From the TIF: Cross Country Pick 5 Past Posting Exposes Tote Insecurities

“One of the most urgent issues facing our industry is that of improved electronic security for the pari-mutuel wagering system.”

This simple declaration was part of the National Thoroughbred Racing Association (NTRA)'s five-year strategic plan covering 2006 through 2010, and published in 2005.

Approaching two decades later, there has been little progress on the topic, and recent wagering incidents in the summer of 2022 highlight the long-term failure to address these problems.

If you think the stewards are always in charge of stopping wagering when the race begins, think again. A new revelation suggests that primary control of some bet types resided exclusively in the hands of a single, off-site tote company employee, potentially in violation of wagering rules in numerous states while also exposing a staggering vulnerability.

Click here to read the rest of this piece from the Thoroughbred Idea Foundation.

The post From the TIF: Cross Country Pick 5 Past Posting Exposes Tote Insecurities appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

Source of original post

Attorney Frank Becker on Texas, HISA Standoff

The simmering stand-off between the Texas Racing Commission and the powers behind the Horseracing Integrity and Safety Act (HISA) bubbled higher Monday, when the commission's executive director issued a letter warning Texas will prohibit the import and export of pari-mutuel simulcast signals at its racetracks if the Act goes into effect on July 1 with jurisdictional authority over the state's Thoroughbred racing operations.

In the letter, Amy Cook, the Texas Racing Commission's executive director, invokes various statutes in the Interstate Horseracing Act, the Texas Racing Act and the Texas Rules of Racing to substantiate this approach.

“Since the Texas Racing Commission regulates all aspects of Texas horse racing, including, in particular, pari-mutuel and simulcast wagering in Texas, the application of federal law pursuant to HISA in any aspect of horse racing regulation for a particular race or meet will necessarily preclude the Texas Racing Commission from full compliance with the Texas Racing Act and will, therefore, necessitate that no such affected race shall be allowed to conduct on-site pari-mutuel wagering or provide simulcast export signal,” Cook writes.

“Any such request will, of necessity, be denied by the Texas Racing Commission,” Cook adds.

In an article for horseracing.net, Cook is quoted as explaining how Texan tracks will, pending race-date approval by the commission, be permitted to run after July 1, but that imported and exported wagering signals will not cross the state line. In other words, “Texans supporting Texans,” Cook is quoted as saying.

To discuss some of the legal implications of Texas' approach, TDN spoke with Frank Becker, a noted equine lawyer and former adjunct professor at the University of Kentucky College of Law.

The following is a mix of written answers and a recorded conversation, slightly edited for brevity and clarity.

TDN: As I understood, the federal HISA supersedes state law. Am I wrong in thinking that?

Becker: No.

TDN: And so, this includes Texas?

B: HISA goes so far as to state it preempts inconsistent state law. Texas obviously has its haunches up by the federal government's intrusion into what it considers state business.

TDN: Cook is reported as saying that when it comes to pari-mutuel betting, only in-state wagering will be allowed come July 1. She also states that under the Texas Racing Act, no pari-mutuel wagering on live or simulcast races is permitted on races the state commission does not supervise. What are your thoughts about the arguments and the approach? Are they legal?

B: The federal government's authority is limited by the United States Constitution. Typically, the federal government justifies its constitutional authority for pervasive regulation on the 'commerce clause' of the constitution. The 'commerce clause' provides that the federal government has jurisdiction over 'interstate commerce.'

HISA's purported jurisdictional authority is based on the commerce clause. Thus, it relies on 'interstate commerce' as its justification. HISA attempts to codify the authority in the definitions of 'covered horse,' 'covered persons' and 'covered horserace.'

Texas appears to be attempting to be excluded from the definition of 'covered horserace.' That definition is: “The term 'covered horserace' means any horserace involving covered horses that has a substantial relation to interstate commerce, including any Thoroughbred horserace that is the subject of interstate off-track or advance deposit wagers.”

Although Texas attempts to avoid its races being covered horseraces by eliminating 'interstate off-track or advance deposit wagers,' that may not fully solve the problem because a Texas track might be considered to be otherwise having a 'substantial relation to interstate commerce.'

The federal government often takes a very expansive view of what constitutes 'interstate commerce,' and might argue that many other aspects of horseracing involve 'interstate commerce' such as the presence of horses, participants, and even equipment from other states.

It will be up to a federal court to ultimately determine this issue, although some courts have recently taken a dim view of regulatory overreach attempted to be justified by an expansive view of 'interstate commerce.'

TDN: Let's take the hypothetical scenario that Texas takes this approach on July 1. What you're saying is, if trainers, owners and jockeys and such who are registered with HISA, and compete in states under the supervision of HISA, if they also try to compete in Texas, that potentially could yolk Texas to the Interstate Horseracing Act?

B: Even if Texas succeeds in avoiding HISA for horseracing conducted in Texas, are horses and participants nevertheless subject to HISA, even with regard to activities in Texas? We look to HISA's definition of 'covered horse' and 'covered person.'

A 'covered horse' is any Thoroughbred from the time it begins a workout at 'a racetrack that participates in covered horseraces or at a training facility' and ends 'when the horse has been retired.'

The federal government might take the position that any Thoroughbred horse that has ever done a workout at any track outside of Texas, or any training facility anywhere, remains subject to HISA even while in Texas.

And because the definition of 'covered persons' is very expansive and applies to those dealing with 'covered horses,' the federal government might take the position that all racing professionals and owners are subject to HISA, even while racing in Texas, if the horse involved ever worked out outside the state of Texas.

If the federal government takes this approach, it appears that the only way to avoid HISA is for horses and participants to conduct activities exclusively in Texas.

Thus, Texas' effort to avoid HISA may end up excluding horses, trainers, owners, and other participants from being involved in racing in Texas, unless they confine all of their activities to Texas.

TDN: I know you're not a self-professed expert in the economics of the industry, but just on a common sense reading of the threatened scenario, how impactful could this be to the industry there? Is Texas shooting itself in the foot?

B: It could have a dramatic negative impact on Texas horse racing. It's hard to imagine it wouldn't.

I don't think it takes an economics expert to say, 'gosh, eliminating simulcasting is one thing, but if Texas has to keep out participants from other states, that's going to have an extremely deleterious effect.'

TDN: So, what do you think is driving this?

B: Do you want me to answer this?

TDN: Sure.

B: It doesn't appear to be difficulty in complying with the regulations. It appears to be somewhat philosophical. Texas has, traditionally, been averse to federal regulatory overreach into what it considers state business.

TDN: What do you think about the other argument Texas is making, that they're doing this to slow down HISA's implementation so as to better manage some of the problems that have arisen, and are expected to still arise?

B: It seems to me that the slowing down may be their main goal here. It's hard to say. I mean, [if so], it's a pretty drastic action to get them to slow down.

 

The post Attorney Frank Becker on Texas, HISA Standoff appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

Source of original post

Bettor-Friendly Legislation Passes Kentucky Senate

By a vote of 33-1, the Kentucky State Senate has given their stamp of approval to Kentucky House Bill 607, which modernizes the taxation of pari-mutuel wagers and, in a major victory for horseplayers, eliminates the dime breakage than has been the standard for many years in favor of penny breakage. The change in the breakage will put more money into the pockets of horseplayers and is the first such measure to be introduced in the United States. The lone dissenting vote came from Republican Senator Whitney Westerfield.

“For more than a century, horseplayers have never received a full winning dividend and today the General Assembly in Kentucky affirmed that it is beyond time to change that and respect horseplayers anywhere betting on races from Kentucky,” said Patrick Cummings, Executive Director of the Thoroughbred Idea Foundation (TIF), which has championed the cause dating back nearly four years.

“Across just the last three decades or so, approximately $1 billion has been retained from winning bets across America. The passage of HB 607 will put some of this money back in the pockets and accounts of winning bettors from future bets.'

“We are thankful for the leadership of bill's House sponsors, Representatives Adam Koenig and Al Gentry, and Senator Damon Thayer in guiding its passage.

In addition to the favorable breakage rules, HB 607 calls for taxation on pari-mutuel wagers at 1.5%, the same rate assessed on Historical Horse Racing (HHR) machines. The standardization of taxation means that bets made through and ADW by Kentucky residents will be taxed at 1.5%, up from 0.5 %.

“Horse racing must relentlessly pursue every method to make its product as competitive as possible,” said Bernick. “The market pressure on racing is stronger than ever with the rapid legalization of sports betting across the country. We hope that operators realize the importance of retaining all customers and driving their participation through the presentation of competitive racing with competitive pricing.”

HB 607 was sponsored by Representative Adam Koenig. A house committee approved the legislation Mar. 16 before referring it to the Senate for its consideration. The bill now returns to the House for concurrence, but it is expected to sail through and head to the desk of Governor Andy Beshear for his signature.

The Kentucky Equine Education Project (KEEP) released a statement Tuesday, applauding the General Assembly for the passage of HB 607.

“A tremendous amount of work went into crafting this new tax policy and KEEP is grateful to the legislators who served on the Pari-Mutuel Wagering Taxation Task Force for the time and effort they put into fully understanding the economic structure of Kentucky's horse industry,” the statement read. “We would also like to applaud Senate Majority Floor Leader Thayer and Representative Koenig for their leaderships as co-chairs of the task force. The resulting legislation was able to strike a delicate balance between increasing revenue for the state, while at the same time not arbitrarily raising tax rates in a way that would damage the economic success of the industry.

“The entire horse industry was engaged in this process and KEEP was proud to work closely with legislators to ensure that they had access to the full picture of what economic benefits the industry has on the Commonwealth.

“KEEP will continue working on behalf of Kentucky's entire horse industry and community to advocate for policies that benefit everyone within the industry's economic ecosystem. Growing the success of the industry's more than 60,000 jobs and $6.5 billion economic impact on the state benefits all Kentuckians.”

Once signed off on by Beshear, the provisions of the bill are due to take effect come August.

The post Bettor-Friendly Legislation Passes Kentucky Senate appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

Source of original post

Pari-Mutuel Bill Approved by Kentucky House Committee

Kentucky House Bill 607, which contains a provision to greatly benefit horseplayers by effectively eliminating breakage, was overwhelmingly approved Wednesday morning by a Kentucky House of Representatives committee. HB 607 also standardizes the tax rate on all pari-mutuel wagers placed in Kentucky and also makes claiming races eligible for Kentucky-bred purse subsidies. The bill must still be approved by the full House before being sent to the Senate.

Representative Adam Koenig, whose district in Northern Kentucky is near Turfway Park, is a primary sponsor of the bill, which also has the capacity to significantly increase revenue to the state General Fund while allowing horse racing to thrive.

“In a couple of years, we're looking at a $27-million increase, probably at a minimum,” Koenig told the committee, noting that's in addition to the $62 million projected to flow to the state from pari-mutuel taxes in 2022. “So the money is coming in from the industry. I think I found some creative ways generating additional money without hurting the product.”

The bill is the product of last year's legislative interim task force on pari-mutuel wagering that was chaired by Koenig and Kentucky Senate Majority Leader Damon Thayer, a long-time supporter of the Kentucky racing industry. Created following the passage of legislation that protected Historical Horse Racing (HHR) in the state, the task force was charged with identifying ways to increase state revenues without negatively impacting purses and without discouraging racetracks from investing in HHR operations and associated capital projects.

Penny Breakage A Positive Development…

A key element of HB 607 is the virtual elimination of so-called breakage, where tracks round down winning payoffs to the nearest dime based on a $1 wager. Under HB 607, tracks would be required to pay off to the nearest penny, resulting in greater amounts of money returned to horseplayers. Koenig cited the example of 2018 Triple Crown winner Justify paying $7.80 to win in the GI Kentucky Derby, a figure that would have been $7.92 with penny breakage.

“That is the bettors' money,” Koenig said. “I've been very interested since last year's HHR debate in making sure the bettors are taken care of. We took care of everyone else. Everyone is getting healthy on this except for the bettors, and this is how we're going to help the bettors. They're going to get paid to the penny rather than every 20 cents. In addition to taking care of the bettors, it will make Kentucky the place in North America to wager. If you're someone who wagers a lot of money, why would you bet anyplace else?” (Click here to watch Adam Koenig on a recent episode of the TDN Writers' Room podcast).

Also easily passing the “L&O” committee Wednesday were bills that would legalize betting on sports in Kentucky and provide funding for problem gambling.

Additionally, HB 607 calls for the taxation of pari-mutuel wagers at 1.5%, the same rate assessed for HHR gaming. The bill raises the current rate for bets placed through ADWs from 0.5%. The tax rate on simulcast wagers placed at a Kentucky track on an out-of-state race would drop from 3%. The majority of bets are now placed through ADWs, while simulcasting has shrunk considerably as horseplayers opt for the convenience of wagering online.

KTDF Supplements Expanded…

Currently, money from the Kentucky Thoroughbred Development Fund (KTDF) is restricted to non-claiming races, but HB 607 cancels that stipulation, a policy change that has been strongly advocated for by the Kentucky HBPA in an effort to raise purses for the lower-level races in which many horsemen compete.

Rep. Al Gentry, a member of the pari-mutuel wagering task force, called making claiming races eligible for KTDF supplements “very, very important and one of the big pieces of the bill.”

Given that HHR has helped Kentucky to be in a position to offer some of the highest purses in the world, and with HHR revenue expected to grow with the expansion of satellite facilities, HB 607 also stipulates that after KTDF money reaches $40 million and the Kentucky Standardbred Development Fund its $20 million in a year, the rate going to purses would decrease, with the difference channeled to the state's General fund.

“We believe in two or three years, when the Historical Horse Racing facilities are more mature, that we're looking at $20 million additional in the General Fund,” Koenig told the committee. “The increase in the ADW tax from one-half to 1 1/2% will immediately generate $4 million a year. That's the growth area, so that will continue to go up over time.”

 

 

 

The bill also:

 

  • Provides funding to the equine programs at the University of Kentucky and Bluegrass Community and Technical College. The University of Louisville business school's Equine Industry Program already receives funding from pari-mutuel wagering.

 

  • Eliminates the 15-cent per person admission tax racetracks currently pay even if they don't charge admission (which is every track except Churchill Downs and Keeneland).

 

  • Requires tracks to maintain a “self-exclusion” list–where individuals such as problem gamblers can say they don't want to be allowed into a track or HHR facility for a given period of time–to be shared with the racing commission and the other tracks and HHR properties.

The post Pari-Mutuel Bill Approved by Kentucky House Committee appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

Source of original post

Verified by MonsterInsights