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NTRA CEO Alex Waldrop Joins TDN Writers’ Room

There's plenty to talk about in racing these days, and NTRA CEO Alex Waldrop joined the TDN Writers' Room presented by Keeneland Wednesday morning to dig into a good deal of the sport's most pressing topics. Calling in via Zoom as the Green Group Guest of the Week, Waldrop talked about how to capitalize and sustain the positive handle trends of the past year, how to pay for the groundbreaking Horseracing Integrity and Safety Act, what movement he expects on H-2B visas with a new administration and more.

“Looking back over the last quarter and even the last half of last year, we were trending five, six, seven percent up over the prior year,” Waldrop said of the increase in handle the sport has seen. “So those trends are very positive. I do think they are related to the fact that new people are coming into the business. They're seeing horse racing as a viable option for the first time. I think that is attributable to a lot of the marketing dollars that were spent in 2020 to get eyeballs on our racing for the first time. And I think that's the way we keep this going. We continue to show our races on television, get more people in front of TV sets, mobile screens, all the distribution channels that we have out there, which are many now and are growing. That's the way to continue to grow.”

“Another way that I think we have to look at in 2021 is to get on more sports betting platforms,” he continued. “Sports betting is spreading across the country. It's a huge and growing business. If we can just get 5% of the number of people who are now betting on these mobile sports betting apps, that would be a huge win for horse racing. And I think in 2021, this is the year to really focus on what we can do to to piggyback on the success of sports betting in this country. To grow our visibility even greater.”

Asked about the tricky issue of funding HISA, Waldrop said that replacing the inefficiencies of racing's current patchwork regulation system will lead to savings on its own.

“HISA and the Authority, is all about centralizing the administration of medication control and racing safety matters. Putting it into one office. There will be significant savings. There'll be efficiencies when you compare costs that we now have for 30 state agencies,” he said. “I think 10 years ago we were spending almost $30 million a year on post race drug testing. That's an astronomical number. I don't think people realized we were spending that much money on drug testing. We're spending more than that now under the 30 state agencies. The second thing to remember is that HISA contemplates a broader-based and more equitable contribution from all industry participants, so not just one group or one tax will be paying for the costs of regulation.”

Elsewhere on the show, the writers reacted to a strong weekend of stakes at Fair Grounds, highlighted some key points from last week's exclusive interview with USADA CEO Travis Tygart and, in the West Point Thoroughbreds news segment, analyzed the passage of a historical horse racing legalization bill in the Kentucky House of Representatives. Click here to watch the podcast; click here for the audio-only version.

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Tygart: USADA, Cycling Played A Role In Federal Indictments

Speaking on the Thoroughbred Daily News Writer's Room podcast this week, U.S. Anti-Coping Agency CEO Travis Tygart revealed the organization may have had a hand in the federal indictments that rocked the racing world last March.

Tygart revealed that USADA had handled a drug positive case with a cyclist who fell under the organization's jurisdiction and gotten information about the distributor of the drugs the cyclist was using. USADA became aware that the unnamed distributor also had connections to horse racing, and Tygart said the organization subsequently passed that information along to the FBI.

Tygart said USADA is still on a learning curve as it prepares to oversee anti-doping programs in horse racing, but he is confident a lot of the same principles will carry over from the world of human athletics. Like many equine drug testing experts, Tygart said post-competition testing should not be the only tool for an integrity program, and touted USADA's tip line, which it uses to help direct out-of-competition testing. Tests from tip information have a 22% positivity rate, according to Tygart — much higher than the typical rate for post-competition sampling.

Read more and listen to the full interview at the Thoroughbred Daily News

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Writers’ Room Exclusive: USADA CEO Travis Tygart Explains How His Anti-Doping Team Will Clean Up Racing

Not too long ago, Lance Armstrong was revered as an American hero. The winner of seven straight Tour de France titles, Armstrong brought the sport of cycling into the mainstream and the story of his unprecedented success after recovering from testicular cancer inspired athletes everywhere. But, as the public later found out, it was all built on a lie.

Armstrong was a cheater, and his extensive involvement in an explosive doping scandal tarnished his legacy forever, stripping him of nearly all of his fraudulently-gained athletic accomplishments. The revelations from that scandal rocked the sports world and marked one of the most staggering falls from grace in recent memory. And it likely wouldn't have happened without the United States Anti-Doping Agency and its CEO, Travis Tygart.

Racing has suffered a fall from grace of its own in the past few years. Once a staple of American culture, the game's public support has steadily waned since its peak in the mid-20th century. But two massive scandals, one involving the spate of fatal breakdowns at Santa Anita in 2019, the other a bombshell series of FBI indictments alleging reprehensible and widespread drugging of horses that came out last March, plunged the sport into an existential crisis. These tragic public relations nightmares finally shook racing out of the inert fog it had operated under for far too long, and presented a crossroads: either clean up your business, or have it all come crashing down once and for all.

Enter Travis Tygart.

Late last year, the United States Congress, within an omnibus spending bill that included aid for coronavirus relief, passed the Horseracing Integrity and Safety Act. It is a plainly groundbreaking piece of legislation for racing, but its most notable provision is that drug enforcement, which has frankly been a running joke in the sport for decades, will soon fall under the purview of USADA and Tygart, arguably the most respected anti-doping authorities in the world.

So what, exactly, does that mean for the future of racing and how it will operate in the new HISA era? In his first public interview since USADA was tasked with an entirely new sport to regulate, Tygart sat down with the crew of the TDN Writers' Room podcast presented by Keeneland Wednesday. Calling in via Zoom as the Green Group Guest of the Week, Tygart participated in an expansive, candid, illuminating discussion on the transformation we should expect to see in the coming years as he and his crew take the regulatory reins.

“It's obviously a huge responsibility, but one that we're fully ready to embrace to learn the nuts and bolts of the industry that we don't know,” Tygart, who grew up near Ocala, said about USADA entering a new domain in racing. “We're honored to be part of it. We feel like it's a tremendous privilege. We recognize that we're going to have to work every day and every night to prove that we're the right organization for this. Cheating, honesty, ethics, and the rule of sport are the same across all sports. So while some might want to say there's a difference between equine anti-doping and medication control programs and what happens in humans, the mentality of cheating and trying to get an advantage against the rules, is the same. So we're really looking forward to putting in a gold standard program that people in the industry can have a lot of satisfaction and pride in, that it's being done at the highest levels, with an equal opportunity to win playing by the rules, which is all any athlete–whether you're a trainer, owner of a horse or a human athlete–can ask for.”

Tygart was invited to speak at the 2012 The Jockey Club Round Table, soon after the Armstrong scandal broke, where he was first introduced to the flimsy anti-doping rules that have proved so inefficient for the sport in America.

“I really started looking at the policies around anti-doping and medication control within the industry and they were just completely antiquated,” he recalled. “They were years behind what the human world, as well as the equine and Thoroughbred horse racing industry around the world had done as far as uniform policies. Other places don't have 38 different racing jurisdictions run by the states, with frequently conflicted people that have an interest in the outcome without transparency, without good quality testing, without laboratory accreditation that is uniform. It actually reminded me of, and I drew the comparison to, what the Olympic world looked like prior to us coming into existence. So having a uniform policy, where you can have confidence that when a horse runs in California, it's going to be running under the same rules and allowances and free of drugs as in Kentucky and in New York too, is going to be a game changer I think, right out of the gate.”

Tygart then explained in detail the process that USADA has put in place for human sports, which it will try to replicate in racing. He outlined two keys to its efficacy in particular: getting ahead of new drugs so that trainers can't just move from doping agent to doping agent before regulators catch up, and a tip line from affected parties in the industry.

“I think it's really important that we begin the education with the industry on this, and I always get the question,'Well, how's the testing going to be different?'” he said. “Just to look at testing is, again, an antiquated, old way of looking at modern anti-doping. How you professionalize and ensure that the athletes' rights and their health and safety are going to be protected, it has to start with education. That's going to be uniform, education about the rules across the country. It's going to have to have a research component involved to ensure that things that might not be tested for today in a robust way can be tested for. Any new drugs that are coming out that would tempt trainers or owners to give their horses, for example, are going to also be able to be detected. Then you also have to have a results management process, because we know the science is limited. It's a complex matrix looking at some of these drugs, some that are endogenous or natural to a human body or a horse body. So, distinguishing what's synthetic versus what's endogenous, is sometimes a difficult thing. You have to get that right from a scientific standpoint. That means you have to also have an investigative and an intelligence gathering model.

“We have a whistleblower line. We're the first to say it takes a team to be successful. So, make the call. Last year in our human world, we had close to 500 tips to our whistleblower line. We have a robust internal process where we investigate each and every one of those. When we direct tests off of that information, we have close to a 22% positivity return, clearly indicating that when the information comes in, it's handled appropriately, it leads to detection and that feeds what we're ultimately after, which is deterrence. We don't want people to cheat, but if it's too easy to get away with, and there's no consequence if you get caught, then people will take advantage of that. That's what we have to stop.”

Tygart undoubtedly faced an avalanche of institutional pushback from the cycling powers that be when he and USADA were working to uncover Armstrong's doping. He reportedly received death threats during the investigation and had to have additional security provided for him by the FBI. Asked about what kind of resistance he expects from people in racing, he said he has been encouraged by the industry's response thus far, and noted that there will be an adjustment period for those currently breaking the rules to fall in line.

“We've had a lot of interaction over the last eight-plus years with wonderful people in the industry, trainers, owners, breeders, all sides of it, who have asked really tough questions and really good questions, who have embraced the effort,” he said. “The deaths out in California, and then the indictments, I think created this perfect storm that finally loosened some of the entrenched positions, so I think we feel very good that the industry wants this to happen for the most part. There will obviously be those who like the status quo, because it's been very profitable for them. They're eventually going to either be weeded out, or change their behavior. They'll be given a fair opportunity. The rules will change and the enforcement is going to change, but you'll be given adequate time to change behavior in order to comply with those new rules and prove that you can win the right way.”

Elsewhere on Wednesday's podcast, the writers previewed a strong holiday weekend racing lineup. Then, in the West Point Thoroughbreds news segment, they analyzed the continuing positive handle trends and the passage of a historical horse racing reinstatement bill in the Kentucky Senate. Click here to watch the podcast; click here for the audio-only version.

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TIF: How Will Racing Pay for HISA? Grow the Business!

by Thoroughbred Idea Foundation

The creation of the Horseracing Integrity and Safety Authority (HISA) is the most significant development in American racing at the federal level since the passage of the Interstate Horseracing Act in 1978.

Questions now being rightly considered include how much HISA will cost and where will its funding originate from. Below, we offer some perspective on the costs. But as the greater industry determines where the funding will come from over time, racing should proactively adopt policies which seek to grow the wagering business.

The industry already has a plethora of obligations–aftercare, backstretch programs, integrity matters, jockey health and equine research, not to mention purses, the main driver for investment from owners. HISA adds to these. The best way for horse racing to afford all of its obligations is to grow the business.

Racing’s wagering business needs to evolve–appropriate pricing of bets, improving access and reducing costs to accurate data, complementing pari-mutuel betting with fixed odds options, modernizing existing bet processing and infrastructure, all while increasing transparency to the public in many areas. Increasing costs to our already fragile wagering markets, or to a declining base of horse owners, without these needed improvements is a recipe for disaster.

Any step where costs to betting are increased to help pay for HISA programs will hurt the greater racing business.

Projecting Costs

There is every reason to expect that a new level of federal bureaucracy functioning on top of individual state commissions will be expensive.

As it relates to testing, these expenses are fairly clear. For example, if the per-race spending on testing alone from the more than 5,000 races across all breeds overseen by the California Horse Racing Board were extrapolated across the entirety of U.S. Thoroughbred racing, nationwide testing alone would run approximately $20 million annually at current standards.

This is a cost already borne by individual commissions.

Factoring in improvements and upgraded requirements, it should be understood that the $20 million–just for testing–merely represents a starting point.

Administratively, what it will cost to start a federal authority from scratch is more challenging to envision. The HISA creates a layer of federal bureaucracy where one never previously existed. This isn’t necessarily good or bad, it is a reality in development with little insight on costs to this point.

HISA requires the registration of all “covered persons”–an umbrella term which, according to the language of the bill, includes “all trainers, owners, breeders, jockeys, racetracks, veterinarians, persons (legal and natural) licensed by a State racing commission and the agents, assigns, and employees of such persons and other horse support personnel who are engaged in the care, training, or racing of covered horses [basically, all active Thoroughbreds].”

Most are already licensed by existing commissions, but some are not. Will that information be shared or require completely new registrations? The exact administrative requirements are (understandably) unknown to this point, but all of this will come with costs.

The United States Anti-Doping Agency (USADA), which will assist in the development of HISA, serves as a potential reference point to understand the possible administrative expenses.

According to its annual report, USADA conducted more than 14,000 tests in 2019 across various groups which include America’s Olympic and Paralympic athletes, services to the UFC or contracted services for other events, such as the Boston and New York City Marathons. Off a base of just 30,000 Thoroughbred races, down from 36,000 run in 2019, it is reasonable to expect the number of annual tests in U.S. Thoroughbred racing would be no less than five times larger than those conducted by USADA, and very likely more.

USADA’s testing costs in 2019 ran more than $13.5 million, but non-testing expenses, which includes results management, science, research and development and drug reference, education and awareness, as well as general and administrative expenses totaled an additional $9.3 million.

It would be reasonable to estimate that HISA’s costs would be similar, if not more, given a substantially increased number of tests, across a far larger base of competitors and events (races) requiring tests.

Whatever the exact costs, it will be more than in pre-HISA times.

Grow the Business

The best chance racing has of covering HISA costs is if racing finds a way to actually grow the business, turning around two decades of decline.

Grow the business. Grow the business. Grow the business.

State commissions are, for the most part, funded through fees assessed to, or withheld from, the sport’s participants. Receiving a portion of the hold from wagering takeout is one source of funding, licensing fees and starter fees are another. Some receive funding through a share of alternative gaming revenue too.

If wagering on racing continues to decline, recalling that it has dropped roughly 50% adjusted for inflation over nearly the last two decades, the ability to pay for HISA and plenty of other programs required of the industry–aftercare initiatives, jockey health, equine research, among others–would grow increasingly difficult. Takeout hikes would be a completely counterproductive measure to pay for HISA as betting churn would decline.

The path to a brighter future, where the industry’s liabilities can be covered, is wagering growth.

More wagering on racing yields a more sustainable business for all stakeholders. But yet, many of the decisions made by racing operators over the last two decades have been in opposition to growing wagering on racing. This has to change.

Whether it is the continuation of churn-killing jackpot bets, high takeout rates, an aversion from many to exploring fixed-odds options, or continuing to operate antiquated pari-mutuel bet-processing systems without modernization–these and other actions have greatly limited racing’s growth, all as the sport’s liabilities increase and its social license to operate becomes tougher to retain.

As racing and humanity emerge from a troubling calendar year, make no mistake that 2020 was a year of tremendous growth in legal sports betting. Those states doing the best with sports betting are those which have embraced online betting and competitive markets. While the overall environment for betting has never been stronger, racing’s wagering product remains stagnant.

If racing wants to succeed, and cover its growing liabilities which now include HISA, it must undertake measures to radically improve–and grow–the wagering business.

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