Arizona Horsemen Looking For Other Solutions As Turf Paradise Future Remains Uncertain

Horsemen in Arizona are still awaiting final word on the future of the upcoming and future racing seasons as organizers scramble to get winter dates in place.

Earlier this year, reports surfaced that Turf Paradise, which normally runs winter-spring dates in the state, was being sold. In late July, the news broke that the Phoenix track would not open as usual in November.

During a meeting of the Arizona Racing Commission on Aug. 10, officials with Arizona Downs in Prescott Valley and the Arizona Horsemen's Benevolent and Protective Association revealed they had been in discussions to shift dates from Turf Paradise to Arizona Downs. Arizona Downs did not apply for 2023 racing dates by the deadline this year, and rumors had indicated it was also under contract to sell. The track was previously the subject of criticism from the commission over its bleak finances, and that will likely come into play if the track wants to run run some of Turf Paradise's dates.

“There is no guarantee to anybody in this – I want to make that perfectly clear,” said Tom Auther, managing member of Arizona Downs ownership, of the possibility the facility could pick up dates starting in November.

The next regularly-scheduled meeting of the Arizona commission is Sept. 14, which would make for a tight turnaround for dates approval. Auther was cautioned by commissioners and staff that the track would need to submit all financial reports as soon as possible for review, and that it should also be prepared to submit a business plan that would show number of race days, number of races per day, daily purses, and operating expenses compared to projected total revenue.

Auther said several unnamed entities have discussed investing in a meeting to make it more financially viable.

Jerry Simms, current owner of Turf Paradise, said it's still possible racing could take place there this winter. According to Simms, the current deal to sell the track to James Watson's CT Realty has a few more steps to go before it's complete. Watson has a Sept. 15 deadline by which financial approvals need to be in place and will have the chance to back out at that time. Simms reported Watson has candidly said he's 50/50 on whether he'll continue to move forward with the deal. If he does, the closing date is set for mid-December.

Watson has indicated he could be interested in continuing racing at Turf Paradise in the short-term, though the long-term plan is for development of the property.

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After he announced the track would not open in November, Simms said he received numerous calls from other entities that wanted to buy Turf and keep it as a racetrack long-term, including one from the owner of Louisiana Downs. Under the terms of his contract with Watson, though, he can't enter into talks with anyone else as long as Watson's deal is still on.

“I'm willing to help,” Simms told commissioners. “I want horse racing to continue in Arizona. I do not want horse racing to end.”

One thing Simms was clear about – he's not willing to reopen racing in November himself.

“The HBPA worked very hard to put a deal together and in the end we were told that Jerry Simms is 77 years old, he's tired, he doesn't want a race meet anymore and we have to wait till there's a new buyer,” said Leroy Gessman, executive director of the Arizona HBPA.

“I've had to loan the track over $12 million in the last few years to keep it open,” Simms said. “I did that because I thought we were going to get [HHR] machines. I felt we had a very, very good chance to get them from [former] Gov. [Doug] Ducey and that didn't happen.”

Part of the sticking point, according to Simms, was the 50/50 split of OTB profit between the track and the horsemen, which he said should be 60/40 in favor of his track. He doesn't expect Watson would be willing to take the 50/50 terms he turned down from the Arizona horsemen, but regardless the horsemen would have to negotiate their own deal with Watson to keep racing. Simms also acknowledged that if OTB operations come to a halt, interest from future owners in keeping Turf Paradise running will likely decline, since they'd be faced with trying to rehire staff for those facilities.

“Then I strongly urge you to get back to the negotiating table and I would strongly urge the horsemen to think about the big picture here,” said Chuck Coolidge, chairman of the Arizona commission.

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Report: 1/ST Considers Moving Preakness To Four Weeks After Kentucky Derby

1/ST Racing & Gaming told the Thoroughbred Daily News this week that it is strongly considering moving the date of the Preakness Stakes to four weeks after the Kentucky Derby, rather than the current two-week turnaround.

“This would give horses more time to recover between races to be able to run in the Preakness,” Aidan Butler, Chief Executive Officer, told TDN. “Horse safety is more important than tradition. NYRA is aware and considering how this would impact the Belmont. Stay tuned.”

In 2023, only one horse from the Kentucky Derby, the victorious Mage, returned two weeks later to attempt the Preakness at Pimlico. In 2022, the Derby winner Rich Strike skipped the Preakness altogether.

The Belmont Stakes, currently run five weeks after the Kentucky Derby, would thus be held one week after the Preakness unless the New York Racing Association also plans to change their race schedule. However, NYRA spokesman Pat McKenna told TDN there are no such plans in the works.

“NYRA has concerns about fundamental changes to the structure of the Triple Crown,” McKenna told TDN. “We have no plans to move the date of the Belmont Stakes.”

Read more at the Thoroughbred Daily News.

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PENN Entertainment Enters Online Sports Betting Agreement With ESPN

PENN Entertainment, Inc. (“PENN” or the “Company”) (Nasdaq: PENN), owner/operator of racetracks like Penn National, Charles Town, Mahoning Valley, and Sam Houston, among others, has announced that it has entered into a transformative, exclusive U.S. online sports betting (“OSB”) agreement with ESPN, Inc. and ESPN Enterprises, Inc (together, “ESPN”).

ESPN Transaction Highlights:

  • Exclusive Right to the #1 U.S. Sports Brand: PENN has secured the exclusive right to the ESPN Bet trademark for OSB in the U.S. for an initial 10-year term which may be extended for an additional 10 years upon mutual agreement
  • Launch of ESPN Bet: The online Barstool Sportsbook will be rebranded ESPN Bet in the Fall of 2023; theScore Bet will continue to operate in Canada
  • Deep Integration: ESPN Bet, operated by PENN Interactive, will benefit from exclusive promotional services across ESPN platforms including programming, content, and access to ESPN talent
  • ESPN Becomes a Highly Aligned, Long-Term Strategic Partner: Agreement enables efficient customer acquisition and retention spend across premier sports content
    • Mutually beneficial relationship through ongoing collaboration and warrants
      • PENN has agreed to make $1.5 billion in cash payments to ESPN paid over the initial ten-year term and grant ESPN approximately $5001 million of warrants to purchase approximately 31.8 million PENN common shares that will vest ratably over 10 years, in exchange for media, marketing services, brand and other rights provided by ESPN
      • Upon ESPN Bet meeting certain U.S. OSB market share performance thresholds, ESPN could receive bonus warrants to purchase up to an additional approximately 6.4 million PENN common shares
    • ESPN will have the option, at its discretion, to designate one non-voting Board observer or, upon completion of year 3 of the agreement, designate a Board member subject to satisfying gaming regulatory approval(s) and a minimum ownership threshold
  • Significant Value Creation PotentialProvides an estimated $500 million to $1.0 billion+ of annual long-term Adjusted EBITDA potential in our Interactive segment
  • Rebranded iCasino Product: Powered by our new promotional engine, our new app will include a separate Hollywood-branded iCasino product in those states where permitted

Barstool Divestiture

  • PENN Divests Barstool Sports to Founder David Portnoy: PENN sold 100% of the Barstool Sports, Inc. (“Barstool”) common stock to David Portnoy in exchange for certain non-compete and other restrictive covenants. PENN also has the right to receive 50% of the gross proceeds received by David Portnoy in any subsequent sale or other monetization event of Barstool

Jay Snowden, Chief Executive Officer and President of PENN, commented, “This transformative, exclusive agreement with ESPN marks another major milestone in PENN's evolution from a pure-play U.S. regional gaming operator to a North American entertainment leader. ESPN Bet will be deeply integrated with ESPN's broad editorial, content, digital and linear product, and sports programming ecosystem. ESPN Bet will also benefit from PENN's operational experience, extensive market access and proprietary technology platform, which successfully debuted in the U.S. this July.”

Jimmy Pitaro, Chairman of ESPN, said, “After meeting with Jay and the PENN team, it was clear that they were the right long-term strategic partner to build ESPN Bet into a leading U.S. sports betting platform. We are confident that the combination of our unparalleled audience along with PENN's operational expertise and state-of-the-art technology provides us with a tremendous opportunity to serve the ever-growing number of consumers interested in betting.”

Mr. Snowden continued, “In connection with the transaction, we are selling Barstool back to founder David Portnoy. Barstool has been a great partner and we are thankful to Dave Portnoy, Erika Ayers, Dan Katz and their team for helping to rapidly scale our digital footprint across 16 jurisdictions in the U.S. and introducing their audience to our retail and digital products. The divestiture allows Barstool to return to its roots of providing unique and authentic content to its loyal audience without the restrictions associated with a publicly traded, licensed gaming company.”

“Our agreement with ESPN will provide us access to the largest ecosystem in sports, with 105 million+ monthly unique digital visitors, an audience of more than 370 million across social platforms, 25 million ESPN+ subscribers, and the nation's #1 fantasy database. PENN's ability to leverage the leading sports media brands in both the U.S. and Canada with ESPN and theScore, combined with our newly launched sports betting app, will allow us to significantly expand our digital footprint and catapult ESPN Bet into a strong podium position in this space. We believe we can achieve substantial adjusted EBITDA in our Interactive Segment over the coming years – and this will translate to very strong free cash flow generation for the Company and value creation for our shareholders,” concluded Mr. Snowden.

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New York Commission Proposes Rule To Keep Claimed Horses In State For 60 Days

A proposed change to the claiming rules in New York could see an increase from 30 to 60 days before a claimed horse is eligible to start out of state, reports the Thoroughbred Daily News. Along with rules designed to make more owners eligible to claim horses, the proposed claiming rule changes were unanimously approved at the New York State Gaming Commission's monthly meeting on Aug. 3.

The new regulations will be published in the state register, then allowed a public commentary period, prior to the NYSGC approving the rules in a final vote.

According to a brief written by NYSGC general counsel Edmund Burns and included in the meeting's informational packet, the extension of the claiming jail rule from 30 to 60 days is designed to “mitigate entry shortages that have been experienced at New York tracks.” The new rule would include an exception for the end of the Finger Lakes race season.

Additionally, owners will be allowed a “greater opportunity to start a horse for the price at which the horse had been claimed.” The rule dictates that for a period of 20 days from the date of the claim, horses cannot start in a claiming race for less than 25 percent more than the amount for which the horse was claimed. For 10 days thereafter, the horse is eligible to start for a claiming price equal to or greater than the price at which it had been claimed. The horse can start for any claiming price on the 31st day.

Another proposed rule adjustment would allow more owners to claim horses, extending the regulations on the time during which a licensed owner had started a horse in New York as well as for the validity of a claiming certificate for newly licensed owners.

Read more at the Thoroughbred Daily News.

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