John Pricci executive editor John Pricci has over three decades of experience as a thoroughbred racing public handicapper and was an award-winning journalist while at New York Newsday for 18 years.

John has covered 14 Kentucky Derbies and Preaknesses, all but three Breeders' Cups since its inception in 1984, and has seen all but two Belmont Stakes live since 1969.

Currently John is a contributing racing writer to, an analyst on the Capital Off-Track Betting television network, and co-hosts numerous handicapping seminars. He resides in Saratoga Springs, New York.

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Wednesday, September 30, 2009

Looks Like NTRA Got This One Right

ELMONT, NY, September 30, 2009--When it comes to making improvements in the racing industry, the appropriate short race-description comment in virtually all cases would be: “off slowly.”

Some might even say: “dwelt at the start.”

I surprise myself when I think about this practice and then think that the industry isn’t all bad responding to all problems, at least, not lately; at least, not when compared to subjects that really matter.

For all its problems, the industry is a lot more responsive to issues than, say, our elected officials.

My beef is that when this industry finally gets around to doing something, it usually involves two types of animals: dogs and ponies.

And when it comes to giving the industry its due; let’s be fair. They’re damn good at putting on these types of shows.

In the main, that’s how I felt when I first heard about the NTRA Safety and Integrity Alliance and its team of inspectors. To me it was curious how, little by little, every track that had some big event in the near future received certification.

To this date I’ve not seen nor heard the words: “ ‘Bet-Your-Money Downs’ Surface Fails to Make the Grade, Ordered Closed.”

Then I remembered that no organization had the right to order such an action.

I learned something the other day from, of all things, an NTRA press release, and what I learned surprised me:

The parameters that comprise the S&IA initiative were broadly based and were not so narrowly constructed as to impede the achievement of positive goals. Some would call this progress. And I do.

The accreditation process is based on many criteria. Recently, Calder Race Course became the ninth track to pass inspection and gain accreditation.

Tracks seeking accreditation must first complete a written application and go through a series of interviews before an on-site reviewer grades all facets of the facility seeking certification.

That done, more interviews are conducted with all relevant parties; track executives and employees, owners, trainers, jockeys, stewards, and fans. The latter came as a complete surprise since I’ve never heard feedback from any fan anywhere about this.

(Let us know if you have).

An inspection team consists of a veterinarian, a racing official, and an officer from the S&IA. It was indicated in the release that of all the prescribed benchmarks, Calder earned the highest marks of the nine approved tracks in the area of injury reporting. It also received high marks for working closely with post-racing adoption organizations that endeavor to save retired racehorses from meeting the horse killers.

John Hettinger would have liked that.

For this, props go to the Florida Division of the Horsemen’s Benevolent and Protective Assn. and Mary Scollay, DVM, who nurtured those improved reporting procedures while Calder’s track veterinarian. Scollay left Florida in June, 2008 to become Equine Medical Director of the Kentucky Horse Racing Authority.

Nice to know that sometimes people in this industry get ahead on merit.

Alliance certification standards cover five categories, those of injury reporting and prevention; creation of a safer racing environment; aftercare and transition of retired racehorses; uniform medication, testing and penalties, and continued safety research.

Within that framework, execution involves: systematic injury reporting; racehorse aftercare; pre- and post-race vet exams; post-mortem study; jockey safety and health; whip use; hoof care and shoeing; safety research for horses, jockeys and handlers; exogenous anabolic steroids and alkalinizing agents detection; on-track medical care; sample freezing and retrospective testing and, finally, security assessment and training.

Former U.S. Secretary of Health and Welfare Tommy G. Thompson serves as an independent monitor and is mandated to provide public reports on Alliance progress. Fortunately, one supposes, we’ve not heard of an violations from Thompson, or jobs-well-done, for that matter. This can be good thing. Or perhaps not.

Created last fall, the stated goal of the S&IA is to help establish national uniform standards in the area of horse safety for the 55 North American racetracks and all the major horsemen’s groups.

But the true reason for its highly visible implementation likely was to stem the tide of criticism from elements outside the industry who call for racing’s abolition every time a high profile injury occurs. From Barbaro in 2006, to Eight Belles last year, to all other less celebrated animals that meet a tragic fate on a quasi-regular basis.

There’s a reason the sport holds its collective breath every time Rachel Alexandra stepped on a racetrack after her phenomenal victory in this year’s Kentucky Oaks. This is a sport that may be one high-profile tragedy from becoming the North American Soccer League.

It’s comforting to know, however, that despite its well documented shortcomings, the NTRA seems to have gotten one spot on. Hopefully, the industry won’t need to learn whether this measure truly works by finding out the hard way.

Written by John Pricci

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Thursday, September 24, 2009

On Fixing a Broken Simulcast Model

ELMONT, NY, September 23, 2009--I had a suspicion that someone involved with the thoroughbred industry was going to respond to Wednesday’s Morning Line blog penned by an industry insider exposing the shortcomings, legal and otherwise, on the subject of settlements.

Settlements are the monies paid by host tracks to their simulcast partners following a day’s betting activity at a particular track or the proceeds that simulcast “guests” owe the host tracks. How does this system work, exactly? What integrity and transparency issues are involved?

Leave it to Fred Pope. Pope never ducks a good argument. The Lexington-based advertising executive should probably have his own vehicle for commentary, not that he’s allowed his ideas to exist in a vacuum all these years. You may not agree with him. But you need to listen to what he has to stay.

The following, then, is Pope’s take on the settlement issue that was exposed by HRI’s industry source Wednesday. Pope’s edited e-mail thoughts to me in response to yesterday’s insider guest commentary.

“Your piece on the Settlement issues provided a new perspective on just how upside down things are in the racing business.…

“.…The question is, if the problems of the off-track business keep becoming more apparent and dire, is there a real world solution? How can we solve it fast enough to save racing and the infrastructure in our major markets?

“…You understand the history of wagering. I got involved in the Upside Down, off-track revenue model in 1995 when I created the NTA, a major-league style structure in racing.

“At the time I called the simulcasting market a "buyers' market" and came up [with] a business plan to fund the NTA primarily by a 50/50 split of off-track wagering like the Breeders' Cup [put] in place.

“If we could have broken the "buyers' market" then, we wouldn't be facing these problems today.

“….As off-track became more and more of the national handle I have watched the only numbers we have in a steep decline from the original deal with the tracks. The percentage of purses from handle has been cut in half while takeout went up four percent.

“…. My solution to correct the IHA is by breaking the back of the ‘buyers' market,’ by establishing a national ‘price floor’ of 50% to the host event. That means tracks would trade evenly and other bet takers would be charged a fair amount over time.

“The federal government will not allow Thoroughbred racing to fix the off-track model itself. If host tracks, and/or horsemen, try to set a higher price for the host product, that is price-fixing.

“But the federal government can fix the problem for racing nationwide overnight. Just like the milk industry, where dairy farmers produce too much milk and buyers drive down the price below what it cost to produce milk, Congress put in a price floor on milk products.

“Milk price supports raise the price of milk to the consumer, but a price floor in racing would not change the consumers' price.

When the IHA was passed in 1978, we needed bricks and mortar OTB's to accept wagers and provide a dedicated facility to watch the races. But that distribution channel is history. Phone and internet bets have bypassed the protected facilities and cannibalized their customers while contributing hardly anything to the sport.

“We need a distribution system now where it doesn't matter where the bet is made, or how the bet is made, a fair amount goes to those producing the product.

“We cannot tell the producers of the product they must continue to distribute through outmoded bet taking operations simply because they did so last year. Apple should be allowed to sell its I-phone direct, not forced to sell it through Amazon because that's how phones were sold before.

“The technology is there…. our best situation is for the Host Track to accept wagers DIRECT. That means a provision in the federal law (IHA) to eliminate barriers at state level in every state that allows parimutuel wagering. Today, kickbacks called Source Market Fees are forced on the ADW's by each state… those would be eliminated by law, making the cost of bet-taking lower.

“…..To the settlement issue, the Host event can accept account wagers and pay back winners from the same pool; no middle men. The Host can contract with existing ADW's or establish its own. YouBet has said in the past they can make a profit with 5% of the wager.

“At the point that this would happen, a national body in racing could establish a state-of-the-art, national tote with one number to call.

“With $13 billion in national handle at an average takeout of 20%, there is $2.6 billion in revenue from wagers. About $1 billion in gross purses this year, including my estimate of $400 million from slots…. making the purses from handle only $600 million, at best. Deduct the $600 million in purses from the $2.6 billion and you get $2 billion for the tracks' share and BET-TAKING Expenses.

“Where that $2 billion ends up, who knows?

“In 1985, purses from handle, $600 million, were primarily on-track and there were no slots contributions.

“In 2008, purses from handle are [the same] $600 million. After 24 years of growth in handle from $7.5 billion in 1985 to more than $15 billion at peak, racehorse owners' purses are the same. [See Power Point presentation for illustration].

“I have now presented the problem to every organization in breeding and racing. No organization, or no individual wants to hear about the problem, nor are they going to do anything about it. (italics mine).

“Why? Because purse money is not their money. There is no [effective] national organization for racehorse owners. No one has their back. TOC in California can do nothing about a buyers' market.

“There's a lot of fear-mongering going on that we cannot risk correcting the IHA. They point to the exclusive racing has on internet wagering but they don't understand racing makes hardly anything from it. If we have $1 billion in internet handle and the hosts only get 3%, that means $30 million is going to tracks and purses and $170 million is going to bet takers.

“Each percentage point of $13 billion in handle is $130 million. If we can get the percent to purses up from 4% to 8%, we'll have $500 million in purses the first year, and probably a like amount to host tracks.

“The breeders just suffered a 50% drop in the yearling market yet have no appetite to fix the off-track model. They don't understand that $500 million in new purses would help keep their customers, the racehorse owners.

“…. More important than purses, a new off-track business model would give racetracks a new lease on life and racing a future. Tracks would have an incentive to put on a good show. Today the incentive [for many] is to bet on other track’s races.

“[We’ve] got to bring a silver-bullet solution [to the problem] and correcting the IHA is a rifle-shot.”

This e-mail included a slide presentation which Pope used when speaking before the Thoroughbred Owners and Breeders Association. Those of you wishing to receive this graphic presentation, e-mail your request to . You will receive a copy at my very earliest convenience.

Written by John Pricci

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Wednesday, September 23, 2009

Industry Failing to Bailout Each Other

ELMONT, NY, September 22,2009--The e-mails keep coming, the problems in this corner of the world ultimately no better, worse, or different than anywhere else.

Or, as Bill Christine described it in his piece yesterday on a related issue, the racing industry is like a snake that eats its own tail.

In this case, the issue is how racing conducts its business and how the actions and reactions of elected representatives entrusted to make those decisions affects racing’s present and future policies.

One issue the manner in which host racetracks and satellite bet-takers pay each other in simulcasting situations, monies the industry refers to as settlements.

HRI has a friend on the inside in this segment of the industry. He sent a series of e mails that I am reprinting almost in its entirety, allowing you to interpret what it all means.

The following is an edited version of our insider’s words. What it reveals should be disturbing to everyone. The good news is that the problem is fixable. The bad news is that no one seems to have the will to do so. Our insider writes:

“As we all know, Magna is in bankruptcy proceedings. There is a major issue that the bankruptcy court is refusing to address… the issue of settlements to the guest tracks (OTBs, ADWs, etc.).

“This also pertains to the possible NYC-OTB bankruptcy [scenario] because of the monies they owe the tracks. A short explanation:

“According to one of my contacts, it’s my understanding that the courts have [essentially] lumped the settlement money owed guest facilities into the debt [that Magna owes all it creditors].

“In effect, that means affected outlets would only get about ten cents on the dollar, if anything, [on the money they paid winning bettors] because the courts do not seem to think settlements are that important.

“[An illustration]: I’m a guest bet-taker and my customers wager $100,000 on a particular track. For argument's sake, after the day's racing, our customers lost $37,000. We now owe the track that amount in settlement money.

“As a bet-taker, I would be required to wire the track $37,000 within 48-to-72 hours. Now comes the next day.

“My customers bet $100,000 on their favorite track only this time they won $210,000. In that example the track would be required to wire us the difference, a settlement to us.

“The problem is that the tracks hold on to the money for as long as three months, some longer.

“[It is] my understanding that the New Jersey Racing Commission came out with a ruling allowing their tracks to take a month to pay the settlements. That’s a two-fold problem:

“It becomes quite apparent that the settlement money due guest bet-takers are being used by host tracks for operating expenses, in effect an interest free loan. Meanwhile, the simulcast bet-taker must cover their liability to the wagering customer immediately.

“And this is where everyone… from racing commissions to track management to misguided, uninformed politicians… has dropped the ball.

“…. In the Magna case, we are talking millions that guest entities are owed, already having paid money to their customers.

“As for NYC-OTB, they owe close to 2.1 million in settlements to various host tracks. (It's not always a one way street).

“If this is allowed to proceed as is, numerous small racetracks, OTBs, and others already on the edge could possibly be put out of business by losing the use of the settlement money even for a short time.

“It has become a trust and integrity problem…. Another example: What happens to an Emerald Downs type track if a customer hits a $3.5 million PK-6 carryover at Santa Anita? The customer is paid immediately, as usual.

“Say it takes Santa Anita takes three months to send Emerald the settlement money. On the brink, Emerald is out $3.5 million and possibly in very deep financial trouble… the way many tracks are now.

“Settlements cannot be lumped with the rest of a host track’s liabilities in a bankruptcy proceeding. The settlement money belongs to the wagering customer.

“Tracks should be required by law to wire settlement money back in a timely fashion just as the guest entity is required to do.

“In the Magna case, one entity is owed close to $2.5 million; another is owed nearly $1.7 mill. in settlements from Magna.

“This is an issue the industry wants to keep quiet. Remember that ADW firm that went bankrupt and closed up owing their account holders money?

“This is a problem that is an epidemic in this industry. State racing commissions have known for years this practice has been going on, the holding back on the payment of settlements.”

Written by John Pricci

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