Challenging times for gaming, racing

Jan 4, 2005 4:50 AM

As the new year dawns, gaming and racing are challenging governmental authority coast to coast.

In Canada, Windsor Raceway is challenging the authority of the Ontario Racing Commission, closing the racetrack — but keeping its racino open — unless the commission permits it to race 121 dates of live racing, as opposed to the 131 it did in 2004. The track’s horsemen’s association wants it to run 153 days, as it did in 2003, but the track president, pointing out that Windsor paid out $2.5 million more in purses last year by increasing the number of races with a fewer number of days, says he will not allow the track to be forced to the brink of bankruptcy.

In New Jersey, the state Assembly is considering challenging the United States government, with the chairman of that body’s committee on tourism and gaming saying the federal prohibition on sports betting, in effect nationally but grandfathered in four states including Nevada, infringes on state law. The speaker of the Assembly agrees with him, but the governor of New Jersey, Richard Codey, does not. And a law professor at Rutgers, the state university, said, "It’s absolutely clear that professional sports are both commercial and a part of interstate commerce, which Congress has the power to protect."

In Oregon, in perhaps the most interesting conflict, a racing fan and consultant, Roger Newell, is challenging the right of AmericaTab, the Ohio betting company based at Beulah Park in Columbus, to pool bets that are then run through the Oregon state hub.

Newell is the son of Pete Newell, the Hall of Fame basketball coach who earned that honor with brilliant records at San Francisco, Michigan State and the University of California between 1946 and 1960.

Roger grew agitated after AmericaTab pooled the bets of 681 of its account holders into a $44,280 betting bankroll, and hit Pick Six payoffs of $280,000 on Breeders’ Cup day Oct. 30 and another Pick Six jackpot of $132,773 at Hollywood Park Nov. 28, for a $412,773 score.

He says those bets are clearly illegal under Oregon law, citing Administrative Rule 462, which says account holders in Oregon must be "any person at least 18 years of age, but does not include any corporation, partnership, limited liability company, trust or estate."

Charlie Ruma, who owns Beulah Park in Ohio, where his AmericaTab is based, says all he is doing is providing a mechanism for account holders to come together. Newell thinks that’s nice and thoughtful, but unfortunately illegal in Oregon, noting, "States around the country want to help farmers, but they don’t allow them to grow illegal crops, even though it’s good for business for the farmers and the states."

The current executive director of the Oregon racing commission, Jodi Hanson, had no racing experience when taking office less than two years ago. But the previous executive director, Steve Barham, who wrote the rule in question, clearly did. He teaches at the University of Arizona’s Race Track Industry Program now, and he says he had clear intentions of barring pooled bets when he wrote the draft of Rule 462. "I didn’t want you and me to be able to come together, form a corporation, and place a bet," he says.

One interested party in all of this could be the Internal Revenue Service. A man named Paul Beecher, identified as "an actuary ad tax expert who studies racing," told that the IRS would have "a field day’ if it learned that the bets of 681 individuals were being routed through a single account. "There’s only one Social Security number being used to initiate that wager," Beecher told the online service, pointing out the obvious that gambling winnings are taxable income. If an AmericaTab employee or executive happened to be that individual, it will be interesting to see how the compassionate and understanding IRS regards those winnings of $412,772.80, even if they were discounted by gambling losses.

Nothing like a new year with a whole new set of problems, as if the old year didn’t have enough.