ILLINOIS HORSEMEN: BEWARE
Purses for Thoroughbred horsemen in Illinois hit a 10-year low in 2008, and things may only get worse if the Illinois legislature enables Churchill Downs Inc., the owner of the state’s biggest track, Arlington Park, to get the Advance Deposit Wagering language it is seeking.
Illinois horsemen have had to put up with a ridiculous law since 1995 that allows racetracks to “recapture” money from purse accounts the law says tracks have lost on live handle since the authorization of full-card simulcasting. Since 1995, over $170 million has been taken from purses earmarked for Thoroughbred and harness horsemen and handed over to the racetracks. (For more details on the recapture provision of the Illinois racing law, see page 10 of the Illinois Racing Board’s annual report for 2008, which can be viewed
here.)This law needs to be repealed, and representatives of the harness and Thoroughbred horsemen’s organizations are working in the state capital in Springfield to do so. Racetracks seem to have more clout, however, and it will be no easy task.
Lobbyists for racetracks and ADW companies are also pushing for approval of Advance Deposit Wagering in Illinois, a state that permits casino wagering, off-track betting and has offered a lottery for many years. Those lobbyists represent Arlington Park, which is owned by the same Churchill Downs Inc. that operates TwinSpires.com. The largest shareholder in CDI is Richard Duchossois, the Chicago industrialist who owned Arlington Park before merging it into CDI. Another company pushing for ADW approval is Youbet.com, one of whose principals is Chicago billionaire Jay Pritzker, heir to the Hyatt Hotel chain. A member of the Youbet.com board of directors is former Illinois Gov. Jim Edgar (one of those rare Illinois politicians who has avoided public scandal or indictment). Edgar knows his way around Springfield.
ADW would be a good thing for Illinois, provided that the horsemen are taken care of. The fear is, however, that Churchill Downs and its lobbyists are crafting a bill that will be more to their benefit than it is to the horsemen.
An example: the bill (
SB1298, which has passed out of committee and is on the floor of the Senate waiting approval), includes an amendment that permits Advance Deposit Wagering terminals to be placed at Illinois tracks. The language of the bill (see page nine, line nine of SB1298) suggests an “organization licensee” (in other words, a racetrack like Arlington with its own ADW) may operate Advance Deposit Wagering without horsemen’s permission. If a track doesn’t own an ADW, it may contract with a third-party company, with horsemen’s permission, to operate Advance Deposit Wagering. In other words, it appears tracks that operate their own ADW can do so without contracting with horsemen.What does this mean? It could mean that Churchill Downs Inc. will do everything it can to move handle from traditional on-track or OTB facilities in Illinois to its ADW platform, TwinSpires, where it would almost certainly retain a greater percentage of the revenue. We’ve already seen how it works in Kentucky, where a wager placed by a Kentucky resident through TwinSpires on a Churchill Downs race produces far less revenue toward purses and more for TwinSpires and its parent company, than would a wager made on-track or at an intertrack wagering facility in Kentucky on a Churchill Downs race. The percentages are even worse for bets made on out-of-state races by Kentucky residents through TwinSpires, versus at a simulcast facility. (See the graphs on pages 16 and 17 of
a presentation on purses I made to the Kentucky Thoroughbred Farm Managers Club earlier this year for an explanation of how the revenue is divided.)Illinois horsemen have to be careful not to let the racetrack and ADW companies dictate the language of this bill, or they are going to see purses fall even farther – if that’s possible.
Of course, bad news for horsemen could be very good news for Churchill Downs. Perhaps that’s why Duchossois continues to load up on CDI stock. I reported last September that
Duchossois was gobbling up shares in CDI, and he’s been on two buying spree since. He spent more than $1.3 million to buy over 42,000 shares in November and in recent days spent another $285,000 on over 12,000 shares. Copyright © 2009, The Paulick ReportVisit the Paulick Report for all the latest news throughout the racing world
Tags: advance deposit wagering, ADW, Arlington Park, CDI, churchill downs, Churchill Downs Inc., duchossois, gov. edgar, illinois horse racing, illinois racing board, jay pritzker, jim edgar, kentucky thoroughbred farm managers club, pari-mutuel wagering, Paulick Report, pritzker, Ray Paulick, recapture purses, richard duchossois, sb1298, twinspires, twinspires.com, youbet, youbet.com
March 19th, 2009 at 11:06 am
More cutting off your nose to spite your face. The continued “us” vs. “them”–”horseperson” vs. “racetracks” does zero to move this sport forward. “horsemen” means HBPA ,which at any track I’ve ever been to involves a small, generally incompetent cabal of mouthy trainers that need every penny in the few purses they win since they are unable to train a lick.
Ever been to an HBPA meeting. Ever seen an owner there? Who are these “horsepersons” that we are allowing to control the “horseman” side of the equation?
We are permitting the least capable part of racing to continue to muck things up, and to me it’s fairly obvious from this article that for reasons unfathomable the alarums go out whenever heaven forbid a racetrack might make a profit.
Is not priority #1 for any “real” horseman to stabilize our race tracks financially and give us a place were we race our horses “Real” horsepersons know how to train and compete and find it unnecessary to nitpick over the last penny of ADW money, and intuitively understand the importance of the tracks having necessary funds and permitting each racetrack without interference from so called “horsemen” to set its purse structure.
March 19th, 2009 at 11:56 am
CDI again shows that the corporate philosphy is based on 1949 and not 2009. But for horsemen who want to dig in their heels, there are many more cozy with track management who will do everything possible to retain the status quo, jumping high for peanuts and celebrating the small treat. I see this in Ohio, where a group of committed horsemen are seemingly thwarted by those who line up each morning for talking points at the offices for management at the dump called Beulah Park.
March 19th, 2009 at 1:08 pm
can you explain. small and committed to “what” Mr. Coreno? as I read your post– taking even more money away from Beulah park, perhaps lining their own pockets instead.
March 19th, 2009 at 2:47 pm
FWIW, all my friends in Illinois already have ADW accounts.
March 19th, 2009 at 4:03 pm
Nixon may have been the original but he’s not the only Tricky Dick. Duchossois has got some of the Illinois horseman in his pocket. Always has.
March 19th, 2009 at 4:20 pm
For all the criticism of Frank Stronach, much of it valid, he did start with the premise that we should be trying to grow from $15 billion in handle to $20-25 billion. He didn’t have the foggiest idea of how to do it, but it was a noble objective.
CDI, on the other hand, is committed to getting a larger and larger percentage of the existing handle. Its growth strategy is to get a higher % of the $14-15 billion that’s still out there, steal market share via ADW and cull the herd of weaker pari-mutuel brethren. It will use the hammer of the Derby to get as far with this strategy as the rest of us will allow.
1999 - Go, Baby, Go
2009 - Grab, Baby, Grab
March 19th, 2009 at 4:58 pm
What’s the big deal.
Yes, the amendments add an “Advanced deposit wagering terminal” definition. But, this fleshes out the section on page 3 defining how ADW wagers may be made:
Page 3
15 … An advance deposit wager may
16 be placed in person at a wagering facility or from any other
17 location via a telephone-type device or any other electronic
18 means.
That sentence is poorly constructed, though it would seem to make it illegal to phone-bet through your ADW while at the track, something the horsemen have been screaming about.
Furthermore, lines 20 to 23 (still on page 3), indicate that wagers made through those terminals will be treated no differently than wagers made through the windows or non-ADW terminals, which is I would have thought the IHBPA would want.
Page 3
20 … Any advance deposit wager placed in
22 person at a wagering facility shall be deemed to have been
23 placed at that wagering facility.
All in all these changes address something that irks me. The report generation facilities of Twinspires.com are better than the Twin Spires Club wants to replicate for it’s account holders. Therefore, if I’m going to Arlington, I’d rather keep all my wagering through twinspires.com and save myself some bookkeeping chores. And with the provision in lines 20-23 of page 3, the horsemen should see the same amount as if I took cash to the track and went to the window.
Horsemen get the same percentage, and I have a more convenient option for wagering. Seems win-win to me.
Now the cap of 6% on simulcast fees from ADWs without Board approval for a higher fee is a different story. I can see where the horsemen (given the THG wars) would object to that.
Page 8
3 … All
4 organization licensees shall provide their live signal to all
5 advance deposit wagering licensees for a simulcast commission
6 fee not to exceed 6% of the advance deposit wagering licensee’s
7 Illinois handle on the organization licensee’s signal without
8 prior approval by the Board. The Board may adopt rules under
9 which it may permit simulcast commission fees in excess of 6%.
March 19th, 2009 at 6:46 pm
WtD
How will they know where the person making the ADW wager is located? Surely they will not have ADW windows at Arlington? So just how can they keep those wagers seperate?
March 20th, 2009 at 8:54 am
The big deal Wtd is that Mr. Paulick is an unabated CD basher who over dramatizes pretty much everything he can spin into something negative about them. Anyone with any sense of the the reality of how the racing business works will realize the IL ADW bill is not the evil thing he is trying to portray. Obviously you took the time to read it and put forth some logical arguments, which I applaud. The horsemen and Mr. Paulick should do the same. Right now the IL AG’s office thinks ADW is illegal and the ADW’s are taking wagers from the State with no obligations to pay market fees, which hurts the tracks and the horsemen.
As for the 6% host fee cap, well California currently caps host fees at 3.5%, so this is a step up for horsemen on that front. Granted, probably not as much as they want to receive, but moving in the right direction.
But the biggest mud he tries to throw … that CD can run amuck with ADW since the horsemen supposedly aren’t going to be able to sign a contract if a racetrack owns the ADW is just false and misleading. Every track has to sign a contract with the local horsemen’s group to run a meet. That’s where all the negotiations are supposed to happen about how to split live racing, simulcasting and ADW wagering revenues. There is no need for another contract. The reason it is required for out-of-state operators is because those operators don’t already have to sign an agreement with the horsemen, so it protects them there.
Wesley … CD already has the ability to allow the TwinSpires customers who bet at FairGrounds and the the LA OTB’s to use their ADW accounts to place bets. It just required that FG switch totes to AmTote’s OR hub. That’s why the took so long to integrate the LA customers into Twin Spires … they had to switch from SciGames which had the tote contract at FG and was providing the account wagering platform. Since Arlington already is an AmTote track it should be easy to do this.
March 21st, 2009 at 12:23 am
Youbet also has deals with Hawthorne, Maywod, Balmoral and Fairmount to provide ADW services. Between Dickie D. at CDI and all the Illinois connections at Youbet, this ADW bill will very likely pass this session.
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