The Friday Show Presented By Woodbine: Historical Setback In Kentucky?

The shockwaves felt on Thursday when the Kentucky Supreme Court unanimously ruled against the claim that certain historical horse racing (HHR) machines constitute pari-mutuel wagering were felt all the way from the state capitol in Frankfort to financial markets on Wall Street.

In the immediate aftermath of the ruling – in a case brought to the courts by the anti-gambling Family Foundation – Kentucky Gov. Andy Beshear and state Senate majority floor leader Damon Thayer spoke out in support of historical horse racing wagering that has helped lift Kentucky purses to among the best in the nation.

Share prices in Churchill Downs Inc. – whose Derby City Gaming facility in Louisville generated the largest market share of the $2.2 billion wagered on historical racing in the last fiscal year – took a nearly 10% fall after the news broke. CDI officials issued a statement suggesting legislative relief may be needed in the wake of the Supreme Court ruling.

In this week's edition of the Friday Show, publisher Ray Paulick and editor-in-chief Natalie Voss assess what may happen next with historical horse racing in Kentucky.

Watch the Friday Show below.

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View From The Eighth Pole: The Skunk In Arizona Racing

“You don't get in a pissing match with a skunk.”

Those words were first conveyed to me in the mid-1970s when I was dealing with a political operative in Washington, D.C., who wasn't happy with something written by a newspaper columnist nationally syndicated by the company for which I was working.

While that may be good advice, sometimes you just can't avoid confrontations with skunks.

One example came from a recent letter from Turf Paradise general manager Vincent Francia to horsemen who race at the Phoenix, Ariz. track.

The letter, likely dictated to Francia by Turf Paradise owner Jerry Simms, was both delusional and insulting. It said, in essence, if you want us to open Turf Paradise for an abbreviated race meeting in 2021, you'll have to find another organization besides the Arizona Horsemen's Benevolent and Protective Association to represent you. Either that, or the current board and executive director of the Arizona HBPA can resign, and then we'll consider opening for a live meet in January.

“Simms is trying to do the same thing with the horsemen that he did with the racing commission a while ago: divide and conquer,” said Robert Hutton, president of the Arizona HBPA. “His move to get rid of the HBPA is because he doesn't want anyone holding him to a standard.”

Simms and Francia are upset that Hutton and the Arizona HBPA took control of $2.1 million in the purse account generated primarily from Simms-controlled off-track betting facilities from the time live racing at Turf Paradise abruptly ended last March and horsemen were given short notice to leave the stable area.

“We were well within our rights,” Hutton said. “We want to take the purse money and give it to anyone who wants to run a live race meet in the state.”

The move came after Turf Paradise told the Arizona Racing Commission in August that it wouldn't be possible to run a 2020-'21 race meeting because of the COVID-19 pandemic. Virtually every other track in the country has been able to meet the challenge of the pandemic and operate with or without fans on-site.

Turf Paradise said it wanted to hold the horsemen's purse money for a meeting at some time in the future. Never mind the short-term pain having no 2021 meet would inflict on horsepeople who have supported Turf Paradise for years or decades.

According to Hutton, Francia and Simms simply may be trying to buy time and keep churning profits out of their OTB network – which he said can only operate if there is live racing.

“No live racing, no OTBs. That's the law,” Hutton said. “In his settlement agreement with us in March, one of the things we agreed to was he (Simms) could have OTB signals until the end of the year. We're willing to stick to that, but that date is fast approaching.”

In response to Francia's Sept. 17 letter to horsemen, Hutton issued one of his own on behalf of the Arizona HBPA the following day

In it, he calls Francia's bluff and agrees to a January-May race meet on the following conditions:

  • That Simms “respect the horsemen's choice of representation and refrain from your attempt to tell us, the horsemen, who we can have as our representatives. Respect us, our choices, our leadership, our solidarity, and our industry.”
  • That Simms “honor the arbitration agreement and allow the AHBPA control of the horsemen's purse account (with the understanding that it will be used for purses during Turf Paradise's live meet). Additionally, reimburse AHBPA purse money from March 2020, when you killed the contract, to present, what the state law requires: 50% of the OTB revenue, when a contract is not in place.”
  • “The track must be safe for horses and people. Right now, the main track, the turf track and the training track are not fit to run on. The back side is full of trenches, power boxes with wires exposed, and the roads and bridle path are in terrible condition. The barns are, as always, dilapidated. And the clubhouse is uninhabitable. No doubt, to meet this condition, a safety inspection will be required.”

Hutton then added: “As an aside, the condition of your facility and grounds gives us pause as to the genuineness of your proposal. Could it be that you are simply after an AHBPA that you can control so that you will be able to collect revenues from OTBs without live racing and secure approvals for importing the signal without live racing, as you are now? If that is the case, then we will have racing on your terms which is no racing at all. Which would violate state law, and we would be forced to have the Commission regulate compliance.”

There is a skunk involved in Arizona racing, for sure, but it's not the horsemen who started this pissing match.

That's my view from the eighth pole.

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It’s Time For USTA To Support The Horseracing Integrity And Safety Act

We've reached a critical stage in the debate over pending federal legislation that would bring sweeping and needed change to the way horse racing operates in America. The current bill, now called the Horseracing Integrity and Safety Act, is supported by hundreds of legislators, horse owners and breeders across the country, the Humane Society, and countless other people across all breeds who believe that only national oversight can begin to fix what's broken in our sport and provide the political and legal cover needed to sustain racing in the future.

One of the loudest voices in opposition to the federal legislation is the United States Trotting Association, led by its president, Russell Williams, who has been crusading for years in opposition to proposed federal reforms. He seems to believe that the bill poses an existential threat to harness racing. He seems to believe that state racing commissions are worth fixing. He seems to believe that harness racing has been shunned through the process by which the legislation has evolved. And Williams is not alone. Other members of the harness racing family seem to have swallowed what Williams is serving and also loudly oppose the legislation.

To them, I say this: don't follow the USTA and Williams over the cliff. There is too much at stake. The existential threat to harness racing is not this legislation. It is not the arrival of federal regulatory power or tweaks to Lasix rules. The existential threat to harness racing instead is the USTA's opposition to this legislation. It makes harness racing a laughing stock in the broader world of racing, gives the legislators we are begging for purse subsidies a reason to deny them, and animal rights activists new causes of action to imperil racing. I believe Williams is sincere. I also believe he is dead wrong. You can be both.

And to the broader world of horse racing, and especially to lawmakers in Washington and state houses across the country, I say this: The USTA doesn't speak for all in harness racing. There are many industry leaders – owners and breeders and trainers and drivers and administrators – who see this imperfect legislation as a timely opportunity to send a message to legislators and the public that harness racing recognizes its integrity and safety problems and is willing to do something bold to solve them. Their voices deserve to be heard, too, as this debate moves toward a conclusion. I hope people of goodwill are listening. You'll be hearing more from us in the coming days.

I think Williams and the USTA are wrong on the merits of the bill but at least I understand the specific arguments they are making against it. What I don't understand is the USTA's refusal  to work with other industry stakeholders to improve the legislation now likely to pass. The USTA's decision to act as an outlier, no matter how principled Williams thinks it is, is a catastrophic mistake that exposes harness racing, and it alone, to punishment by legislators and activists. The USTA looks at the legislation only as opposing counsel would. But there was never an industry-wide discussion, or vote, on whether that's what the rest of us want.

Here's an example of what I mean. The current version of the legislation, introduced a few weeks ago in the Senate, includes several meaningful concessions (on Lasix, for example)  that ought to have made the bill more palatable to the USTA. It didn't. Williams last week offered the same old, tired objections to the new and improved bill. Invited to compromise, to work to make the legislation better, Williams instead doubled-down. Faced with the same choice, on the other hand, what did the Jockey Club do? It wanted a full ban on Lasix, right? It didn't get that. Yet It accepted a much more limited ban. It's at the table, negotiating, while the USTA is threatening a costly lawsuit. Whose members are best being served?

Let's take some of Williams' points one by one. He says that state racing commissions are “accountable” to elected officials and that the new legislation would create a federal regulatory system, through the Federal Trade Commission, that would be “passive and symbolic at most.” Great talking points – sure to resonate with horsemen skeptical of federal power. But the opposite is true. Surely if you have read this far you know from your own experience that the lack of accountability and diligence among racing commissions is one of the major reasons why racing integrity is such a problem in our sport.

Pick a state, any state with horse racing, and you can argue the regulatory scheme there is broken by perennial cronyism and a level of bureaucratic inertia and incompetence that would be shocking if it weren't so ordinary. That's why there is still so much cheating and so little done to stop it. Does anyone deny that? When Williams says that racing commission members are basing their decisions on their “immense learning and experience” he's asking us all to stop believing what we are seeing with our own eyes and hearing with our own ears. And he's leading the industry toward a path where it will become a club sport.

Does anyone think that the USTA has some sort of magic plan to fix what horse racing has failed to fix in racing commissions for half a century? If so, I haven't seen it. Look at New York, for example. Where is the “immense learning and expertise” among state regulators there? The FTC, meanwhile, which Williams calls “passive and symbolic,” has been around for more than 100 years and regularly presses to enforce criminal and civil penalties. What's “'passive and symbolic” are the failed racing commissions the USTA inexplicably wants to rescue.

Williams complains that the bill “makes a couple of head fakes in the direction of breed-specific rules, but it lacks the mandatory language necessary to make sure the Authority makes such rules where appropriate.” Here's what the bill now actually says: “Consideration of other breeds. — In developing the horseracing anti-doping and medication control program with respect to a breed of horse that is made subject to this Act by election of a State racing commission or the breed governing organization for such horse under section 5(k), the Authority shall consider the unique characteristics of such breed.” (Emphasis added).

Conjuring up old grudges with the RMTC, which only he cares about, Williams next says that those who support the new rules on Lasix now in the legislation are buying into a “hoax” cobbled together by our friends in the Thoroughbred industry. But successful Lasix-free racing in the rest of the world is no hoax. Nor is it universally agreed that Lasix is not a “performance enhancing” drug or that it doesn't mask blood doping. Nor is it a “public distraction,” as Williams says. There are plenty of reasonable people who believe that administering a diuretic to a horse before the race itself raises concerns about animal cruelty.

Under the new version of the bill, in one of its most significant recent compromises in the USTA's favor, states could request a three-year delay in prohibiting Lasix within 48 hours of a race except on 2-year-olds and in stakes races. That three-year period would be used to further study the effect of Lasix on horses and, perhaps, to put to rest the contentious medical and scientific debate on the topic. The federal authority created by the new law would then have the opportunity to modify the 48-hour Lasix rule. Does that sound unreasonable to you? Enough to spend millions litigating over?

Williams complains about the funding mechanism in the bill, arguing that the harness industry will be disproportionately and unfairly taxed compared with our Thoroughbred cousins. He keeps harping on a figure he has made up – $13 million, by multiplying a fee of $45 for every race – and suggesting that this will be the annual testing cost to harness racing for the rest of time. But there is nothing in the text of the law that mandates this disparity or that cost. And certainly nothing that guarantees the Thoroughbred industry will benefit to our detriment.

My sense instead, from talking to many people involved in this debate, is that there are discussions to use a sort of scale that would distribute drug testing costs more equally across breeds in the new legislation. Why the USTA is not involved in these discussions, or no longer involved, is a question the association ought to answer before it resumes its propaganda offensive against the Integrity Act. It's certainly a question the USTA ought to answer for itself before it commits millions to lawyers to try to overturn a well-meant law.

On the topic of fees, by the way, in the last 15 years I have yet to meet another owner who has said that he or she wouldn't be willing to spend a little more to try to make the sport more fair. Owners, like everyone else in the industry, need to put their money where their mouths are for the greater good. Here's an idea. Instead of spending $425,000 on lawyers to prepare for an attack on the constitutionality of the proposed law (which the association did in April even as it was cutting salaries) the USTA could have instead, for starters, created a fund to help defray the costs of the drug testing under the federal regime.

Williams next argues that USADA's program is not set up to perform the broad drug testing the new law would require. But there is nothing in the new bill that limits the ability of the federal drug testers to contract with other labs across the country, providing they are accredited, to perform the necessary testing. And then Williams complains again about the USTA losing its voice in a process that will directly impact harness racing. He's complaining here about a problem he himself has created. Our voices would be heard if not for the USTA.

The USTA has been invited to have a voice in this legislation, which now includes a provision that makes it clear that the authority established by the law won't be dominated by the leaders of any one breed. Standardbreds aren't specifically included in the bill now because of the USTA's relentless opposition to it. Fortunately, however, there is an opt-in provision in the law that makes it easy for the USTA to join the coalition of racing entities willing to work within the framework of the legislation once it is passed. The door is open, in other words.

Having chosen to oppose the bill, Williams now laments the fact that harness racing won't be able to control its own destiny if it passes. While the USTA prepares for litigation, meanwhile, I am told that members of the Quarter Horse racing community already have met, or will meet, to coordinate how they plan to “opt in” to the law. They surely aren't thrilled with everything in the law. They, like the harness industry, are not explicitly included in the current bill. Yet they are coming to the table, working within the framework of the bill, which by the way will only further isolate the USTA and make harness racing a rich political and economic target.

Take New Jersey, for example, Representatives of the harness industry are now lobbying legislators to restore millions of dollars in crucial funding that helps fuel racing's economic engine in the Garden State. It is a particularly tough sell these days with the state's budget overwhelmed by the coronavirus. The USTA's choice to oppose the new Integrity Act, and to prepare to litigate over it, gives an easy out to any state legislator who is on the fence about voting to help harness racing: “Oh, you don't support the wildly popular, bipartisan congressional effort to make your sport more safe and fair? Why should I give you a dime?”

None of this is to say that the Horseracing Integrity and Safety Act is perfect. It' isn't. It does raise serious questions that ought to be answered sooner rather than later. But no legislation is perfect. Laws always include compromises between and among competing factions. This law will not do all it must do to rid the sport of cheaters and protect the horses we love. But the federal bill represents meaningful change. It will bring more uniformity to racing. It will upset the failed old system of state racing commissions. It will make it harder for cheaters to prosper. It will make it easier for those who endanger our horses to be caught.

There are many prominent voices in harness racing who want the USTA, at a minimum, to work alongside all the other stakeholders to try to make this legislation stronger and more fair. That this isn't happening, right now, before the legislation passes, is a crying shame but no great surprise. Some of the same folks who helped make harness racing vulnerable to questions of integrity, and viability, are the very ones who now are preaching that the new solutions included in the Integrity Act won't work. The problem isn't the legislation. The problem is USTA leadership, never missing an opportunity to miss an opportunity.

Andrew Cohen is a Standardbred owner and breeder.

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The Friday Show Presented By Woodbine: Bloodstock Markets In The Year Of The Pandemic

Bloodstock editor Joe Nevills joins publisher Ray Paulick on this week's edition of the Friday Show to talk about the state of the Thoroughbred market after completion of the recent Selected Yearlings Showcase at Fasig-Tipton and the early stages of the marathon September Yearling Sale at Keeneland.

Like many industries, the bloodstock market has had to adapt as a result of the coronavirus pandemic, with a wider embrace of off-site research and bidding from both domestic and international buyers who either were reluctant or unable to travel to Lexington, Ky., for the sales because of COVID-19.

The economics of live racing have been turned upside down by crowd restrictions, lower purses in some markets, and, for some owners, the joy of the game has been deflated by the “new normal,” which could lead to decreased participation in the auction market — at least in the short term. The results of the current Keeneland September Sale could have ripple effects on the upcoming breeding stock sales.

Finally, it's a big weekend of racing at Woodbine in Canada, highlighted by Saturday's $1-million Ricoh Woodbine Mile, and Nevills and Paulick go through the field for that Grade 1 turf fixture.

 

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