Illinois Tracks Threaten Collapse of Live Racing

ARLINGTON HEIGHTS, Ill., Jan. 24, 2016 /PRNewswire/ -- Illinois tracks are plotting to upend industry regulations fundamental to the integrity and strength of thoroughbred horse racing, threatening to crush what remains of live racing, devastate the breeding industry, and compromise thousands of agribusiness jobs statewide.

Churchill Downs Inc./Arlington Park and Hawthorne Race Course have quietly urged the Illinois Racing Board, at its Tuesday meeting, to abolish rules that provide essential structure to the racing schedule and therefore create an incentive for horsemen to race at those tracks. If the tracks succeed in their pursuit, they will render the condition book meaningless, discourage horsemen from shipping to Illinois during this racing year, and promote the collapse of live racing.

At issue are rules adopted nearly 40 years ago to implement the basic construct of the Illinois Horse Racing Act of 1975. Specifically, the tracks are attempting to repeal the rules:

    --  Requiring that all non-claiming races other than maiden races, and all
        claiming races with a claiming price of $20,000 or more that are offered
        and fill, must be carded and run. The rule covers all stakes races, all
        allowance races, and all non-maiden claiming races of $20,000 or more.
    --  Setting the order in which races are to be used (condition book races
        must be used first, then substitute races listed in the condition book,
        and then finally the extra races published on daily sheets days before
        the race date).

Together, these rules allow owners and trainers to predict what races offered by the tracks will actually be carded and run. Without the rules in place, a track could elect to follow the condition book - or not - at its sole discretion. Horsemen, without the ability to effectively manage their horses and operations, will choose to go elsewhere - where there is greater predictability of races available for their stables.

Additionally, the rule pertaining to race order encourages Illinois breeding by requiring that the substitute Illinois-conceived and/or foaled race be scheduled, if possible, in the event that an Illinois-conceived and/or foaled race fails to fill. Elimination of this rule will, obviously, depress Illinois breeding.

Another Push for Stall Rent: In a parallel pursuit before the IRB, CDI/AP is again attempting to charge stall rent - thinly veiled this time as a "facility fee" - as part of its request for a modified stall application. Its proposal also would increase the room deposit fees for grooms, hotwalkers and their families, among other changes hostile to backstretch workers and horsemen. This is the same track whose parent corporation boasted in October, in its quarterly report, of "record net revenues of $279.8 million, up 61% over third-quarter 2014." CDI/AP officials certainly are aware that charging stall rent and these related fees will poison efforts to attract horsemen to ship there for the summer.

Unlike a sports franchise in which the owner pays salaries to the athletes and otherwise makes a total, direct investment in them, horse racing tracks make no direct investment in the thoroughbred horses that are this sport's athletes. In baseball or basketball, the team owns the rights to the players. CDI/AP takes the images of our horses and circulates them around the globe through simulcast. That same signal is used for account wagering. Without that image, they wouldn't have a business. Horsemen get no salary and no direct investment from the track; we're compensated only through the purse.

As CDI/AP shifts its focus to casino-style gaming, track executives are trying to shed their own operational costs and load those costs onto the horsemen. After stall rent, will CDI/AP want horsemen to pay for water, electricity and the track's other utilities? Forcing horsemen to pick up the tab owed by the tracks is like a consignment shop, in addition to getting a percentage of all sales, charging "shelf rent" for goods that may or may not be sold.

Bursts of Corporate Welfare: CDI/AP and Hawthorne are spearheading industry contraction even as they happily collect corporate welfare - dollars that directly undercut purses and the IRB's own operational revenue.

In 2015, CDI/AP took $4.24 million in "recapture" subsidies. Those funds come straight from the horsemen's purse account, undermining the ability of Illinois racing to compete with other jurisdictions. Hawthorne last year took $2.6 million in recapture from the horsemen's purse account. (In the coming year, CDI/AP is poised to seize an estimated $4.41 million in recapture, while Hawthorne stands to take an estimated $2.65 million. Those seizures will deplete purses by nearly $60,000 a race day at CDI/AP and more than $40,000 a race day at Hawthorne.)

Also in 2015, CDI/AP took $2.55 million in the form of a pari-mutuel tax credit, while Hawthorne took a credit worth $579,003. Those credits, which tracks use to offset their property tax liability, come directly from revenue that would otherwise support the IRB, which is responsible for testing winning horses and ensuring the integrity of our business.

The tracks accept these dollars even as they're reducing their commitment to Illinois-restricted stakes races - races limited to horses foaled in Illinois and which directly support our breeding industry. Between 2012 and 2014, CDI/AP cut Illinois-restricted stakes purses 42% from $891,800 to $518,875. Hawthorne, during that period, cut those purses 35% from $1.6 million to $1.06 million. (The overall purse distribution during this time dropped about 19% at CDI/AP and declined about 35% at Hawthorne. So while Hawthorne cut Illinois-restricted stakes at a rate consistent with the overall decrease, CDI/AP cut those purses at a rate more than twice the overall decrease.)

Thumbing Their Noses at the Law: The Illinois Horse Racing Act, the law authorizing racing in our state, deliberately and thoughtfully seeks to balance a track's interest in maximizing profit against the state's interest in maximizing live racing. By establishing this basic compact, the law reminds us that live racing - not corporate profit - supports tourism, the breeding industry, numerous jobs at the tracks and across agribusiness, and a broader base of revenue for public services.

A host track gets to decide which races are simulcasted in Illinois and it enjoys the commission on wagers placed on those races. In exchange, the track must host a minimum number of live races. The two sides of the bargain can and should be close companions. Simulcasting spotlights live racing while live racing stimulates our local audience, fuels our local industry, and enhances the simulcasted product. But from the standpoint of Illinois tracks, the two sides evidently seem incompatible - simulcasting promises the highest profit margin, while live racing requires an unacceptable level of investment to produce the desired return.

Horsemen and breeders appreciate that this is a trying time for Illinois racing. Policy makers at the Illinois Capitol remain locked in a standoff that likely will preclude consideration of slots-at-tracks legislation until fundamental differences over the state budget and related matters are resolved. We also recognize that tracks desire more profitable business models.

But we will not stand by as tracks attempt to exploit gridlock at the Capitol, behind the guise of financial stress, to annihilate the live racing opportunities supporting the livelihood of not just horsemen and breeders - but also thousands of men and women, from hay and feed suppliers to backstretch workers and truck operators, across Illinois.

Where is the obligation, on the part of the tracks, to maximize live racing? Where is the respect for the horsemen and the other working men and women who provide the resources necessary to make their betting platforms possible? In this challenging time, major industry stakeholders should be working together to preserve and protect the live racing opportunities that support jobs, tourism, breeding, agribusinesses and a broader base of tax revenue - not maneuvering to quash them.

Contact:
Mike Campbell
President, Illinois Thoroughbred Horsemen's Association
[phone]
[e-mail]

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SOURCE Illinois Thoroughbred Horsemen's Association