UPDATE ON FG PURSES (9/25/14)

Due the large amount of inquiries we have received in the past week concerning this subject, this letter is intended to clarify recent announced purse cuts by the Fair Grounds for the upcoming meet and ancillary statements attributed to CD in announced news releases.

First and foremost, the HBPA was never consulted in formulating these cuts. In fact, these cuts make some assumptions which we disagree with and cannot understand the FG’s logic in making these assumptions. We will expound on this later in this letter.

Since we have never had the courtesy of receiving any written documents from the FG, we are extrapolating the purse cuts as follows from the information that we are required to receive by law and other public sources. (It should be noted that since monies are paid out from an April to April basis that projections based on past data are made for the upcoming months from October 2014 to March 2014.):

1)      Due to a decrease in slots and video poker revenue, overnight purses would project to be decreased by 4%.

2)      Since the bulk of the effect of the escrowed funds from the lawsuit was addressed in the stakes purse cuts, the remaining escrowed funds (approximately $700,000) should cause the overnight purses to decrease approximately 4%.

3)      THE REMAINING CUTS ARE ATTRIBUTABLE TO A PRESUMPTION BY THE FG THAT PARIMUTUEL WAGERING WILL BE DOWN 15% FROM LAST YEAR RESULTING IN AN ADDITIONAL DECREASE OF APPROXIMATELY 9%. No mention of the cuts attributable to this presumption was made in the press even though this assumption affects overnight purses more than other factors. 

We disagree with the presumption based on a number of reasons which will be enumerated. We understand that at the end of the meet the total amount of purses that will be paid out will be the same. However, the manner in which they are paid out during the meet can cause inequities to our horsemen.

We are concerned that calculations and assumptions that are being made do not have any factual basis. Incorrect estimates can have detrimental effects on the current meet. The goal should be to pay out the purses evenly throughout the meet so that all owners are sharing in the purses on the same level. Low calculations cause owners who win early in the meet to be paid less than those who win later. Furthermore, an incorrect projection of a low overnight average could cause stables not to even participate in the meet which would contribute to a decline. We do not think that starting out purses at a level which has no factual basis so you can have a purse increase later is fair to those who support the meet at its inception. 

We are also concerned that care is not being taken in making their calculations. At the recently concluded FG QH meet, purses were on pace to be overpaid at a level which would have a significant effect on next year’s meet. Only by the happenstance did rain cause the cancellation of a portion of the racing card on August 30, 2014. At this time all races were already drawn for the remainder or the meet and the overpayment would have exceeded the one day average. Our contract addresses overpayments and notifications which we never received. 

As a result of the above, we have sent also sent a letter to the FG expressing our concerns. (See attached letter to Tim Bryant, President of the FG) 

ASSUMPTIONS BY THE FG HAVE NO SUPPORTING EVIDENCE

The FG cannot base their assumption for this decrease in handle on industry trends. In fact, the wagering industry has remained flat during the course of the last year according to an Equibase report dated September 4, 2014. In fact, when examining the data from the winter tracks competing against the FG, every track’s wagering either increased or was flat while the FG handle from last winter decreased sharply.

What caused this trend at the FG? Last year, the FG attributed it to the “unusual” weather and excessive rain totals in New Orleans when in fact the total rain total was near the average in 2014. Our organization has contended that the drop in wagering was due to the FG’s mismanagement of the turf course and the FG’s lack of customer service dedication. The FG ostensibly contends that it addressed these issues by fixing the turf course problems and increasing their dedication to customer service. Are they now saying what they did is not going to improve the product? Last year handle was adversely down by the uncertainty of the turf racing. When races come off the turf or if bettors are not sure on the surface, they will not only shy away from betting on a reduced field of 4 to 5 horses but will forego handicapping or betting on THE ENTIRE RACING CARD. There were 126 races taken off the turf last year with an average decrease in wagering at $60,000 per race. The FG has said that it has fixed the turf issues. Any increase in the number of turf races from last year would increase handle not decrease handle.

We are at a loss to explain the FG‘s assumption. Are they trying to set up their continually unfounded argument that there should be a reduced number of race days because racing is allegedly down? The reason the FG wants less race dates is to save them operating costs. Most of the struggles at the FG come from their own actions in not having a useful turf course or providing adequate customer service not from industry trends. On one hand, the FG is on record saying they have addressed these problems and on the other hand they say that handle is going to be down. What is their reasoning? Meanwhile, their actions have a real effect on current decisions by horsemen whether to come to the FG and hurts those who win purses early in the meet. These actions by themselves can have the FG create a self-fulfilling prophecy if horsemen do not run waiting for higher purses or go somewhere else altogether. 

ONGOING EFFORTS BY THE HBPA

Please be assured that we will continue to stand up to the FG to make sure the horsemen are treated fairly. The FG makes over $20 million from video poker and slots. These revenue streams only exist because of racing. The legislature recognized the importance of the thoroughbred industry and specifically intended to support the economics of racing from increased competition. If our purse structure is not competitive, we will seek an increase to it out of the large profits that the FG makes. Why should the FG be able to make these profits while racing industry suffers when the intent of these purse supplements is to help racing (see LA. R.S.27:352). In addition, if the turf course is not fixed properly or other reasonable capital improvements are not made, we will continue to urge our legislators to require the FG to act reasonably and expend the necessary funds to maintain quality racing. The FG boasts about the things they are doing when, in reality, they are only doing the things they were supposed to do and someone had to make them do it. How does fixing a turf course that was ignored, getting tellers to work all day, having video screens that work and doing normal maintenance work on the backside represent going over and above from an entity that derives over $20 million in profit because of its association with racing?

Fortunately, the horsemen have a knowledgeable set of regulators and legislators who are watching out for our interests. As seen through last year’s legislative session and commission hearings, we are fortunate to have people who also CARE. I have no doubt that they will see our interests protected.

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