Churchill Downs purses cut by 20 percent

[clevfan]

May 10, 2008


Churchill Downs purses cut by 20 percent

Track cites dispute with horsemen

By Gregory A. Hall
courier-journal.com

Churchill Downs Inc. is reducing purses 20 percent at its Louisville track -- the first cut in at least 15 years -- because of a dispute with horsemen who want a larger share of wagering profits.

The cut will be effective Wednesday.

Track officials blamed the cuts on the Kentucky Horsemen's Benevolent and Protective Association and the Kentucky Thoroughbred Association, which they said blocked Churchill Downs' races from national account wagering sites, like Churchill's TwinSpires.com, and Florida simulcasting sites.

That will reduce the track's projected betting revenues, said Kevin Flanery, a Churchill senior vice president, who denied that the purse cut is retaliatory. He wouldn't say what those projections were.

But Marty Maline, executive director of the horsemen's group, released figures yesterday that showed Churchill's first-week handle declining 2.7 percent, from $248.8 million last year to $241.9 million this year.

"It just doesn't, you know, appear there's any logic behind it, other than some sort of retaliation for our attempts to get a larger share of the (account-wagering) revenue," said Maline, who couldn't remember a purse cut at Churchill in the last 30 years.

Horsemen want one-third of revenues from account wagering -- which consists of online and telephone betting -- something Churchill officials say would make TwinSpires unprofitable.

Betting revenues come from a variety of sources -- wagers placed at the track, at other Kentucky tracks, at racetracks and off-track betting parlors in other states, Internet and account betting sites and, in some situations, betting companies that give rebates to high-volume customers.

Based on contractual agreements with horsemen, a portion of the money that is not returned to bettors is put into purses.

Account wagering revenues are coveted because they represent the growth area of the relatively stagnant pari-mutuel market.

"We're dropping the purses because of the economic reality that we are losing handle from the account-wagering platforms and from the horsemen's decision to not allow the signal to go into Florida," Flanery said, "and what we see as we look forward -- how that will continue to impact our daily handle and therefore purses."

Kentucky horsemen are blocking races from Louisville at the Miami-area track owned by Churchill -- Calder Race Course, where Churchill and Florida horsemen are in a similar revenue dispute.

The horsemen have effective veto rights over interstate betting under federal law, which allows them to negotiate better terms with tracks. The decision to block races to account-wagering companies is an effort by the horsemen to get a bigger share of account-wagering revenues.

Flanery said yesterday that while the daily handle and purse numbers given to The Courier-Journal by Maline are accurate, they don't show the whole financial picture. He compared it to looking at seven days of a personal checking account.

"It doesn't tell you what happened before, nor does it tell you what's going to happen in the future," Flanery said.

Flanery said Churchill estimated purses based on anticipated increases in account wagering last week and through the rest of the spring meet, revenue related to the Derby and Oaks that didn't materialize, and Churchill races being available in Florida.

Churchill's races were available in parts of Florida through last week, Flanery said, because Tampa Bay Downs was racing, but its live meet is over. That means Churchill races are not available in Florida.

"Even since this weekend, circumstances have changed, and those are the circumstances we're using to forecast going forward," he said.

Maline questioned any decreases that would justify a 20 percent cut, saying this week's betting benefited from large carryovers -- which typically attract above-average betting -- in exotic betting pools that began Derby Week.

Maline said horsemen also are asking for a 30-day cooling-off period before any cut is implemented.

Flanery said he was not aware of the request, but he said the door is open for negotiations. Maline also said a meeting with horsemen would be scheduled to consider options, which could include legal action.

No significant negotiations have taken place since Churchill officials and the horsemen reached a stalemate Derby Week.

The Kentucky horsemen are working with the Thoroughbred Horsemen's Group, which is negotiating on behalf of horsemen in other states like Florida and Texas, where similar disputes exist.

Churchill also announced yesterday another purse cut at Calder because of the dispute there with the Florida Horsemen's Benevolent and Protective Association. The dispute there is over account wagering and potential revenues from slot machines that Churchill won the right to implement in a January referendum.