Tag: The Biz

Pingpong, anyone? How about horse racing instead?

Dave Basler sees betting on table tennis in Asia and envisions it being replaced with horse racing in America's burgeoning sports books.

“We can fill that void a lot of times during the day so that they don't have to play table tennis from China or cricket from Australia — things that people have no idea about,” Basler, the executive director of the Ohio HBPA, said Thursday during a morning session of the National HBPA Conference at Oaklawn Racing Casino Resort. “That's not just attractive to sports books, that's attractive to horsemen and racetracks for the opportunity to increase our revenue.”

Eric Hamelback, CEO of the National Horsemen's Benevolent & Protective Association, at the 2018 conference cautioned horsemen that sports wagering was coming and the racing industry needed to be prepared. Shortly thereafter, the U.S. Supreme Court struck down the ban on sports wagering. Thirty states now have passed such legislation, including Arkansas.

Now, he says the U.S. racing industry must turn its attention to implementing fixed odds. That's a divergence from the pari-mutuel industry that currently is the linchpin of American horse racing, while sports betting is based on fixed odds that allow players to lock into a price in advance of an event.

“It's here, it's on us,” Hamelback said. “Now we need to really move and pivot and focus on how to deal with it.”

He said later, “I still can't get my head around how much money is wagered on pingpong. Pingpong!”

How much? In fact, $63.5 million was bet on table tennis in 2020 in Colorado, a number that mushroomed to $101.6 million last year, according to Colorado Department of Revenue-Division of Gaming.

The panel also included Louisiana HBPA executive director Ed Fenasci. Sports betting began in Louisiana last fall, with an online component starting in January. Basler's home state of Ohio is scheduled to start sports wagering Jan. 1, 2023 after passing the enabling legislation in December.

“Pari-mutuel wagering is not going to be in the sports books,” Basler said. “Fixed-odds wagering will be. So we need to take advantage of that ability to bring in customers and get our product in front of millions and millions of potential new fans.”

Fenasci said sports books have the ability to be more creative than pari-mutuel wagering, including with parlay bets.

“Who knows what is going to become the popular wager, right?” he said. “Two grays will win today at the Fair Grounds. This trainer is going to win a race and this jockey will win two races. You can marry a hockey game with the fifth race at the Fair Grounds and marry that to maybe a college football game betting on LSU.

“This is the future of horse-race wagering in the United States. Not this year, five years from now. This model of sports book wagering has competed very well with other forms of gaming. The parimutuel model has been eroding over the last 30 years. It's not standing the test of time when other forms of gaming come in and capture the attention of the customer base.”

Fenasci said the apps for betting online with sports books is “the type of interaction that is going to appeal to 20- and 30-year olds…. We want shelf space on these new e-commerce sites. We want horse racing to be there prominently displayed for people who may not have had the opportunity in the past to consume that product.”

Basler said fixed odds could make “an unbettable race now a bettable race.”

“There's a graded-stakes race with six horses and a 3-5 shot in there,” he said. “There's a good chance the bookmaker will take the 3-5 shot out of the pool entirely and price everybody else as if that horse weren't in the race. There are a lot of things that we don't have the ability in parimutuel pools that fixed odds can offer and perhaps enhance our product.”

Former Ladbrokes executive Richard Ames is CEO of British-based Sports Information Services and president of its U.S. subsidiary SIS Content Services Inc., both of which provide content and production services to the betting industry. He said Australian racing went from being overwhelmingly parimutuel to a decade later seeing “probably 55, 60 percent” of wagering through fixed odds.

“We know consumers like the idea if they place a bet at 6-1, that's what they're going to get,” he said.

Panel moderator Michele Fischer, an industry consultant who spent years working for the tote-betting company Sportech Racing and now serves as vice president of SIS' American operation, said some horsemen are surprised to hear that U.S. races already are being distributed in overseas sports books. While the Stronach Group-owned GWS is the largest exporter of U.S. content, she said SIS is the world's largest horse-racing content distributor in the world. It is fairly new to the American market, however.

SIS currently distributes on a 24-hour cycle more than 30,000 horse races and 38,000 greyhound races a year at 118 tracks in 16 countries.

“The sports book wants to have a volume of content,” Ames said. “They want to have access to thousands of races.”

He said there are different models on how racetracks and horsemen are compensated for having their races in sports books, including a fixed fee, revenue-sharing or getting a percentage of betting proceeds.

In a subsequent interview, Hamelback said it's important for both horsemen and domestic sports books to understand that, even if it's not parimutuel, bets on horse racing are still covered by the Interstate Horse Racing Act of 1978. That law gives horsemen the right to say where their race signal goes in the United States. It does not apply to betting on U.S. races in other countries.

“A wager on horse racing is subject to the Interstate Horse Racing Act,” Hamelback said. “It doesn't say a parimutuel wager. Doesn't say a fixed-odds wager. Doesn't say anything other than a wager.”

Hamelback and others said to expect some cannibalization of existing parimutuel wagering but that the expansion of the market should more than compensate as far as revenue to horsemen.

“Why should we consider this?” Fischer asked rhetorically. “Horse racing had a fabulous year in terms of handle in 2021, the highest it had been since 2009. In some states, we have a false comfort. Purses are very high – you look at Kentucky with HHR (historical horse racing) booming there. It's doing well in Virginia. But when you look at the big picture across the United States, the simple answer is horse racing is not self-sufficient. We're using alternative gaming to support our purses.

“This is an opportunity to become more self-sufficient, because we're betting on horse racing — not betting on a VLT machine or HHR machine.”

The conference continued Friday, concluding Saturday morning with a meeting of the full board of the National HBPA.

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Former harness trainer Christopher Oakes was sentenced to three years in federal prison on March 3 after pleading guilty to one count of drug adulteration and misbranding in connection with the ongoing federal doping case. Oakes was accused of assisting fellow trainer Jorge Navarro in his doping program.

On Feb. 24, co-defendant and former trainer Marcos Zulueta was also sentenced to three years in prison for his role in the scheme, and harness trainer Rick Dane entered a guilty plea in the case on Feb. 18.

“These three defendants, Christopher Oakes, Marcos Zulueta, and Rick Dane, Jr., each undertook a duty to care for and protect the health and safety of the animals under their control. Each man flagrantly violated that duty in pursuit of purse money,” read a statement from U.S. Attorney Damian Williams on March 3. “Oakes's sentence today, like Zulueta's sentence, reflects the callousness of their crimes, and the gravity with which this Office takes the kind of abuse that each practiced.”

A pre-sentencing report from prosecutors was filed in Oakes' case with several more transcripts of wire tapped calls between Oakes and others, as well as co-defendants Navarro and Zulueta discussing Oakes. It's not clear which people or substances Navarro and Zulueta are talking about for much of these transcripts, but Navarro does refer to Oakes as something of a specialist at passing a nasogastric tube into a horse's stomach, which the defendants refer to as “drenching.” \

Nasogastric tubes are the means of delivery for baking soda and other components of what's called a “milkshake” – a mixture that's designed to combat the build-up of lactic acid in the body, artificially increasing endurance. Different practitioners of milkshaking may use different combinations of ingredients to achieve the desired effect, and Navarro and Zulueta spent some time comparing notes on what Oakes may have in his drench. Nasogastric tubes may also be used legitimately by veterinarians to deliver substances like electrolytes during a colic treatment, for example.

Prosecutors say Oakes “maintained a small pharmacy's worth of drugs at his barn in Pennsylvania,” including “misbranded and adulterated blood builders, growth factors, and pain shots.” They also say he provided Navarro with untestable medication and advised Navarro on drenching the ill-fated XY Jet.

Prosecutors also attached documents to their pre-sentencing report showing what they say is an attempt by Oakes to sidestep a prohibition by Meadowlands owner Jeff Gural on racing horses there. The documents make it appear that Oakes had ownership interest in some harness horses racing in New Jersey and generated fake invoices to someone referred to as “Chuck” to help Oakes get paid when necessary. Check information shows Oakes being paid by someone named Charles Pompay III.

Government filings portray Oakes as an uncaring doper who was willing to go to great lengths to conceal his activities, even though he was not as successful financially as Navarro.

“Oakes glibly claims that he never abused or intended to abuse an animal for money,” the prosecutors' report reads. “That is false. Oakes purchased small vials of injectable drugs from manufacturers like Seth Fishman without regard to the actual content or likely long-term effects of those drugs in the body of the horses under Oakes' control. He stored those drugs in his barn, injecting them for the purpose of committing fraud. And he did so over an extended period. Because there was no reason for this course of conduct other than to force his horses' bodies to conform to an unnatural level of performance in furtherance of a fraud, Oakes was, indeed, involved in the abuse of his animals for money.”

Oakes' counsel took issue with that characterization.

“We strongly dispute the inflammatory accusation that Mr. Oakes ever 'abused' horses or engaged in 'animal abuse in pursuit of money,'” read a reply from the defense. “There is no evidence to support such an accusation, and it is contradicted by the various letters written by veterinarians, horse owners, and others involved in the care of horses who support Mr. Oakes ahead of his sentencing. While Mr. Oakes did administer misbranded or adulterated PEDs to some of his horses, there is no evidence that he administered dangerous substances to any horses or caused any horses harm.”

Like other federal defendants, Oakes' pre-sentencing submission included a number of letters from character witnesses, including surgeon Dr. Patty Hogan, veterinarian Dr. Thomas Oliver, owner Bill Kenyon, owner Alan Johnston, owner Saverio Dalia, trainer Kevin Reynolds Jr., and US Harness Hall of Fame driver Ronald Pierce.

Oakes also disagreed with the government's assertion that he had given EPO or Epogen to some of his horses, saying that accusation came from a wiretapped phone call in which he had poor signal but was talking about two horses of his named Epillete and Epic Union. It is true that a number of the government's wire taps have included sections of transcript where a word is entered phonetically but doesn't make sense in context – trainers referring to joints and talking about knees and “knots” for example, when it's likely the conversation participants were talking about hocks.

Oakes had already agreed to pay $62,821 in forfeiture for the value of the drugs he obtained and gave to horses.

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Woodbine Entertainment announced Thursday a purse increase for select claiming events this upcoming season at Woodbine Racetrack.

The 2022 Thoroughbred season will see a 20 percent purse boost for $5,000 to $20,000 claiming races.

The boost will bring the purse for a $5,000 Maiden Claiming event up to $20,500 (including Ontario Sired and Bred bonuses).

Woodbine will release its first condition book for the upcoming season this Friday.

All condition books and other relevant information from the Woodbine Race Office is available at www.Woodbine.com/Horsepeople/.

The 2022 Thoroughbred season at Woodbine Racetrack is scheduled to begin on Saturday, April 16.

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The National HBPA's National Conference at Oaklawn Racing Casino Resort broke from the gate Wednesday with a panel on the Horseracing Integrity and Safety Act entitled “HISA: Where are we now?”

It was a question largely answered with more questions, as has been the case with much of the dialogue about HISA since the legislation was passed and signed into law by former President Donald Trump in late 2020 as part of the massive COVID relief bill. The legislation requires the law to go into effect July 1.

“I spend my days these days on the phone answering the same question: 'What will HISA do?'” said Ed Martin, president and chief executive officer of the Association of Racing Commissioners International, a trade association representing racing regulators. “The answer is 'anybody's guess,' and the fact that I'm saying that should be troubling to everybody.”

Martin and the three attorneys on the panel were very clear in their views of the problems and issues facing the legislation's launch by the Horseracing Integrity and Safety Authority (also known as HISA). Peter Ecabert, the longtime general counsel of the National Horsemen's Benevolent & Protective Association, moderated the panel, with Martin joined by Pete Sacopulos, an equine attorney from Terre Haute, Ind., and Chris Kannady, a member of the Oklahoma House of Representatives who also serves as Staff Judge Advocate for the Oklahoma National Guard.

Kannady, a former Marine who served in Afghanistan, called HISA “a snake in the grass” snuck into a 6,000-page bill.

“Each and every state legislature, I don't care if you're a Republican or Democrat (the question is going to be): who is going to pay for this?” he said. “… Usually what happens with the federal government is they show up and say 'We want you to do this federal program. But we're going to give you 10 times what you put into the program.' … Here they're saying, 'Here's our law. You go pay for it.' There's no way in hell state legislators are going to hand over a bunch of money … to the federal government to run a federal program.

“It is never going to happen. It is destined for failure.”

Kannady said the funding will fall to the state racing commissions, which he predicted would pass on the costs to the horsemen and the tracks.

HISA faces two federal lawsuits challenging its constitutionality: one filed by the National HBPA and 12 of its state affiliates in Lubbock, Texas, and one filed by Oklahoma, West Virginia and Louisiana and supported by six additional states in Lexington, Ky.

Sacopulos is representing the North American Association of Racetrack Veterinarians in its support of the National HBPA's lawsuit. He cited four constitutional challenges:

• The Constitution's non-delegation doctrine that says Congress is the branch that makes the laws. “So we cannot have Congress delegating the power to make laws to some private entity, and that's what has occurred. here,” Sacopulos said.
• The appointment clause: “Who appointed the Authority?” he said. “In this case, we had a private entity appoint its own people. That runs afoul of the appointment clause in our constitution, which says if you're dealing with an agency, the executive branch of government should be making those appointments.”
• The anti-commandeering provision: “Which says the federal government should not come in and take over state-run agencies and authorities,” he said.
• The due-process argument. Sacopulos said that is best demonstrated by how the disciplinary process works now and how it would work under HISA.

“Most states have an administrative and judicial combination of what happens if you're accused of a violation,” he said, referencing the process of a stewards hearing and appeals to the commission before a racing participant can turn to court.

Sacopulos said that under HISA, the process starts with a review by the Authority, which, if a violation is determined to have occurred, turns it over to administrative law judge appointed by Federal Trade Commission.

If there is an adverse ruling, he said the FTC has no requirement to hear the case and the next stop would be the U.S. Court of Appeals.

“Let me tell you, for the U.S. Court of Appeals, the average cost is $20,000 to $50,000,” Sacopulos said. “… Due process is the right to be heard in a meaningful way within a meaningful time. What you've done is create a cost barrier that most people simply can't pay.

“There's no guarantee right to review,” he continued, adding, “and every one of these violations is now a federal violation, no matter how minor it might be.”

Eric Hamelback, CEO of the National HBPA, in his introduction of the panel said that his organization has been unfairly portrayed as being “off-base” in finding flaw with HISA. He called HISA “the new four-letter word that is giving all of us a lot of uncertainty.

“Lack of transparency, fear of unknown costs, lack of expertise in writing the rules certainly gives us a lot of cause for uncertainty,” he said. “…. We want transparency. Is that off-base?…. We wanted a seat when writing the rules, and I think everyone in this room knows we have none. The HBPA wants equal representation. We're not trying to run the show, but we certainly got run out of the room… In my opinion, they just don't want us playing their game.”

Martin said state racing commissions won't go away under HISA but their role would change. “We don't make laws. We implement them and we enforce them,” he said. “Our bottom line here is we don't want to see this turning into a mess — and that might be way beyond our control.”

Sacopulos said no matter how the federal courts rule, an appeal is a virtual certainty.

“I firmly believe there's there is a strong chance we're going to get a favorable ruling,” he said. “But then the question is: what's next? I think collectively we need to know what our next move is going to be. What's our proposal for a solution? In these types of situations, you always need to be thinking ahead.”

Hamelback said the National HBPA has never said it inherently is opposed to federal legislation but that it's vital to find out if HISA is legal. Otherwise, he said if rules violators are sanctioned under HISA, only to have the law declared illegal, “they walk away scot free.”

“Nobody in the HBPA has any problem with national uniformity based on science,” he said. “Do we have a problem with something being illegal? Hell yeah we do…. We have to do our due diligence now.”

Hamelback expressed frustration at accusations that the National HBPA is only fighting HISA without providing constructive alternatives as the industry grapples to create real reform and achieve uniformity of its medication rules, safety standards and enforcement.

“I have offered solutions until I'm blue in the face,” Hamelback said. “Solutions don't necessarily end with federal legislation. Nobody has ever jumped up and down and said we would not have federal legislation. What's written now, we don't think it's legal. I don't think it's legal. But if we have the rules in place and they're put there by science, hey, that is part of the solution. Tell us why you're banning Lasix. Certainly you can point toward the international world. But that's not science.

“I've written a white paper on putting all the national uniformity laboratories under the Department of Agriculture…. There's your uniformity. There are a lot of solutions that have been put out on the table. Those of you who read the vast majority of the media, you're not going to get that. But … I am working my ass off to find solutions. They may not get out in the press. I don't have the massive PR that everybody else does. But we're trying very hard to find the solution. This act is not the solution.”

The conference's regular programming runs through Friday, with the National HBPA's board meeting Saturday. The event is being held in Oaklawn's hotel overlooking the track's first turn.

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