HANA: CHRB dominated by narrow interests

by | 12.08.2010 | 8:20am

Written by HANA's Roger Way

Various conflicts of interests with the California Horse Racing Board (CHRB) have led to the decline of support of horse racing from the citizens of California.  
 
The CHRB is tasked with serving the public interest, not the interests of one aspect of the industry over another. The CHRB has lacked appropriate balance in the membership. It is unacceptable for a public Board to be so dominated by interests of one segment of the industry they are charged with regulating.
 
The United States has 38 racing jurisdictions and the states of New York, New Jersey, Illinois, Texas, and Florida are among the largest and all prohibit their racing board members from having any financial interest in the business. Arizona allows only one member to have a financial interest in the industry and Maryland allows no more than four of its nine members to own horses.

A number of California state boards also prohibit such conflicts of interests by barring those in the industry from serving as members, including the Medical Board, Dental Board, Board of Optometry, and Board of Accountancy.
 
The leadership of the seven members CHRB is dominated by licensed horse owners and by law they are also members of the Thoroughbred Owners of California (TOC), a horsemen's advocate organization that is supported by over a million dollars per year from the betting public takeout money. The TOC members pay no dues for their   support, along with other horsemen advocate groups in California.
 
We think California would be better served by limiting the CHRB to no more than three members with a financial interest in the industry, and the Chairman should have no financial interest at all.
 
The actions of the CHRB  have destroyed the original business model that led to success, by approving for horsemen larger purses upon demand at the expense of the betting public. The takeout has escalated in California from 10% to 20% and headed for 30% with a deteriorating program presented to the customers and endangering the entire industry that provides 50,000 jobs and $50 million in state and local tax revenue and millions of dollars for charitable programs and endowments.
 
The CHRB has failed in its mission in all respects…
 
Mission Statement
The purpose of the California Horse Racing Board is to regulate pari-mutuel wagering for the protection of the betting public, to promote horse racing and breeding industries, and to maximize State of California tax revenues.

A few years ago S/B 27 ($40 million) was intended to resolve the problems by granting from the State a 3% additional takeout for horseman purses instead of lowering the takeout for the customers to meet increased competition from other gaming. The result was that horsemen paid more for their horses and all costs increased across the board for all supporting services and made California one of the most expensive places in the country to maintain a racehorse, and support from customers continued to dwindle.
 
The recent takeout increase of 2-3% on exotic bets that begins on December 26th at Santa Anita flies in the face of reality. Instead of working to find the optimum price point (The price point that produces the maximum profit to those who put on the show)of the bet, the CHRB have supported (A/B2414,$70 million) another increase specifically for horsemen's purses proposed by the TOC and added to the burden of racings customers. This is in conflict with other jurisdictions (NYRA,etc.) that are trying to find ways to lower the cost of the bet to compete with other gaming such as Sports Betting and Poker.
 
The recent fiasco at Los Alamitos when the CHRB allowed an increase of 2% to the takeout at the request of Los Alamitos after the Horseplayers Association of North America (HANA) had proven without any doubt that it was a revenue, handle, and profit loser for all and a downer for the customers indicated another rubber stamp approval.
 
The recent display of arrogance by the Chairman and the Vice Chairman  of the CHRB at the September 22, 2010 meeting of the CHRB at Fairplex captured by Bill Christine in his article “Get out the Lifeboats” indicates an attitude that is not in the best interest of horse racing in California.
 
For these reasons and more, and the downward trend line direction of the world's greatest customer participation sport in California, we request a review of the CHRB actions from an independent state government oversight committee for obvious conflict of interest.

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