Simulcasting Again an Issue in Northern California

The Stronach Group continued its efforts to revamp the way pari-mutuel wagering is conducted in Northern California during an Oct. 25 California Horse Racing Board meeting at Santa Anita Park.

Meet application proposals for The Stronach Group-owned racetracks Golden Gate Fields and Santa Anita were both shelved during the CHRB meeting Thursday because of similar issues related to unresolved agreements with horsemen's groups and ADWs, but the situation in Northern California is particularly loaded with land mines.

Over the summer, The Stronach Group sought to conduct Golden Gate's Aug. 22-Oct. 2 meet without sending its simulcast signal to the region's brick-and-mortar satellite facilities that operate through Northern California Off-Track Wagering Incorporated. While Golden Gate didn't succeed in that attempt, and the legality of the issue is still to be decided through the court system, simulcasting was once again at the forefront of the discussion regarding Golden Gate's application to conduct its meet that begins Dec. 26, but this time about bringing out-of-state signals to the region.

The meet application presented to the CHRB Thursday did not have Golden Gate importing any out-of-state signals to any brick-and-mortar locations in Northern California, other than the signal from the Hong Kong Jockey Club. If approved by the CHRB, that would force bettors who would like to wager on out-of-state races to do so through an advance-deposit wagering platform, rather than through windows at a satellite facility or at Golden Gate.

"I realize some of the applications we have been submitting recently are a little bit unconventional," said The Stronach Group executive Scott Daruty. "I've heard something to the effect of, 'This isn't the way this has been done historically.' And you're right. We are trying to push for change, and sometimes change is uncomfortable, but we are trying to make change for the better. We have a huge investment in Northern California, as do a lot of people in this room, and we're doing what we believe is best to try to make racing sustainable in Northern California."

Previously, executives from The Stronach Group have expressed a desire to do away with the conventional brick-and-mortar simulcast operation in Northern California with the intention of replacing them with "ADW cafés" that would operate like simulcast facilities but process wagers through an ADW system. The Stronach Group owns ADW Xpressbet.

At the Thursday meeting, however, that plan was not expressed explicitly, and although CHRB members and staff pressed Daruty to indicate what the organization's specific plans were, he wanted certain assurances from the board as to whether the import of out-of-state simulcast signals was legally required, in its view. The conversation was largely circular, with CHRB members and staff requesting The Stronach Group's plans, and Daruty emphasizing a need for clarity regarding the CHRB's view on the simulcasting requirements before a plan would be disclosed.

"What Golden Gate Fields needs to understand is the CHRB's view on import signals—specifically, does California law require Golden Gate to import races, or is that something we're allowed to do but not required to do," Daruty clarified after the meeting. "Once we get direction from the CHRB on that issue, we can start to plan out how we operate going forward, with the goal of growing handle. Without change, we don't think the current model is sustainable."

CHRB executive director Rick Baedeker said the board's "current legal position is that the board cannot force you to import out-of-state signals," although he, and CHRB chairman Chuck Winner, wanted that position to be reviewed by the board's legal counsel. The CHRB's exact position on that issue was a main sticking point for Daruty, and Baedeker said the CHRB could get that answer to The Stronach Group by the end of next week.

Jack Liebau, vice president of the Los Alamitos Racing Association, said the legality of whether it's required to import simulcast signals was a separate issue from "what is in the best interest of racing" and said, "The perception is that (The Stronach Group) is going to starve these satellite facilities and put them out of business."

Thoroughbred Owners of California president and CEO Greg Avioli said the TOC cannot reach an agreement with The Stronach Group without knowing how Golden Gate intends to replace the handle (and purses) generated by the regional satellites or by wagering on imported signals.

"Absent another plan that would show how those purses would get paid, it would be virtually impossible for us to reach an agreement," Avioli said.

Most of the satellite facilities in the region are operated at fair sites, and California Association of Racing Fairs executive director Larry Swartzlander called the plan to not import out-of-state signals "another step in eliminating the fairs. … I can't see us separating importing signals from agreements with the satellites."

John Valenzuela—president of Local 280, the Pari-Mutuel Employees Guild—called The Stronach Group plan "an attack on labor," and called the organization "a bully."

Cliff Goodrich, executive director of the California Thoroughbred Horsemen's Foundation, also spoke during the discussion, and although he didn't take a stance on the issue, he expressed an opinion that important changes sometimes require "wild ideas."

"I'm an advocate of stimulating discussion of what some people may think are wild ideas—and I'm not referring to what (Daruty) is presenting (because) we don't know what his game plan is," Goodrich said. "But if this industry is going to survive and thrive, I'm absolutely convinced it's going to come from ideas outside the box, and if discussions like this lead to a twist or a detail someone hasn't thought of, I think it can only help.

"I'm an advocate of not just continuing to do what we do but welcoming new ideas, however crazy they might be, because something good might come from them."

Both meet applications for Santa Anita and Golden Gate will be readdressed at the next CHRB meeting, which is scheduled for Nov. 15 at Del Mar.