Racing regulators propose changes

May 6, 2003 5:23 AM

The impact of slot machines and pari-mutuel red tape were key topics of discussion at last week’s convention of the Association of Racing Commissioners International in Seattle.

The 69th annual convention of more than 200 pari-mutuel regulators also spotlighted topics relating to drug testing of racehorses and the integrity of the pari-mutuel wagering system.

The latter topic stemmed from the Breeders Cup Pick Six controversy in which hackers last fall broke into the system and created bogus winning tickets.

Tim Smith, National Thoroughbred Racing Association Commissioner, said that an investigation into the security gaps that allowed an Autotote employee to alter bets was nearly completed, and that a report would be made public in August.

However, specific recommendations for totalizator companies and others involved in handling and/or transmitting bets would not be disclosed.

The issue of slot machines at racetracks, or "racinos" as some are called, was a hot topic, especially in states that are experiencing budget problems.

University of Louisville economist Richard Thalheimer reported that despite the advent of full-card simulcasting, purses have shown no real growth in the past decade.

"Significant gains, such as those in Delaware, New Mexico and West Virginia, have resulted from slot machine operations," Thalheimer said, adding that slot machines aren’t a universal panacea. "Horsemen, tracks and states can gain or lose depending on their relative share of the revenue."

Magna Entertainment President Jim McAlpine said that Magna likes to integrate slots into its pari-mutuel business, depending upon the jurisdiction.

Two years ago, Magna adopted a table of suggested splits of net slot revenue, with the track and purses getting 45 percent each, the backstretch getting 5 percent and breeders getting the remaining 5 percent.

"We have to be very careful not to lose sight of the horse racing aspects," McAlpine said. "We have to work out butts off ”” all of us ”” to be certain that racing is preserved."

What doesn’t need to be preserved, McAlpine said, is the "alphabet soup of regulatory agencies and rules" that separate jurisdictions around the country.

McAlpine said that Magna operates in 13 jurisdictions, but its 2002 acquisition of the Maryland tracks required four months of hearings, acquiring Lone State Park in Texas took six months, and the purchase of Flamboro Downs in Canada, where Magna is based, took 10 months.

"That can’t make sense," McAlpine said.

One of the solutions suggested at the convention was the possible merger of the Association of Racing Commissioners International and the North American Pari-Mutuel Regulators Association.

By operating under one set of regulations, pari-mutuel operators which simulcast race and betting information across state lines, wouldn’t have to deal with varying regulations in different states, said Christopher Scherf, executive vice president of the Thoroughbred Racing Associations.

"The world has changed because of simulcasting," Scherf said. "If you’re still conducting your business with the same outlook and with the same staffing as in 1990, I can tell you that you’re doing something wrong."

Although Magna’s McAlpine wouldn’t explicitly endorse the proposed merger, he implied a change is necessary. "If you look at it from our side of the table, does it make sense to have different regulatory agencies?"