Political Climate in California

At the start of last month, a small cadre of animal rights protestors snuck onto the Golden Gate Fields racetrack, lay down with arms interlocked in pipes, and halted live racing–as well as a vaccination drive on facility grounds–until police intervention saw their removal.

While the incident had a flash-in-the-pan quality, it had the corollary effect of reminding those within the sport here in the Golden State of the somewhat precarious position in which it still finds itself–an important part of the economic puzzle, employing tens of thousands, but one that doesn't always fit squarely with the state's broader progressive bona fides on animal welfare.

And so, placed in the context of the last two years, during which time the sport has been buffeted by sweeping reforms and hitherto unbeknownst scrutiny, it begs the question: Where does the state's industry now find itself in terms of political favor and cultural currency?

The answer appears both promising and cautionary, with the California state senate's vote against the reappointment of Wendy Mitchell to the California Horse Racing Board (CHRB) Monday providing yet another indicator of a delicate balancing act.

“Two years ago, at this date, we were sitting at meetings with The Stronach Group [TSG], reviewing various plans whether to close Santa Anita for the rest of the meet,” said Greg Avioli, president and CEO of the Thoroughbred Owners of California (TOC), pointing to the welfare crisis that had engulfed Santa Anita.

Since then, the sports political roller coaster has been helter-skelter, taking in a joint hearing in Sacramento, a letter of condemnation from senator Dianne Feinstein, major pieces of legislation, a regulatory board dramatically reshaped by Governor Gavin Newsom–who told The New York Times in 2019, “I'll tell you, talk about a sport whose time is up unless they reform. That's horse racing”–as well as a proposed ballot initiative to end racing in the state (one that was ultimately extinguished before voters had a chance to weigh in).

Two years later, sweeping equine welfare and safety reforms have proven markedly effective. “We've come a long way,” Avioli said.

Del Mar | Horsephotos

As to the temperature in Sacramento toward horse racing, “We have conversations with legislators and representatives weekly. In this last week, the conversations have focused on the recent safety results, particularly at Del Mar,” Avioli added, referring to recent news out of the Southern California track that it is among the safest in the nation for the third year straight year.

As a result, “I do not expect that you're going to see additional bills on the same subject,” said Avioli about prospective legislation in Sacramento. “The core issues of horse safety and welfare right now seem to be adequately addressed by the legislature.”

That sentiment appears mirrored by Senator Bill Dodd, whose legislative fingerprint can be seen on a number of horse racing-related bills over the past two years.

A spokesperson for the state senator, who represents the northern San Francisco Bay Area and Delta region, wrote in an email: “As chairman of the committee overseeing horse racing, Sen. Dodd follows developments in the sport closely and continues to monitor his previous measures to improve rider and equine safety. He has not introduced any new legislation in this area so far this year.”

Josh Rubinstein, Del Mar Thoroughbred Club president, strikes a similar tone to Avioli.

Industry progress made at the local, state and national level–including recent passage of the Horseracing Integrity and Safety Act (HISA)–means there is now a “different tone in our conversations with governmental leadership” compared to two years ago, Rubinstein wrote, in an emailed response to questions.

“We have real tangible progress we can point to, which makes a difference,” he added.

 

Protesters on the track at Golden Gate | Direct Action Everywhere

“I think there's some positives in all of this”

And so, what to make of events up at Golden Gate, by an organization called Direct Action Everywhere, which purportedly seeks to shut the facility down?

Anti-racing protests in California aren't new or novel–picketers have routinely descended upon both Del Mar and Santa Anita in recent years, often prompting workers at both facilities to stage counter-protests.

Indeed, Scott Chaney, CHRB executive director, downplays the significance of what occurred last month.

“I don't think a few protestors at Golden Gate are representative of the larger population in California,” Chaney said, highlighting both overarching public sentiment toward the sport, and the fractured nature of animal welfare organizations in the state with disparate sets of goals and agendas. “I think lumping animal rights activists in one group is unfair.”

At the same time, Chaney acknowledged the long thread of political activism woven throughout the history of the City of Berkeley–whose district Golden Gate Fields partially overlaps–as something the industry needs to be cognizant of.

Political pressure was brought to bear on the CHRB last October, when Berkeley City officials wrote the board requesting an investigation into equine fatalities at Golden Gate.

(The track routinely boasts a better equine fatality rate than the national average, which was 1.53 per 1,000 starts in 2019, according to The Jockey Club. In 2020, it was 1.23, 0.64 in 2019, and 1.12 in 2018.)

The CHRB responded with a letter explaining these rates, while listing a series of increased medication and safety measures the board had recently undertaken statewide and intended modifications for the future, including those specifically geared toward Golden Gate.

How was the letter received? “I'm not certain,” said Chaney.

“But to be fair, this is all against the backdrop of a global pandemic,” he added, saying that the track had built a good rapport with the City's Public Health Division as a result of a large facility outbreak last year, illustrated by the vaccination drive conducted on Golden Gate property. “I think there's some positives in all of this.”

In a written response to questions, Craig Fravel, CEO of 1/ST RACING, wrote, “At 1/ST, we believe in the right to free speech and peaceful protest, but the types of actions exhibited by the activists that disrupted live racing at Golden Gate Fields last month run directly counter to a safe and healthy environment and endangered the lives of thousands of people as well as the horses they were claiming to protect.

“Animal rights and extreme activists are very different,” Fravel added. “Those in our industry who stand for ethical horse racing believe in the protection of these beautiful creatures and are working together to ensure that racehorses are cared for before, during and after their racing careers.”

 

A surface safety evaluation at Santa Anita | Horsephotos

“It's a very substantial undertaking”

Which brings us to the path forward, and political land mines still to be negotiated. Come the next election cycle, could racing face another potential challenge at the state ballot?

“You always have to be cognizant in California–just look at Governor Newsom and the recall effort–of the ballot initiative as a challenge for horse racing,” Avioli said.

However, “You generally need upwards of $100 million to support a ballot initiative successfully. It's a very substantial undertaking,” he said, adding, “There is no indication of serious talk of a ballot initiative right now to address horse racing.”

One important distinction, said Avioli, is that a history of state initiatives related to animal welfare show support “to some level” by the Humane Society.

“We have good relations with them,” he said, of the global non-profit. “It all goes back to the fact that we did two years of the most aggressive reforms that have ever been done in this country in horse racing and it appears to be working.”

But that brings us to perhaps the biggest sticking point moving forward, one that highlights the various levers and conflicts tugging at the sport both within and without: the issue of continuing reform.

Horsephotos

According to Avioli, after two years of snowballing regulatory change, the industry is at a point of consolidation, allowing the dust to first settle on a radically altered landscape before further modification.

“The CHRB seems right now to be not in an activist role,” he said. “They understand the massive amount of new regulations that have been put in place over the last 24 months, and they do not expect it to continue at the same rate.

“Now's the time to focus more on implementing those–see the results of the new rules–before we go on and add additional ones,” Avioli said.

Yet, Kathy Guillermo, vice president of People for the Ethical Treatment of Animals (PETA)–an organization, alongside the Humane Society, afforded key industry input–is critical of the rate of change since the CHRB has undergone its recent personnel reshuffle.

“For all the criticisms of the previous board, at the end, we were working very closely with them to try to make those changes,” Guillermo said, pointing to efforts that included tightened rules pertaining to multiple violators, as well as the implementation of central pharmacies on racetrack grounds, mirroring jurisdictions like Hong Kong.

And while the reforms instituted have seen the industry turn a corner, “a lot more still needs to be done,” Guillermo said.

“There has always been a division in racing about what needs to be done to correct the public perception. I see about half the people really get it,” Guillermo added. “And I see other entrenched parts of racing that still refuse to believe that they're going to have to be accountable to anybody but themselves. And they need to get on the same page.”

Here, it should be noted that the new board has been split on a number of controversial topics in recent months, including the issue of whether to grant Los Alamitos–the latest California facility under scrutiny for its welfare record–a truncated six-month license. After an extended period, the board granted the facility its typical 12-month license.

More recently, the panel was divided over the issue of whether to implement even tighter whip reforms than currently exist, with the board eventually voting 4-3 to table the motion for the time being.

Guillermo released the following statement regarding commissioner Mitchell's failed re-election to the CHRB:

“I've never had a conversation with Wendy Mitchell, nor has PETA ever contacted her directly, but it has become clear to us in the last several months that the California Horse Racing Board has failed to bring about the promised changes to protect horses.”

Guillermo added: “The board and, apparently, the California legislature remain beholden to the old guard in racing that considers abuse and death to be normal business practices, rather than listening to the public that has demanded change. PETA won't sit by quietly while the body count mounts. Legislators can expect to hear from our 700,000 supporters in the state.”

Del Mar | Horsephotos

It's unsurprising, then, many are circumspect about this ongoing balancing act.

“While we may not always agree, as stakeholders we share a collective vision to ensure a healthy and sustainable future for horse racing in North America,” wrote Fravel.

“There is a vast ecosystem that makes up the Thoroughbred racing industry and in order to move forward, the entire industry needs to continue to prioritize equine health and safety and to demonstrate that priority at every turn,” he added.

“It's complicated,” admitted Rubinstein, distinguishing between inclinations from the fringe elements of the animal rights movement and the more orthodox viewpoints of the mainstream.

“So, our messaging is aimed at the more reasonable people who want to see the sport continue and thrive, who appreciate that it is an economic engine for so many people, that it protects family farms and working open space.”

The majority of people support horse racing, he added. “As an industry, we have to take the initiative in Washington and at a state level to affirm recent progress and our overall commitment to safety and welfare.”

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New COVID Protocols Outlined at Santa Anita, Golden Gate

Based on increasing vaccine availability and declining COVID-19 numbers, The Stronach Group and TOC outlined new protocols at Santa Anita Park and Golden Gate Fields to allow licensed owners more access to the grounds.

SANTA ANITA PARK

Mandatory Santa Anita protocols, including social distancing (a minimum of six feet), face cloths covering your nose and mouth, health screening, temperature check and wrist banding will continue to be enforced for everyone entering Santa Anita, including the Stable Area.

Winner's Circle

After each race, the winning horse will be brought into the winners' circle and a limited number of owners will be allowed access for the customary photo.

  • Social distancing (minimum of six feet) in the winner's circle will be strictly enforced.
  • Entrance to the winner's circle will be restricted to a maximum of eight owners and/or guests to allow for social distancing.
  • Owners and/or guests will be required to stand on the West Side of the winner's circle.
  • Face cloths covering nose and mouth remain mandatory at Santa Anita, including the winner's circle.

Stable Area Access

  • Each trainer can authorize a maximum of two CHRB licensed owners to go to their barn at any one time between 10:00 a.m. – 7:00p.m. daily.
  • Prior to entrance, owners and their guest must pre-register with the Santa Anita Racing Office and submit one of the following to the Santa Anita Racing

Stable Office:

  • Negative COVID-19 test result that is received within 72 hours prior to the day requested (Negative COVID test can remain on file for a maximum of 30 days)
  • Proof of completed scheduled COVID-19 vaccination doses
  • Each owner may bring one additional family member.
  • Owners may only visit the barn where their horse is stabled.
  • Owners must keep their visits to the outside areas, including the stall entrances, and not enter stable offices, tack rooms or other enclosed locations.

Workouts/Afternoon Racing

  • The current protocol (i.e. CHRB licensed owners are permitted each race day) will remain in place for the time being, and CHRB licensed owners should continue to contact TOC to put your name on the reservation list for each race day. No reservation is required for morning workouts. Contact mforney@toconline.com, eperon@toconline.com, or call Mary Forney at (626) 826-3782.

GOLDEN GATE FIELDS

The grandstand and winner's circle at Golden Gate Fields are open for live racing to CHRB licensed owners with the following protocols in place:

  • Owners must provide a Negative COVID-19 test result that is received within 72 hours prior to the race day (Negative COVID test can remain on file for a maximum of 30 days).
  • N95 masks covering your nose and mouth remain mandatory at Golden Gate Fields, including the winner's circle.
  • Social distancing (minimum of six-feet) in the winner's circle will be strictly enforced.
  • Entrance to the winner's circle will be restricted to a limited number of owners and/or their guests to allow for social distancing.
  • The grandstand is open for morning workouts on Saturday and Sunday mornings to owners under the aforementioned protocols.

The local health department continues to mandate that the stable area at Golden Gate Fields remains closed to owners, however, conversations are continuing to lessen those restrictions as the COVID-19 numbers improve in the county, and an update could be issued soon.

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Simulcast Fee Dispute: Churchill Withdraws Complaint Against Thoroughbred Owners Of California

On Feb. 2, 2021, Churchill Downs Technology Initiatives Company (CDTIC), a subsidiary of Churchill Downs, Inc. that operates advance deposit wagering companies TwinSpires and BetAmerica, filed a lawsuit against the Thoroughbred Owners of California for invoking state statute in an effort to bring a dispute over simulcast hub fees into binding arbitration.

According to the Thoroughbred Daily News, that lawsuit has been dropped. A “notice of voluntary dismissal” was filed Monday in the United States District Court (Central District, California, Western Division), which indicated that the parties reached an agreement on March 5.

The notice did not indicate specifics about that agreement, and neither TOC's Greg Avioli nor Scott Edelman, the CDTIC's attorney, responded to queries from the TDN.

The dispute centered around a hub agreement reached on Dec. 22, 2020, between Santa Anita Park and CDI's two online wagering companies, TwinSpires and BetAmerica. The agreement specified the percentage the ADW companies would receive on each dollar wagered by California residents using their platforms. By California statute, the maximum an ADW company may receive to facilitate a wager is 6.5%. The agreed-upon percentage in the agreement between the ADW companies and Santa Anita is redacted in the court filings. According to the lawsuit, TOC asked that the hub fee be reduced to 4.1%, which the complaint said “would cost Churchill Downs Technology millions of dollars and upset almost a decade of an established course of dealing between the contracting parties.”

Two months earlier, on Oct. 28, the suit alleged, TOC president and CEO Greg Avioli asked Churchill Downs Inc. executive Mike Ziegler to “voluntarily return the equivalent of 1% of the total” wagered on the company's ADW platforms in 2020. “TOC threatened that if Churchill Downs Technology did not comply with its 'voluntary' request, it would demand arbitration pursuant to section 19604,” the complaint alleges, calling the effort a to retain additional revenue a “shakedown.”

Read more at the Thoroughbred Daily News.

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Churchill vs. TOC Lawsuit Withdrawn; Neither Side Wants to Say Why

After alleging last month that a disagreement over advance-deposit wagering (ADW) hub rate fees was so egregious that it amounted to a “shakedown” that needed to be fought in federal court, a subsidiary of the gaming corporation Churchill Downs, Inc., dropped its lawsuit against Thoroughbred Owners of California (TOC) Mar. 8.

According to a “notice of voluntary dismissal” filed Monday in United States District Court (Central District, California, Western Division) by Churchill Downs Technology Initiatives Company (CDTIC), an agreement between the parties was reached Mar. 5 that apparently settles the matter “without prejudice.”

But the details of that agreement were not disclosed in court filings. And when given the opportunity on Tuesday by TDN to explain what led to the apparent resolution, neither TOC president/CEO Greg Avioli nor Scott Edelman, the CDTIC's attorney, responded to email queries.

In a spat that centered on which entity should benefit from the pandemic-related boom in at-home betting, CDTIC filed a Feb. 2 complaint asking a judge to rule that TOC couldn't use a state law to force CDI into either accepting lower rates, abandoning its recently signed agreement with Santa Anita Park, or entering into arbitration to settle the dispute. (Santa Anita itself was not a defendant in the suit.)

According to CDTIC's complaint for declaratory and injunctive relief, the dispute arose Oct. 28, 2020, when Avioli allegedly asked CDI's then-executive director of racing, Mike Ziegler, to “voluntarily return the equivalent of 1% of the total amount generated from California residents wagering on those platforms in 2020.”

In addition, according to the complaint, “Mr. Avioli proposed that all ADW providers agree to a 3% hub fee for the 2021-2022 term–a rate CDT has never agreed to in its history of operating in California.”

CDTIC had not wanted to disclose details of those hub fees in court documents, and had even been granted permission from the judge overseeing the case Feb. 9 to instead file those financial details as sealed documents that the public couldn't view. Hub fees are generally not disclosed by industry entities because such figures are deemed competitive secrets.

According to the original complaint, “TOC threatened that if CDT did not comply with its 'voluntary' request, it would demand arbitration pursuant to [a California law]. Contrary to Mr. Avioli's false characterization, the revenue ADW providers earned in 2020 was not a 'windfall,' but the result of increased demand for online wagering.”

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