Horse racing must make better use of technology to create new betting products and experiences or it will be left behind other sports and entertainment industries.
That was the message of Friday’s technology session on closing day of the Association of Racing Commissioners International’s 84th annual Conference on Equine Welfare and Racing Integrity at the Hotel Hot Springs.
Panelists said that the likelihood of widespread sports betting, which is based on fixed odds in contrast to horse racing’s pari-mutuel structure, provides a pathway to innovation.
Moderator J. Curtis Linnell, the Thoroughbred Racing Protective Bureau’s executive vice president, said all entities involved in racing should work toward increased participation in horse racing through betting.
“Betting is the juncture in which the marketplace comes to horse racing,” he said. “That is where participation by the customer happens.”
Sean Pinsonneault, an industry consultant and previously executive vice president of strategy and wagering for Woodbine Entertainment Group, said racing’s big days and the creation of “jackpot” wagers in recent years are ways the sport has created excitement.
“There are lot of positives that come from this industry, but it’s changing the way we do things,” he said.
Pinsonneault used as an example offering a partial cash-out option on multi-race wagers, where the bettor who remains alive in the wager has the option to get partial payment or bring in partners who buy part of the bet for the remaining legs. Pinsonneault said that is being done in the United Kingdom, which has resulted in a 30-percent boost to pool income and with 80 percent of the cash-outs being partial. He said the bet increases spending and retention of customers, modernizes the multi-race experience and maximizes player engagement. He added that its “Deal or No Deal” concept is ideal for sharing on social media to let people know part of a so-far winning bet is up for sale.
Linnell added that’s the technology version of “20 years ago when a long shot won the first race, a guy would be walking around the clubhouse saying ‘Who wants to buy half my Daily Double ticket?’”
Pinsonneault also said Australian racing’s wagering went from 70 percent via its pari-mutuel system and 30 percent fixed-odds wagering to 32 percent pari-mutuel and 68 percent fixed odds through corporate bookmakers — a change that has seen the betting on horses increase 38 percent in 10 years.
“As an aside, when Winx was making her 18th or 28th start trying to set the world record for consecutive wins, everybody knew she was going to win,” he said about Australia’s great racemare who has won 23 straight races. “Some of the corporate bookmakers offered fix odds on lengths of win. There was a tremendous amount of action on that horse, rather than just offering a win bet that was going to pay 5 cents on the dollar. That shows you innovation in a fixed-odds environment.”
The panel also suggested studying innovation in other highly regulated industries, such as the financial sector’s addition of derivatives that resulted in an explosion in investment. Linnell encouraged experimentation in the pursuit of the home-run idea and emphasized the need for increasing the speed from innovation to implementation.
Linnell said the TRPB, racetracks’ investigatory body which oversees a wide range of integrity issues, stands ready to help regulators creating new betting-product models that comply with their rules and laws are legal, accountable, audit-able and fair to the betting public.
“We’re going to find a jurisdiction in North America that is innovative and wants to challenge the status quo,” he said. “It’s just a matter of time. Hopefully we can find that sooner rather than later, and we can bring some of these innovations to the customers of horse racing. And that’s more money flowing back to the industry.”
Ed Martin, ARCI’s president and CEO, said the likely expansion of sports betting will pave the way for racing to use fixed odds in addition to the pari-mutuel model.
“I think it’s incumbent on every racing commission to have your general counsel look at any bills going through your legislature to make sure that they are broad enough, that you aren’t restricted in language in regards to wagering on horse racing, that it has to be pari-mutuel,” he said. “In some states it’s constitutional; in other states it’s a statute. You might give serious thought to slipping something in a bill that’s going through the legislature to give you maximum flexibility. It’s not only the racing’s commissions’ responsibility. It’s the responsibility of the tracks, the horsemen, the breed registries and everybody involved in this.
“This sport is in a highly competitive environment. We can be sitting here talking about pari-mutuel wagering 10 years from now. But you just saw these statistics about fixed-odds wagering and where the market is taking wagering. You talk about bets going offshore because we cannot offer these opportunities domestically because we as an industry have not done what we needed to do to adopt to the technology coming forward. This is about the survival and competitive position of an industry. We can debate Lasix for five more years. But if we don’t debate this stuff, we’ll be debating Lasix in front of an empty grandstand.”
Changes to ARCI’s model rules:
One of ARCI’s most important missions is to research, develop and approve rules and regulations that can a blueprint for racing jurisdictions to adopt. Among the changes approved by the ARCI board after being recommended by its model rules committee:
The concussion protocol for jockeys was amended to require that at least one of the previously-required medical professionals on site must be adequately trained in diagnosing concussions. The new rule also mandates establishment of guidelines for clearing jockeys to ride after sustaining a concussion.
The scale of weights that jockeys carry in quarter-horse races was moved up four pounds in each age class (now 124 pounds for 2-year-olds, 126 for 3-year-olds and 124-128 for older horses).
The addition of recommended best practices in the case of lighting during the races, which proved fortuitous with Thursday’s overnight and Friday morning’s thunderstorms in Hot Springs. The model-rules committee looked at other sports to see how they handled lightning, landing on a version of the NCAA lightning protocols.
Maryland’s Hopkins new ARCI chair
Mike Hopkins, the longtime executive director of the Maryland Racing Commission, was sworn in Thursday as ARCI’s new chair, following Washington State Racing Commission’s Jeff Colliton. ARCI chairs serve one-year terms. Dr. Corrine Sweeney, a noted equine researcher and member of the Pennsylvania Horse Racing Commission, became chair-elect after holding the post of treasurer.
Marc Guilfoil, executive director of the Kentucky Horse Racing Commission, was voted recipient of the Len Foote Award in recognition of exemplary service and contribution to racing integrity by a commission executive director as chosen by his/her peers.
“There are a lot of smart people in this room, and I’m not one of them,” Guilfoil said. “But my daddy taught me a long time ago that common sense goes a long way in life. We can never have enough common sense in horse racing.”
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Three perspectives on how to achieve North American uniformity of thoroughbred racing regulations were presented on Thursday’s second day of the Association of Racing Commissioners International’s 84th annual conference on Equine Welfare and Racing Integrity.
James Gagliano, president of The Jockey Club, batted leadoff and pushed for a proposed federal bill that would put control of drug testing in the hands of the United States Anti-Doping Agency — a move widely opposed by the major horsemen’s associations, most racing regulators and privately by many racetracks.
Alan Foreman, chairman and CEO of the Thoroughbred Horsemen’s Association, countered that the Interstate Compact on Anti-Doping and Drug-Testing Standards spearheaded by Mid-Atlantic states is a template for achieving the uniformity that counts without adding a costly and unnecessary bureaucratic layer.
The New Jersey Racing Commission, which is part of the Mid-Atlantic alliance, adopted a third approach by changing its laws to where the ARCI model rules automatically go into effect in the Garden State — a method known as “by reference.” The model rules are created and approved by the ARCI board to provide the blueprint for individual jurisdictions in the regulation of the sport.
Gagliano painted a picture of an American industry that needs H.R. 2651, titled the Horseracing Integrity Act, to stay viable internationally by establishing a single authority to create and implement a national uniform medication program while putting medication oversight in the hands of USADA, which does not do actual testing but contracts with existing labs.
“Until and unless states agree to adopt the ARCI model rules by reference, all effective on the same date and so long as the National Uniform Medication Program remains a living document, we most assuredly will never achieve uniformity in our current regulatory system,” he said.
Foreman said there is uniformity where it matters.
“We drug test, we identify prohibited substances and don’t permit prohibited substances,” he said, adding that “the enforcement might be different … But ladies and gentlemen, we are uniform. What we’ve tried to do over the years — and some people beat us up for this — is we try to do it better.”
Foreman said that 97 percent of betting on horse racing in America comes on states that have adopted the ARCI/RMTC Controlled Therapeutic Substances list.
“So when they tell you that we’re not uniform, put it in perspective as to who is not doing this, and does it really matter?” he said.
Foreman said the Mid-Atlantic states represent 40 percent on the national handle on a daily basis as the nation’s largest concentration of racing, including at times when 12 thoroughbred tracks within 200 miles might run at the same time. As such, the Mid-Atlantic has led the charge toward uniformity, with its regional regulatory group mushrooming and creating what has become a potentially national compact in the Interstate Compact on Anti-Doping and Drug-Testing Standards, he said.
“Everyone who has skin in the game at this segment of our business, and they’re not there to bring their agendas,” he said of the current working group. “They are there to help collectively to move us forward to see if we’re complying with the national program. Are there next steps to take? What are the problems we need to address?”
Foreman noted a 23-percent reduction in positive findings among post-race drug tests in 2017 from 2016 in the region and a 27-percent decrease in equine fatalities from 2013 to 2017. He said that four years ago only a handful of racing laboratories had national accreditation, but that today only one state’s lab is not accredited.
“You hear all this stuff in the media about chaos and confusion and lack of uniformity,” he said. “… Is that chaos? Is that confusion? That’s compliance with a program.
“A compact is a streamlined way of getting us all collectively to adopt a rule and implement it at one time. It requires legislation in every state that wants to join. Maryland became the first state last week to unanimously adopt the compact… I expect by end of the year we’ll have Delaware, New Jersey, New York; and West Virginia will be next year because we’re beyond their (legislative) deadline…. The compact is not being created to become this new rule-making body.”
Compacts don’t have “opt-out” provisions, but the Mid-Atlantic’s compact — open to any state to join — requires that 80 percent of member jurisdictions vote in favor for a compact rule to pass.
“It’s a protection device to insure there is at least the ability to discuss and send back for further consideration a proposed rule,” Foreman said. “… It is designed as the next logical step, and that is: If you have a consensus and want to make a change, we can do it one time and do it quickly. Our horsemen want it, our regulators want it. It’s in everybody’s best interest, and it’s totally non-threatening.
“The Mid-Atlantic has agreed to do this. And if nobody else does, that’s fine. This is not one of these ‘OK, we’ve got a national thing here and because Nevada and Wyoming didn’t join you don’t have a national compact and we’ve got to run to the federal government because they’re the only ones who are going to get it done.’ We’re going to do it for the people for whom it’s important.”
Ed Martin, ARCI’s chief executive officer, cited states, including those outside the Mid-Atlantic, that have approved various forms of enabling legislations to join a compact.
“There are more states looking at it for next year, and you are seeing some concrete advancement on this concept,” he said. “It’s not a theoretical.”
Judy Nason, deputy director of the New Jersey Racing Commission, said her state looks forward to being in the compact. In pursuit of uniformity in 2014, New Jersey opted to adopt ARCI’s model rules by reference.
“When ARCI updates the rules and amends them, New Jersey automatically incorporates those amendments and supplementations by reference,” she said. “It keeps us current with the work of this body.”
Eric Hamelback, CEO of the National Horsemen’s Benevolent and Protective Association that fiercely opposes the federal bill, asked Gagliano from the audience about his repeated references to international racing and Grade 1 stakes.
“Are you talking about a class separation in integrity and a variation in testing?” Hamelback said. “Because you distinctly left out what I would consider 95 percent of racing…. We all agree essentially that North American racing is the leader in the world. So why does the international comparison continue to be utilized?”
Foreman added that in the Mid-Atlantic, every lab tests to the level of graded-stakes protocols.
Martin said everyone agrees “on most aspects of where we need to be.
“There is a lot of money being spent on people to argue from both sides of this issue. I sit on the board of the RMTC, and I look at the amount of money committed to research. I look at the number of strains of EPO (Erythropoietin, used in blood doping) that nobody in the world — in horse racing lab or human — can detect. And where our challenge is with emerging threats, the amount of money we’re spending disagreeing over what route we should take (to uniformity), if that money was given to the RMTC to do research, we might be better off.
“This is a tough sport to police, whether you’re in California, New York, Washington, France, Great Britain. We need to collectively figure a way to pool certain resources and focus in on real threats we have to the integrity of this sport as well as the health and welfare of our horses. There might be some times when we just have to agree to disagree. But in the scheme of things, they are relatively minor.”
Roundtable: Emerging drug threats include “research chemicals” bought online
One of the daunting challenges for racing’s testing detectives trying to ferret out illegal substances in horses is the ability of people with a credit card and mailing address to purchase from unscrupulous websites medications and drugs that have the potential to affect performance in a race, said Dr. Rick Sams, laboratory director of the LGC Science Inc. that does Kentucky horse racing’s testing.
Sams said that the some substances showing up in post-race samples are listed as research chemicals “sold with disclaimer that they are for research purposes only and not to be administered to humans or animals. … Some have never been tested in animals or humans for any purpose. They are sold on the internet and can end up in people or horses that are entered to race.
“… We have to know the identity of these substances in order to enter them into our databases so that we can make identifications when we encounter them,” Sams said as part of a roundtable discussion on drug testing. “Methods to identify some of these substances will require innovative methods, and that will require considerable research funding.
“Delays in our ability to find these substances are risk factors for integrity of racing and also potentially damaging to the health and welfare of the horse and human participants in racing.”
Other areas of concern for the testing labs: selective androgen receptor modulators (known as SARMs) that appear to build muscle and burn fat but none of which are approved for use in medicine; designer drugs that include synthetic opioids; drugs resurfacing in racing samples after being discontinued because of side affects or addiction liability, and peptides, some of which are designed to have an anabolic-steroid effect.
“There are qualitative issues in regard to these substances,” Sams said of such online purchases. “In some instances they are impure. In some instances they don’t contain what they are labeled to contain, or they contain too much or too little based on label claim.”
Dr. Dionne Benson, executive director of the RMTC, said the consortium no longer focuses on therapeutic medication with precious research dollars. “We’re focusing on things that should never be in a horse, and eliminate those threats,” she said.
She said that the RMTC also is starting “double blind testing” of the country’s racing testing labs, sending out doctored samples along with legitimate post-race regulatory samples to see if the lab detects what her staff put in it. RMTC currently is doing single blind testing, where the lab is told to test urine and blood samples that it knows were prepared by the RMTC.
“We know the labs are going to do their best work on it,” she said. “But what we need to find out is if your samples that you send in as a commission are treated the same way…. This is the only program like this in the world. We are learning a lot about the laboratories and their capabilities this way. The laboratories are doing fairly well. In some cases we’re finding that we administer drugs and none of the laboratories can find them, which doesn’t necessarily mean that’s a failure of laboratories. It means we need to do more work on that specific medication or substance because no one can find them.
Ref; Research Chemicals
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Starting at the top, Arkansas’ pari-mutuel industry was spotlighted at Wednesday’s luncheon kicking off the Association of Racing Commissioners International’s 84th annual Conference on Equine Welfare and Racing Integrity at the Hotel Hot Springs.
Gov. Asa Hutchinson lauded Oaklawn Park; the track’s influential owner Charles Cella, who died in December, was remembered, and Cecil Alexander, who spent 24 years on the Arkansas State Racing Commission, most as chairman before stepping down two years ago at age 80, was presented the "William May" Award, the ARCI’s highest award and which recognizes an individual or entity that has had a profound positive effect on racing and racing integrity.
The conference attendees also heard state of the industry updates from leaders of pari-mutuel racing’s four major groups.
Hutchinson said that, behind agriculture, Arkansas’ No. 2 industry is tourism, for which he said travel-related expenses in the state have increased 32 percent the last five years.
“The venues of Oaklawn and Southland are two historic venues providing premium racing for our state,” he said, referencing the 114-year-old thoroughbred track and Southland Park Gaming and Racing greyhound track in West Memphis. “We’re proud of it and we protect it and want to make sure (they) are the premium venues for racing in our country. They are success stories. Oaklawn is the top commercial tourist attraction in Arkansas, with 2.8 million visitors last year, 1,500 employees during racing season, a $250 million economic impact for the state of Arkansas.”
Hutchinson then acknowledged “the incredible work of Cecil Alexander” and his varying careers as a restaureur, in real estate and as vice president of governmental affairs from 1980-2000. The governor said the futures of Oaklawn and Southland were in great jeopardy when Alexander joined the Arkansas State Racing Commission in 1993.
“He oversaw a resurgence in both Oaklawn and Southland,” Hutchinson said. “… Cecil used every legislative trick in the book to get it done. From ‘Instant Racing’ he was able to get installed, to games of skill being passed through the legislature that reinvigorated Oaklawn and Southland, he has made a difference in our racing environment and success of racing in Arkansas every step of the way.”
Hutchinson planned to go with daughter Sarah to Oaklawn that afternoon, joking, “You can’t give me any trips, but feel to help Sarah out. She’ll keep it very confidential.”
In the remembrance of Cella, ARCI chief executive officer Ed Martin said, “We lost one of the greats of racing this past year when Charles Cella passed away. The Cella family has meant much to racing, not only here in Arkansas but everywhere. Challenges put out and the product put out week after week is second to none. We’re just sorry that we can’t stay for the Arkansas Derby.”
Louis Cella, who took over as the Oaklawn Jockey Club’s president after his father’s death Dec. 6, said that while the track dates to 1904 “our renaissance really started with my father. For 50 years he maintained a single goal: aim high strive to be the best.
“It took more than just a sportsman; it took a team,” he said. “That team included government, commissioners, horsemen, the 1,500 loyal employees that by the way equates to one employee for every stall we have on the backstretch. Because of this team effort, today we’re allowed to offer open maidens for more than $80,000, allowance races as high as $85,000. We typically have 20,000 people in the grandstands. Two weeks ago on our Rebel (stakes day) we had nearly 40,000 and next week at our Derby we’ll have maybe 60,000, 70,000. As the governor said, we’re the largest commercial tourism attraction in the state, making Hot Springs the top tourist destination of the state.
“When you’re in a smaller location a little bit off the beaten path, you have to work harder and be creative to survive.”
Louis Cella said the Arkansas racing commission was instrumental when Oaklawn offered the first merged-pool interstate simulcast wagering in 1990 when the track took Arlington Park’s full card. As casino boats on the Mississippi River flooded Oaklawn’s market, “It staggered us, but we knew we had to do something to survive.”
Under Alexander’s regulatory leadership, Oaklawn invented Instant Racing, also known as historical horse racing — an electronic parimutuel wagering product utilizing hundreds of thousands of previously run races.
“We didn’t know if it would work, but we knew if we didn’t try something, we would not make it,” Cella said. “From its inception in 2000, Instant Racing turned us around…. Suddenly we were picking ourselves up off the canvas and getting back in the game…. Working with the commission and the (horsemen), we believed we developed the best racing model for racing and gaming, just as my father had hoped for.”
He said the Oaklawn Foundation channels millions of dollars into Hot Spring for college scholarships, educational programs and initiatives for senior citizens.
“Oaklawn has gone from trying to fill races to becoming one of the leading, brightest lights in racing,” Cella said. “This could not have been without people like Gov. Hutchinson, like our racing commission, our horsemen and breeders, our loyal fans and so many others who have a stake and care about how Oaklawn operates. By working together, setting aside agendas, there isn’t any question we are continuing to do what my father set out to do 50 years ago: aim high, do it right and be the best.”
Updates on parimutuel racing’s four major groups
NTRA’s Waldrop: ‘Nothing more important to future than investing in facilities’
Alex Waldrop, president and CEO of the National Thoroughbred Racing Association, reported on thoroughbred racing’s recent successes with betting and purses up in 2017; the explosive rise of online and account betting; the victory in getting the Treasury Department to adopt modernized regulations regarding the withholding and reporting of pari-mutuel proceeds, allowing horseplayers to keep more of their winnings; increasing popularity of the big-event days; robust sales at the top end at horse auctions, and new programs and favorable tax policy for horse owners.
“Our big race days are at an all-time high, no question,” Waldrop said, including the Breeders’ Cup bringing on new host sites Keeneland and Del Mar and Gulfstream Park creating the $16 million Pegasus World Cup. “… The popularity of these big events has led most of our big tracks — NYRA, Churchill Downs, the Stronach Group, Oaklawn Park — to invest millions of dollars in their facilities. I think nothing is more important to the future of the thoroughbred industry than the reinvestment of dollars in our facilities. We need convenient, state-of-the-art facilities if we’re going to compete in this very challenging sports entertainment environment.”
But Waldrop said challenges include the vastly-shrunk foal crop, horse auctions’ middle and lower market and the potential added competition of sports betting.
“You don’t really have a horse shortage; you have an owner shortage,” he said. “We do need new owners. We have programs in place to do that…. On multiple fronts, we’re working to addresses public concerns about safety and welfare. We’re looking to find new homes and second careers for off-track thoroughbreds… The past decade there’s been a commitment to improving the safety of human and equine athletes, and it’s starting to show significant results.
“Even with many challenges, thoroughbred racing is alive and well today, and we’re very optimistic that it will remain so for many years to come.”
USTA’s Tanner: ‘Never been a better time to own a standardbred racehorse’
Mike Tanner, executive vice president of the United States Trotting Association, said the standardbred industry’s status largely mirrors those of thoroughbred racing but on a smaller scale. He said his membership is holding steady at about 15,800, down from 1986 when it approached 50,000.
“We were slightly down in handle last year, about 4 percent,” said Tanner, who started out in thoroughbred racing. “We handled about $1.4 billion. We were flat in terms of per-race handle. But the number of races were down, number of race days were down, owing to foal-crop size. Purses were very strong, up 2 percent. We gave away $432 million in purses last year.
“I go around the country telling people there’s never been a better time to own a standardbred racehorse, and it’s the truth. The financial incentives are quite generous. Our costs of training are relatively-speaking lower (than thoroughbreds), our horses race more frequently and it’s a hands-on sport as well. When I was a kid I wanted to be a jockey. Genetics and my love of food obviously conspired against me. However, I can and am able to hop on a race bike to help train standardbreds. It’s a great breed.”
Tanner said the breed is creating the Standardbred Transition Alliance, similar to the Thoroughbred Aftercare Alliance to guarantee care for retired racehorses. The proposal is pursuing a $1 per-start fee paid by owners, which would have reaped more than $330,00 starts last year, and a $1 fee on every transaction processed by the USTA, which would have raised $110,000 last year.
AQHA’s VanBebber: Breed-specific rules boost move toward uniformity
Jane VanBebber, the chief racing officer for the American Quarter Horse Association, said the sprint breed is making great strides toward uniformity of regulations among states, giving a shout-out to ARCI having breed-specific model rules that allow the quarter horse industry to address issues that aren’t as problematic in the other racing breeds.
“Several of our jurisdictions have made plenty of improvements this year,” VanBebber said. “We are invigorated by new ownership at Ruidoso Downs, with a partnership of gentlemen who have been very involved in quarter horse racing and are very committed to our sport. We have different jurisdictions that have enjoyed growth. Wyoming just boasted $1.7 million in breeders awards in their state, much due in part to historical horse racing. Colorado in 2017 offered fewer quarter-horse races at Arapaho Park. They found they missed us, and in 2018 they brought back all the races.
“Oklahoma just kicked off their Meeting of Champions and had the first futurity where every entrant into the race was hair-tested as a condition of entry. Between the Futurity and Derby there were roughly 170 horses tested and only three positives and those were from the Derby, in 3-year-olds that had competed in a jurisdiction that allowed a level of Clenbuterol.
“So we feel the work we’re doing enhancing integrity in that area through hair testing is proving a very viable alternative. Talking about the anti-doping, all jurisdictions are coming on board with uniformity…. thanks in part to the breed-specific rules passed here last year. I’m really proud of that for our association, because we can use that as a tool to combat some of the problems that are specific to quarter-horse racing.”
She said reduced racing opportunities are a concern, along with funding and sponsorship support and the issue of “program” trainers, where a horse might in reality be trained by someone not listed in the official entries.
“I’m real pleased that the good outweighs the bad,” VanBebber said. “I think the future is bright for quarter-horse racing.”
National Greyhound Association’s Ward: ‘We battle to survive on a daily basis'
Julie Ward, president of the National Greyhound Association, gave props to Arkansas’ Southland Park Gaming and Racing in West Memphis for its purses, promotion of the sport and quality and care of the animals. But said the sport of greyhound racing is under siege.
“The greyhound business is in a constant battle with the animal-rights activists, unfortunately with some racetracks and state legislators,” Ward said. “So we battle to survive on a daily basis. We try to stay positive internally, to stay upbeat, and we do. We’re able to show that through the quality and care of the animals. But we’re under a lot of pressure and scrutiny.
“We still feel our product is very viable…. Several auctions have reached $1 million of sales. But what is going on down in Florida right now is going to be a big factor in where our industry goes. There is an amendment trying, by animal-rights activists, to let the general public be able to vote to get rid of greyhound racing and simulcasting. It is very scary…. Greyhound racing has been around since the pharaohs, and we would love for it to continue and be a part of this. We’re just going through a big battle and we need everyone’s support.”
Rebecca Shoemaker