Tag: tom auther

For over two years, the simulcasting signal from 1/ST-operated racetracks, along with several others around the country, has been missing in Arizona–the residual fall-out from a long-simmering dispute between the owners of Arizona Downs and the arm of The Stronach Group (TSG) tasked with distributing the company's signal.

In both California and Arizona, stakeholders argue that this simulcasting blackout has hit both the bettors and the industry–by how much appears open to debate.

A recent analysis by the Arizona Horseman's Benevolent & Protective Association (AZHBPA) of the projected lost revenue to California purses between 2020 and 2021 pinned the number at more than $1,1 million, and another nearly $900,000 in lost track commissions.

The estimated loss to Turf Paradise alone between the years 2021 and 2022 amounts to more than $1 million, said Vince Francia, general manager of Turf Paradise. For Arizona Downs, however, the impact has been “negligible,” say track operators.

Scott Daruty, president of TSG's Monarch Content Management, also downplays the impact of the hamstrung signal to Monarch's bottom-line, saying that the resulting lost fees is only a fraction of Monarch's total business. He also disputes the AZHBPA's projected losses to the California purse account.

Monarch's umbrella extends over several California tracks–including Santa Anita Park, Del Mar, Golden Gate Fields and Sonoma County Fair–as well as Turf Paradise, Lone Star Park, Gulfstream Park, Laurel Park, Pimlico, Rosecroft Raceway, Monmouth Park, and Meadowlands.

Against the backdrop of this ongoing dispute, there are indications that 1/ST is eyeing potential inroads into the Arizona marketplace.

Within recent months, representatives of 1/ST have visited Turf Paradise with the intention of possibly purchasing the facility, said Francia. AZHBPA executive director, Leroy Gessman, said that 1/ST recently did the same at Arizona Downs.

According to two sources familiar with the situation, 1/ST has made a thus far unsuccessful bid to purchase Arizona Downs.

Daruty declined to comment whether 1/ST has indeed made any formal bid to purchase Arizona Downs but called the Arizona marketplace “one that appears to have potential.”

 “At that point, you're negotiating with a terrorist, right?”

The genesis of this rather convoluted simulcasting dispute goes back years.

In summary, when Arizona Downs reopened for live racing in 2019, Monarch sent its signal to the track itself but not to the track's network of Off-Track Betting parlors (OTB), and at a higher rate than its Arizonan neighbor, Turf Paradise.

In contrast, Monarch distributed its signal to Turf Paradise and its network of some 60 OTB's.

When asked about the contracting disparities between both Arizonan tracks, Daruty said at the time that Arizona Downs had been “consistently delinquent in its payments to our racetracks.”

In an effort to resolve industry stakeholder disgruntlement, the state passed in 2019 a law requiring all simulcast providers that send their races into Arizona to offer the products uniformly among all tracks and all their OTBs.

The following January, the Arizona Racing Commission passed a motion requiring the three racetracks in the state–Turf Paradise, Arizona Downs and Rillito Park–to comply with that law.

The commission also sent a letter to Monarch to “stop sending any simulcast signals to Arizona permittees racetracks and/or their additional wagering facilities.”

To all intents and purposes and despite various legal maneuverings in the interim, that state of affairs has remained, and Monarch has not beamed its signal into Arizona since.

At the start of Santa Anita's most recent winter meet, Monarch approached the operators of Arizona Downs with an offer of all Monarch content to the entire Arizona marketplace, including to Arizona Downs' network of OTBs, said Daruty.

According to Daruty, the operators of Arizona Downs made several unilateral modifications to the contract which were unacceptable. They included reducing the fees paid to Monarch tracks below the previously contracted rate between them, and a requirement for Monarch to “pre-approve” new simulcast locations without the ability to conduct legal and regulatory due diligence, said Daruty.

“At that point, you're negotiating with a terrorist, right?” said Daruty, once again raising Arizona Downs' reported history of delinquent payments.

“We can't abandon our principles and abandon our reasoned business approach to distributing our signals,” Daruty added.

Detailing a back-and-forth process of negotiations, Tom Auther, an Arizona Downs owner and partner, said that Monarch initially offered Arizona Downs a contract with non co-mingled pools–what he described as an immediate non-starter–and then an offer charging the track overall as much as twice what Turf Paradise was paying.

Monarch subsequently declined Arizona Downs' counter-offer, which was to pay Monarch 20% more in fees than Turf Paradise, said Auther.

“Twenty percent's still a lot of money,” Auther said. “If we paid what they want us to pay, the horsemen would not approve it because there'd be no money left–only three percent left in horse purses.”

When asked about Arizona Downs' reported history of defaults, Auther said that they had offered Monarch to escrow an adequate amount of money to offset the anticipated costs. “They refused it,” said Auther.

In an effort to understand the impact from the nixed signal into Arizona on California's horsemen, the Arizona HBPA contracted the firm Global Racing Solutions–founded and operated by Pat Cummings–to run the numbers.

According to GRS' calculations, California horsemen lost $1,115,000 in purse contributions between 2020 and 2021, and California track operators missed more than $877,000 in commissions during that same period.

To put that into perspective, California's purse total in 2021 was some $118 million.

TDN reached out to Thoroughbred Owners of California (TOC), who declined to comment.

As for Monarch, when they last ran the numbers, “the host fees that the Monarch tracks received out of the state of Arizona were less than one percent of the total host fees received by the Monarch tracks,” Daruty said. “It just doesn't move the needle for us.”

Daruty also said that the AZHBPA's projected California purse loss numbers were over-estimated, though added that Monarch hadn't run their own calculations.

And what of the potential impacts on the Arizona tracks? Again, there are mixed-signals.

Between 2021 and 2022, Turf Paradise lost an estimated $1,011,317 due to the missing Monarch signal, the estimated loss to the purse account was $944,915, and the estimated loss to the Regulatory Wagering Assessment (RWA)–a wagering tax used to fund the state racing department–was $61,139, according to Francia's calculations.

Auther, however, shared handle numbers with the TDN–taken, he said, from the state commission's website–comparing the year 2021 with 2018, when Turf Paradise received the Monarch signal.

According to Author's numbers, Turf Paradise lost in 2021 more than $8 million in overall handle compared to 2018. Turf Paradise operated in 2021 with 13 fewer OTBs than in 2018, however, and those OTBs were closed for 1038 days more than in 2018, according to Auther's calculations.

Auther also estimated that the annual hit to Arizona Downs' business without Monarch has been negligible. “It exists,” said Auther, about the loss. Horseplayers, however, have simply adjusted their betting patterns to other available options, he said, adding that the loss of the Monarch product to Arizona Downs was one of quality rather than numbers.

More broadly, Arizona HBPA president Bob Hutton broached what he sees as some of the more deeply felt impacts to the state's racing industry.

“With the state of racing the way it is, when we're trying to get fans to the sport, why is this good?” said Hutton, critical of Monarch's part in the negotiations. “This is costing horsemen all over the country money, and why? I don't get it.”

Turf Paradise, it should be noted, has been for sale since at least 2020.

According to Francia, 1/ST representatives recently toured the track with a potential eye to purchase the facility. “They have not made an offer but they have looked at the track,” he said.

According to Gessman, representatives from 1/ST have similarly toured Arizona Downs, adding that he was present at the visit.

According to two sources who wished to remain anonymous, 1/ST made the owners of Arizona Downs an offer for the facility which was subsequently declined.

Both Auther and Daruty refused to comment on any possible offer that 1/ST has made for Arizona Downs.

Though calling the Arizona marketplace one with potential, Daruty added that “I think all the infighting and frankly some of the regulatory dysfunction has just left it in a place that's not healthy.”

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