Business
2:08 am
Fri June 6, 2014

OTB Parlors Criticize Hike In Horse Racing Simulcast Rates

Originally published on Fri June 6, 2014 8:09 am

Transcript

STEVE INSKEEP, HOST:

Tomorrow is a big day in horse racing - the Belmont Stakes, the last race in the Triple Crown. California Chrome has a chance to complete the Triple Crown for the first time in 36 years, having already won the Kentucky Derby and the Preakness, of course. That's the excitement in the foreground. In the background, a quiet war is raging. Charles Lane, of member station WSHU, reports.

(SOUNDBITE OF KENTUCKY DERBY)

UNIDENTIFIED ANNOUNCER: (Yelling) But California Chrome shines bright in the Kentucky Derby.

CHARLES LANE, BYLINE: Triple Crown races are among the biggest gambling moments of the year. And many people experience that excitement at off-track betting parlors like this one, just outside Buffalo, New York.

(SOUDBITE OF ARCHIVED RECORDING)

MICHAEL KANE: Someone who wants to wager on a race can either put in cash or a voucher.

LANE: Michael Kane runs Batavia Downs state-run horse track, with a casino filled with flashing video lottery machines and an OTB, where customers bet on horses using two gray computer terminals beside a wall of TV screens. During the Kentucky Derby last month, Kane says, the place was packed.

KANE: We didn't make any money.

LANE: No money on one of gambling's biggest events of the year.

KANE: No because of the increased fees. We actually lost money on the wagers we accepted for the Derby.

LANE: The increased fees Kane talks about is a 30 percent hike in simulcasting rates. Those are the fees OTB parlors pay to show races. A few weeks before the Derby, the company that controls rights to many of the races, including the Derby, hiked rates. Churchill Downs Incorporated, or CDI, is an $800 million conglomerate, and owns more than a dozen racetracks, casinos and online betting sites around the country. Here's Michael Kane again.

KANE: It's not just here in New York. I think it's pretty much nationwide disgust with the operations at Churchill.

LANE: The fee hikes are part of a much larger feud between the company and New York lawmakers. New York subsidizes the state's horseracing industry and, last year, passed a law taxing bets going to companies like Churchill. Churchill found a loophole so it could avoid the tax. New York then introduced new legislation to close the loophole. That's when Churchill hiked fees. New York lawmakers aren't the only ones frustrated. Louisiana is also upset. Churchill operates the famous Fair Grounds in New Orleans and angered the local racing community by investing money in new slot machines but not maintaining the historic racetrack. Here's State Rep. Helena Moreno.

(SOUNDBITE OF HEARING)

CONGRESSMAN HELENA MORENO: We were taking pictures of the gutters just all around the barns. I mean, there's weeds and flowers growing out of the gutters. I mean, no one's even cleaning the gutter areas.

LANE: Churchill's vice president of gaming, Austin Miller, was at that hearing and responded that those slot machines are propping up an industry in peril.

(SOUNDBITE OF HEARING)

AUSTIN MILLER: Racing is losing its popularity. The generation of people that were attracted, and felt passionately about racing, are leaving us. Part of what we're trying to do is grow that sport.

LANE: Churchill's revenue comes increasingly from the casino side of the business. Only a third of the company's revenue comes from horseracing - forty percent comes from gaming. The company did not respond to numerous requests for interviews.

(SOUNDBITE OF HORSE WHINNYING)

LANE: And it's not only lawmakers who are mad at Churchill.

(SOUNDBITE OF ARCHIVED RECORDING)

RICK VIOLETTE: (Talking to horse) Hey, buddy.

LANE: Horse trainer Rick Violette is racing the feisty colt Samraat in Saturday's big race. He says Churchill is taking money from his jockeys and stable hands by dodging the tax meant to subsidize New York horseracing.

VIOLETTE: They are much more interested in the stock price than the - than racing itself, and maybe the animals.

LANE: Now, tomorrow's big race won't be affected by this feud between Churchill and state lawmakers since the Belmont Stakes is owned by New York's Racing Association. But when the race is over, expect another volley. Michael Kane, who runs Batavia Downs, says he and New York's other OTB's plan to stop taking bets on all of Churchill's races.

(SOUNDBITE OF ARCHIVED RECORDING)

KANE: We do about $95 million in handle on CDI tracks, so we're not talking nickels and dimes, here. It could have a very large impact.

LANE: He's hoping a boycott against Churchill will pressure the company to pay more taxes to New York and do its part to keep New York horseracing on the right track. For NPR News, I'm Charles Lane. Transcript provided by NPR, Copyright NPR.

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