don’t agree that you cannot review takeout in the context of looking at everything else. When you’re looking at almost [30%] reduction in purse generation in the largest racing market in California over 48 months, you owe it to my constituents, the owners, to look at “X.”

The whole point of this economic model is that it was derived 20 years ago for ADW. There’s no question it’s had its benefits for California. It’s also been extremely lucrative for the operators. So, we’re just looking at: What is the model that is sustainable going forward?

One thing the folks who operate the major ADWs in the state–TVG and TwinSpires and Xpressbet–these are business people, right? They understand business numbers. None of this is personal. Right? If we went to the ADWs and said, ‘Guys, we’re off [30%] of our revenues–of our income–essentially for two years, we need to change the model.’ Of course, everyone has to look at the model.

DR: This period has proven to be a windfall for the ADW companies like TwinSpires and Xpressbet who, at the same time, have seen operating expenses at their tracks slashed due to the reduction in racing. The TIF calculated that Churchill Downs’ online wagering profits rose 39% in the second quarter of this year, even without the Derby. How does this dynamic factor into things moving forward?

GA: Which dynamic are you referring to?

DR: Where’s the short-term financial incentive for companies like The Stronach Group (which owns Xpressbet) to bring patrons and bettors back to their brick-and-mortar facilities?

GA: I think that there are significant reasons. Look at Del Mar, for example. They have one of the most robust food and beverage operations in the whole country when it comes to racing. On-track wagering is the most lucrative form of wagering–of course you have incentives to bring fans back to your facilities.

The Stronach Group makes more money on a dollar wagered at Santa Anita than they do bet on Xpressbet. So, I disagree with that premise.

If your question is: How do we address the reality that Churchill Downs as a racetrack owns an ADW, as does The Stronach Group? I’m really not as focused on Churchill Downs as [I am on] The Stronach Group because they own two of the largest tracks in California.

DR: But that’s a different dynamic than Del Mar, though. Del Mar doesn’t own an ADW-The Stronach Group does.

GA: Correct. I’m not privy to–they’re a private company–all the books and records of The Stronach Group, but I know for a certainty that that entity is significantly better off if people are wagering at that racetrack–particularly at California where they have a relatively minor market share for ADW. I’d say [almost] 80% of [ADW wagering] in California is TwinSpires and TVG.

DR: So, where are you looking to make fixes?

GA: If you go back to what I said about purse generation projected about $85 million this year, what is coming out of that? There are two sides to the equation. One is how can we reduce expenses that are paid out of the purse account right now so it can go back to purses, right? And big expenses that we have right now for that would be the CHRB [California Horse Racing Board], whose budget will be over $18 million this year, with $9 million coming from purses.

That’s a budget that has increased on its own by 50% over the last five years from somewhere around $12 million. Even though the number of horses, the number of races, number of owners, number of trainers, everything that they regulate has declined 10 to 30%, their budget has gone up 50%.

We’ve made it very clear to them–to the board members and the legislators–that’s not good government. We need to work on that. There is some funding in the recent bill that’s just passed–the animal welfare bill in Sacramento [AB 1974]–that will allow some of the [state revenues from racing licensing and fines] that previously went to the general fund, to go to fund expenses at UC Davis that were previously paid for by the CHRB. So, it’s a first step in a long journey, but that’s about [$1.2] million a year that will unburden the horse industry right now.

We have the stabling and vanning fund that will be operating at almost a [$3.7]-million deficit this year, because it is primarily funded from wagering at the OTBs and the satellites, which have been largely dormant. We cannot continue to pay $5 million a year out of the purse account for stabling and vanning, particularly when we are funding a capacity of stalls of approximately 3,200 while dealing with horses in those stalls of approximately 2,400. We’ve got to restructure that program.

We have taken significant steps in the last 12 months to shore up and improve the safety of the backside for live racing and training, so that we can stabilize if not reduce the cost of workers’ compensation, which is another multi-million-dollar hit to the purse account.

We’re doing the things we can do on the big picture numbers and the expense side. Obviously, the way to grow a successful business is, long-term, not to cut costs but to increase revenues. So, on the revenue side, first and foremost, and this is a longer-term effort, but we have to increase our field size.

You’ve seen the decrease in the number of days of racing, and now that we are down to three days of racing [a week], we have to have stronger field sizes for those three days. And that’s a topic of conversation for another day: How do you go about doing that? But the days of providing free year-round training, and yet having horses participate as the trainer chooses without regard to the broader economics, that can’t continue.

DR: You mean there might be some kind of stabling fee imposed?

GA: One way or another, we have to come up with a shared vision between the racetracks and the trainers in order for the business to survive. There has to be a minimum number of horses participating on a regular basis in the state. Right now, we’re much more old school, where everyone does their own thing. I run when I feel as though my horse is ready to run–can’t rush them. If in fact I have a couple horses in training for a year that don’t make a start, but the industry is paying for [them], that’s a challenge to my business. That kind of stuff probably has to be addressed.

DR: That’s a tricky thing to address though. All we’ve got to do is look back at the Santa Anita welfare crisis–that was a big concern, trainers being compelled to run.

GA: There’s a big difference between a heavy handed–“you run or you’re gone”–and an educational process where everybody starts nodding their head and going, ‘I never realized.’ And if we collectively don’t do “X,” we’re not going to make it.

DR: At the end of the day, it’s the horsemen who are being crushed by the purse retention rates with ADWs. What should they be doing right now?

GA: The first is philosophical–we’re an ecosystem. There’s no way to significantly improve California racing as an industry and as a product if it’s not done together. Almost any party can block something. If the horsemen go to Sacramento and they want something and the tracks don’t, it’s not going to happen. Vice versa.

We have got to get leaders to emerge from all segments who can say, ‘What can we all do together?’ And really take the time to understand the complex economics. What can we do to fix this? Until there’s a commitment to work together and realize that things are going to have to change–already have changed–then we’re just wasting a lot of energy trying to convince people of your idea.

DR: The ADW contracts expire at the end of the year. What’s the status of the negotiations?

GA: The way the ADWs work in California is another most remarkably Byzantium deal that legislators set up in 2000. All those licenses are set to expire by December 31st. So, the requirement for accepting wagers after your license is granted is that you have to have what is known as a hub agreement with one of the following parties: either the TOC or with a Thoroughbred racetrack running at least five weeks. That would be Santa Anita, Golden Gate, Los Alamitos, [Del Mar].

There’s a statutory cap on the amount that [an ADW provider can receive from an ADW wager made by a California resident, which is 6.5%]. All the ADWs can go to The Stronach Group, Del Mar, Los Alamitos. If they go to one of the racetracks and they work out an agreement with them, it comes back to the TOC to approve it, and the only thing we can approve or disapprove under the law is the rate. And if we think the rate is inappropriate, we can propose a different rate. And if that rate isn’t agreed to, then there is a very short specific arbitration process.

DR: Have you made any projections on what those rates should be?

GA: You can do the math. ADW [handle] is going to be $800 million in California this year, and every point of fee paid to the ADWs is $8 million. So, add a 5% fee which has been a standard rate for the last decade out here on the larger ADWs, that is $40 million that they’re getting in terms of post revenues–out of ADW–that would otherwise be going to the purses and commissions. If there was 4%, then it would be $32 million. Three percent, $24 million. We have not determined what an appropriate rate is–all this is happening in real time right now with us analyzing these numbers [and making] projections into the future.

The post “This Now has Some Permanence”: TOC’s Greg Avioli on California Handle, Purses appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

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When it comes to California alone, startling betting patterns have emerged with potentially serious ramifications for the long-term sustainability of the sport in the state–that’s according to handle and purse data from the first eight months of the past three years put together for the TDN by the Thoroughbred Owners of California (TOC).

Among the key takeaways is this: While a dramatic reordering of betting patterns has facilitated a quarter-billion dollar boon for the advance deposit wagering (ADW) industry, that hasn’t translated into a windfall for California horsemen.

Purse revenues in California during the first eight months of 2020 have fallen by $23 million when compared to the first eight months of 2018, and a $12-million loss from the same period last year.

The primary reason for such a marked drop in purse revenues is a fundamental pivot away from brick and mortar betting facilities shuttered during the pandemic–those which provide the highest purse retention rates–to lower yield ADW platforms. More specifically, the shift has been toward ADW monies wagered in California on out-of-state races, which have the lowest purse retention rates of all the potential betting avenues in the data table.

But other factors are certainly at play and, in another respect, the massive handles garnered by the ADW industry have helped to buffer the steep declines in the number of races run in California this year.

For the purposes of analysis, the TDN has primarily compared this year’s numbers to those of 2018 due to the Santa Anita welfare crisis skewing last year’s totals.

   Races and cards

There have been roughly 30% fewer races run this year compared with 2018, and nearly 32% fewer cards compared with two years prior.

   Brick and mortar

Overall handle–including all wagering from within California and out-of-state wagering on Californian races–has fallen by $368 million from 2018. This works out to a drop of 18.8% from two years prior on about 30% fewer races.

Unsurprisingly, the largest decreases can be observed at brick and mortar facilities.

The amount wagered in California at brick and mortar facilities on California races dropped some $252.7 million from 2018, and on out-of-state races at brick and mortar facilities by some $169.1 million.

Combined, that decrease amounted to some $421.8 million less wagered in California at brick and mortar facilities–a drop of over 70% from 2018 numbers.

   ADW and purse retention

The amount wagered in California through ADW platforms on both California races and out-of-state races constituted a roughly quarter-billion dollar windfall for ADW platforms from two years ago–a 59% increase.

Interestingly, the average ADW amount wagered per race on California races has grown from $67,000 in 2018 to $110,000 this year–an increase of 64%.

Despite the ADW companies reaping such prolific profits during the pandemic, the purse retention percentages from ADW handle are so low, and the losses to brick and mortar revenues–those with the highest purse retention percentages–so precipitous, that purse monies have suffered a hefty body blow this year compared to years prior.

To highlight just how costly a hit this has been to California horsemen this year, purse revenues have shrunk from roughly $87.8 million in 2018 to $64.3 million this year–a decline of just over 26%.

While that’s with 30% fewer races run in California this year, the overall decline in handle from 2018 was only 18.8%.

This purse decline has been exacerbated by a noticeable swing not only toward ADW platforms, which carry a lower purse retention rate than brick and mortar facilities anyway, but specifically toward ADW betting in California on out-of-state races, which have the lowest purse retention rate of all the various betting avenues.

Indeed, the amount of money wagered in California on out-of-state races on ADW platforms increased by $225.5 million between 2018 and 2020, but purse revenues from these monies grew by less than $7 million. During that period, the purse retention rate dropped from 3.46% to 3.29%.

While the amount of money wagered in California on California races on ADW platforms increased by $25.3 million between 2018 and 2020, purse revenues from these monies rose by only $1.3 million. During that period, the purse retention rate dropped from 5.94% to 5.81%.

The all-source purse retention rate has decreased by nearly half a percentage point since 2018–a drop that has cost the California horsemen over $7 million in potential purse revenues alone this year.

It should be noted that purse percentage retention rates are hard-baked into contracts, all of which are up for renewal at the end of the year.

   Wagering from outside CA

The amount of money wagered out-of-state on Californian races fell from $944 million in 2018 to $747 million this year–a drop of about 21%. To put that into perspective once again, there was a 30% decline in the number of races run in California this year.

Interestingly, because the percentage of handle that goes to purses is so low on out-of-state wagering–3.62% this year–the loss of purse revenues generated from these monies was slightly less than $5 million from 2018.

   Questions for the future

The numbers raise all sorts of pivotal questions. For one, exactly how will the industry continue to oil critical daily operations–things like the running of the California Horse Racing Board (CHRB), the stabling and vanning fund, the off-track wagering network, and workers’ compensation. These have traditionally been funded primarily through on-track and satellite wagering revenues.

Stepping back, these numbers also raise fundamental questions about the long-term viability of the industry in California in the event the economic toll from COVID-19 is sustained, especially if brick and mortar facilities stay closed, and the current betting patterns and purse retention rates remain unchanged.

How long, for example, can California purses–already the poorer cousins of some other states–remain constricted before that parlays into lasting economic harm to the horsemen in terms of a decline in quality product?

And what about the betting environment post-pandemic? Will discretionary spending patterns revert to type from before the pandemic, for example? Or will the marked swing toward ADW betting prove hard-baked into the behaviors of the betting public?

   Thoroughbred Idea Foundation

The TDN shared the data with Pat Cummings, executive director of the Thoroughbred Idea Foundation (TIF). Just recently, the TIF argued that horsemen should be better compensated for the content they provide. Cummings’s response is as follows:

“Probably our most fundamental problem, nationwide, is that racing is trying to survive a nearly two decade-long decline in handle in what is the most competitive legal wagering marketplace in American history with a product that, mostly by design of its own industry, is increasingly uncompetitive.

“California’s purses are subsidy-free and sustained only by wagering on racing. If they want some sort of stimulus, it is going to have to come from finding ways to increase wagering on its own product. Making actual wagering on actual horse racing as competitive as possible in light of the ever-expanding options for bettors should be the goal.

“Horsemen want a larger share, and they deserve it–ADWs retain the majority of the takeout dollar, and it is a wholly unfair system to the people whose work enables a wagering product to be delivered in the first place. The splits on betting were established when internet wagering was microscopic and while the world has evolved, the splits have not. If the horsemen got into the ADW business 20 years ago, it would be a different story, but they are boxed out of that space and now need to demand a fairer cut. There is one major caveat. While purses need to rise, and horsemen need a larger split, it is tempting to hike takeout on bettors–make no mistake, that would only hasten racing’s handle decline.

“Tracks, horsemen and all stakeholders need to focus on ways to stimulate betting on racing–this should include a focus on reducing pricing where possible (in California, that involves the legislature), finding ways to increase betting churn as opposed to highlighting churn-killing jackpot wagers, and leading with improved measures of transparency that will be appreciated and engaging for customers. We recognize the challenges of implementation are significant, but the greater betting marketplace is getting more crowded and a path to success will get tougher the longer it takes to revolutionize the racing wagering space.”

The post Pandemic in Numbers: Great for ADWs, Not So Much for Purses appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

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