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Friday, May 29, 2009

An Alternative to a Commissioner

There has been a call for a Commissioner of Harness Racing from several respectable sources. As such, harness racing would in effect become a league, similar to MLB or the NFL. This commissioner would become the arbiter of any disputes and bring standardization to harness racing and strengthen the sport by being able to suspend or ban those that would be unworthy.

It is not going to happen.

While admirable, barring federal legislation which most people fear, there is no way you will be able to have a commissioner or formal league in harness racing. First of all, there are anti-trust concerns. Secondly, leagues traditionaly have been formed on the grass roots level. Investors have purchased into leagues as a start up and agreed to form a league. After a league forms, it expands by investors buying in or it decides to contract by buying out a franchise. Racetracks are already established and owned by investors. If it was decided to form a national association (instead of using the term league), racetracks would have to voluntarily join this association. There is no way you can force the racetracks to join as now that you are going interstate, the federal anti-trust regulations would take effect. Hence, you would have tracks in this association abiding by a common set of rules, but others tracks will continue to operate individually using their own rules.

What are you going to do about these tracks? Well, if you can't force a track to join the USTA, (see this case The UNITED STATES TROTTING ASSOCIATION, an Ohio non-profit corporation, Plaintiff-Appellant, v. CHICAGO DOWNS ASSOCIATION, INC., Fox Valley Trotting Club, Inc., and Illinois Harness Horsemen's Association, Defendants-Appellees, how are you going to force a track to join this association? Well, don't allow the trainers and drivers to race at these 'renegade' tracks? Trainers and drivers are independent contractors and banning them from competing at these renegade tracks would be restraint of trade.

The only way you can force a national association to regulate the sport is if the federal government steps in and grants harness racing an exemption to the Sherman Act and legislate a national association into existence. What is the chance of that as each state has a vested interest in racing (taxation)? Would the federal government step in for harness racing and not other forms of parimutuel racing?

That being said, all is not lost. There is away to strengthen harness racing (all racing in fact) and that is through the establishment of Horse Racing Authorities.

Each state with racing currently deal with the expense of maintaining racing commissions. In the NY/NJ area, there is the Port Authority of New York and New Jersey which is a bi-state agency charged with promoting commerce in a defined area within the two states. Let's use that model and create horse racing authorities to promote all horse racing and breeding in the regions. Using this model:

  1. The states would save money as the horse racing authority would be responsible for regulating all types of racing and would be responsible for performing the functions the racing commissions currently do. Let's say, there was the HRA of NY, NJ and PA. There would be economies of scale as there would be one racing commission where in the past there were three.
  2. These racing authorities would be self funding. The racetracks in the authority's area would have to pay for the expenses of the authority. Racetracks will no longer be forced to close when states have budget issues.
  3. The states in the authority would agree on a common tax rate so each track would be taxed the same.
  4. The states would get out of the regulating of the sport; all they would do is collect revenue.
  5. The racing authorities would have equal representation from standardbred and thoroughbred racing and where appropriate, greyhound and quarterhorse racing. The authorities would also have equal representation between track operators, horsemen and breeders.
  6. Race dates for each breed would be assigned by this racing authority so a circuit can be formed eliminating competition for horses, providing fuller and competetive fields, making the product better for gamblers. Horsemen can race year round with all tracks in a reasonable commuting distance.
  7. With each track having a true season (let's say no more than three months), the product will be fresh and people will support the meets on track (think Saratoga t-breds).
  8. Purses will be better as simulcasting profits from the whole year would be paid out over a short period of time at the individual tracks.
  9. Standardized rules will be in effect in the authority's area.
  10. The HRA will issue licenses. Get suspended? You will be suspended throughout the HRA jurisdiction.
  11. Easier to track fines and suspensions. With fewer regulatory agencies, it will be harder to hide a suspension.
  12. In addition to continuing the individual state's sire stakes programs, you can have the HRA form a regional sire stakes program; horses that are not grand circuit caliber will now have two circuits to race on to attempt to recover their expenses. It will make yearlings moer marketable in these areas.
  13. A little bit of socialism. A percentage of betting and slot handle (if applicable), will be used by the HRA to subsidize racing at tracks where there is no slot money; similar to the millionaire's tax in baseball.
  14. Instead of each track having stable areas (those that still do have them), the HRAs can establish centralized training facilities. These facilities would be under strict control of the HRA. Basically, these facilities would be racetracks without a grandstand. Those that prefer private training centers may still avail themselves of them.
  15. Nothing in this set up would not allow a horse to be shipped to another racing authority circuit.

Using my example of the HRA of NY, NJ and PA, you would have the following parimutuel harness tracks under the control of the HRA; Meadowlands, Freehold, Yonkers, Monticello, Tioga, Vernon, Saratoga, Buffalo, Batavia, and Pocono Downs under the control of one racing commission. Under this one circuit, you can set up two groups of tracks:

  • Vernon, Tioga, Buffalo, Batavia, Saratoga
  • Meadowlands, Freehold, Pocono, Monticello

The Meadows and Chester Downs geographically on the fringe would belong to different racing authority circuits (Meadows with the Ohio and Kentucky circuit and Chester with the Delmarva circuit).

Using this set up, you would have no more than two harness tracks operating in geographically diverse areas. Each of these circuits would divide the 365 racing dates in the year so they would have live racing no more than three months at a time. As for the t-bred side, there would be only one or two t-bred tracks operating in the area as the Aqueduct, Belmont, Saratoga, Meadowlands, Penn National, Monmouth and Atlantic City would be under the HRA's control and have to follow the same rules. With fuller and more competitive fields and betting being less diluted, betting on both breeds will be more concentrated making each track more profitable as well as benefit the horsemen.

Certainly there are other issues to be addressed, such as how does slot/casino games figure into the picture (each track should be allowed to offer whatever gambling is allowed in that state). You may disagree with some of these items, but this proposal provides a framework for discussions to solve many of racings problems.

Do you see any problems with this approach or care to offer an alternative plan? Please share.

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