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Emerald Downs

Muckleshoot Indian Tribe

Washington Thoroughbred Breeders Association

Washington Horse Racing Commission

President's Message - May 5, 2010

Greetings from your WHBPA, and a Happy Cinco de Mayo (for those inclined to enjoy some libation tonight):

We have completed the first four weekends of the season at Emerald Downs, and there has been plenty of excitement on and off the track. Congratulations to all of the winners!

I would like to thank all of the folks that supported the races through our first month, to include the owners and trainers who put the cards together, as well as the host of folks on the backstretch, grooms and exercise riders, that make those fabulous horses “jockey ready.” We cannot overlook the horseplayers as well, as they provide the wagering that drives the purse account.

Most recently, the Kentucky Derby brought out many horseplayers and fans to Emerald Downs, and it was great to be there among them. Most exciting to many of us was the run of Atta Boy Roy in the Churchill Downs Handicap. I am sure that the Shaefers and Valerie Lund would have been very happy to know that a large roar went up at Emerald Downs (and probably at Turf Paradise as well) as their star took down a lot of big name horses to capture his first graded race! Clearly, a fair amount of local coin had been wagered upon him, including by me, given the cheers that I heard. However much I fattened my wallet with Atta Boy Roy, I quickly thinned it right back down in the Derby…

We have had a few challenges in getting the 2010 season smoothly underway. Whether it traveled up from Portland or not, a number of our local horses were struck with a virus just prior to the season getting started, reducing the number of horses ready to run. Also, due to our earlier start this year, our horse population was sharing more dates with both Portland Meadows and Turf Paradise, and those two tracks both closed seasonal operations just this last weekend; we are hoping that a number of expected shippers will help augment our level of stock during the near-term part and throughout the season. With the available horse count down at the track, we had a number of challenges filling races and running the numbers of starters per race that attracts pools that drives successful contributions to the purse accounts, as well as to the operations of our track partner, Emerald Downs.

There were some anxious moments on the backside and at the racing office over the second weekend in getting the races full, but the track and members of the HBPA pulled together to ensure that races were run each day. Certain WHBPA members really stood tall for all of us, by placing horses in races either a week early or a bit out of their intended class to ensure that we were able to “make” races for that rather challenged weekend card. If you take a look at the entries for that second weekend, some will stand out to you; give them your thanks – they personally made a difference.

In response to a number of calls of concern, your Board met and discussed areas of suggestion for working with the racetrack to enhance the entry process for the continuing season. While we all believe that the most challenging time has passed, we are similarly of the mind that certain efforts should be made to enhance that process to achieve the highest number of races with the greatest number of starters possible. We met with executives at Emerald Downs to discuss our mutual concerns, and came up with a few ideas that we feel should assist both the horsemen and the track in going through the card for the balance of the year. The track has been very accepting of our thoughts, and has indicated that we will continue to mutually tweak things, if necessary, as the year continues.

I will also observe that I have been very pleased to see the apparently broad acceptance and use of the 180 day rule, protecting claiming horses off for that period from reclaim in their first outing of the season, if run at a “tag” equal or higher than their last race.

Last month, I indicated that I would soon address certain questions that have been raised for additional information on the local industry, how it is funded, how it works, and “who works for whom?” Today is the day I will endeavor to address those topics. And, for those among the distribution list that want me to be more succinct, I again apologize in advance…

Horseracing in Washington is authorized by law, and is to be administered by the Washington Horse Racing Commission (“WHRC”), whose members are appointed at the pleasure of the governor. The Commission makes rules and carries out the regulation of the industry as required by the law. The Commission places its representatives, the stewards, at Emerald Downs, to make all decisions regarding all issues affecting the conduct and outcome of the races and related (such as claiming) matters. The Washington Horse Racing Commission and its agency costs are funded by a percentage of the takeout from wagering activity in the state on races anywhere and, primarily, on races conducted in the state. As the level of wagering has declined in the state, the Commission’s budget has been challenged and its fund balances have been reduced. Above all, however, we, including Emerald Downs, are all responsible to the Commission, as licensees of any type.

Emerald Downs is a privately owned facility, and is operated by the Northwest Racing Associates Limited Partnership. It provides the venue for the horses to run. It has a licensee relationship with the WHRC, which regulates it, and one with the WHBPA, with which it contracts. Otherwise, its primary business matters are its own. It derives its income from admission, parking, concessions, and from its share of allsources handle and the signal that it sells from our live racing. Over the years, the management at Emerald Downs has done an incredible job of working with the Muckleshoot Indian Tribe to identify the importance of mutual cooperation in terms of economic development, and has worked with the Tribe to obtain purse fund enhancements related to the economic development issues of critical importance to our industry. The Tribe’s contribution to assist with purses has replaced a significant handle loss due to competition and due to technology in ways that have otherwise negatively affected available purse money. Both Emerald Downs management and the Muckleshoot Indian Tribe are to be given high credit for responding to issues critical to the survival of the industry.

The Washington Horsemen’s Benevolent and Protective Association (“WHBPA”) was formed to serve as the legally authorized body to negotiate contracts with Emerald Downs with respect to the purse account and the backside conditions found at Emerald Downs. It has two primary functions: it has an Administrative side (over which this Board presides) and a Benevolent Trust side (which has an independent number of trustees). The Administrative side is primarily responsible to negotiate the contact between the horsemen and the racetrack and to monitor the handle recorded by the track and ensure that the purse account is properly funded. In addition, it provides services to and on behalf of the industry, to include interfacing with the WHRC on new laws and rules and monitoring of legislation and national trends that could affect the rights and responsibilities of horsemen. It provides continuous assistance to horsemen (primarily trainers) with issues such as: 1) immigration laws, forms, and obtaining visas for seasonal workers; 2) medication rules and representation before the WHRC when violations are alleged; and 3) representation on behalf of the industry with respect to the laws, rules, and rates of the Washington Department of Labor & Industries with respect to workers compensation issues. The Administrative side of the HBPA also has a number of committees of the Board and other members, as needed, to include a Legislative Committee, a Finance Committee, a Track & Safety Committee, a Condition Book Committee, and a By-Laws Committee.

WHBPA membership is automatic among owners and trainers licensed by the WHRC to race horses at Emerald Downs. A person can opt out of membership, and for acts considered detrimental to the entity or industry, a person can also be removed as a member. There are no dues, as the entity’s revenues are primarily derived from wagering dollars, as is explained further below. The members elect, every three years, a Board comprised of five owners, five trainers or trainer/owners, and a president, who must be an owner. The Board is charged with conducting the business of the entity, and does so through its staff of two, to include the Executive Director, MaryAnn O’Connell, and Office Manager, Lanna Allen. The staff prepares a budget each year for approval of the Board, and is then charged each year with providing services within the constraints of that budget.

The Administrative and Benevolent Trust sides share the efforts and costs of the employees. Thus, both entities receive their services for the personnel at less than the full-time cost of the personnel involved.

The Benevolent Trust side provides services to horsemen and those who are employed by those horsemen. These include the well-known, such as Cinco de Mayo, Annual Picnic, and Christmas parties and support of the Backstretch ClubHouse Learning Center (non-profit childcare center located in the barn area at Emerald Downs), and the less well-known, such as providing rides for backside workers to the doctor, and assistance with personal issues of health, death of family members, legal issues, and certain counseling for substance abuse, and recreational and educational programs.

Separate from all other entities listed above is the Washington Thoroughbred Breeders and Owners Association (“WTBOA”). This entity currently has no direct standing with respect to racing in the state, but instead is generally an association of breeders which has traditionally offered the means to market thoroughbreds produced in this state and others. Annual summer yearling and winter “mixed” auctions (in 2010, one combined auction is intended) are held. The entity is funded primarily by fees and commissions from the sales, substantial contributions from Emerald Downs as well as membership fees and advertising revenue from its magazine and website. Thus, a very useful organization (of which I am a proud member); it is not directly part of the wagering revenue split. [Owner and breeder awards, which are funded by handle, are authorized by law and paid out through theWHRC].

So, how is everything funded? Well, the primary driver is wagering “handle,” which used to refer to the amount of money pushed through the windows at the racetrack. Times and the manner of pushing that money into the wagering chain have changed greatly since I was a young bettor, and today, there are many varieties of contributions to what we call “handle” although its various composition members have significantly differing contribution to the coffers of the State, the well-being of the racetrack, the owners and breeders award money, and the purse account used to pay horsemen for placings in races.

In the simplest form, money wagered at Emerald Downs and its satellite facilities provides the greatest direct payback to the purse account, as there are less parties with which to share the “takeout.” In those instances the number of parties with which the “takeout” is shared is limited, and more of the takeout money goes to the parties putting on the show – Emerald Downs and the WHBPA horsemen – as well as the WHRC, than through other sources. When other parties are involved, the “takeout” is shared, and not always in ways with which we might agree value has been contributed. Overall
additional “handle” comes from wagers made at Emerald Downs and its satellite facilities on races being simulcast from other tracks, wagers made on Emerald Downs races at other racetracks and non racetrack casino facilities, and wagers made through Advance Deposit Wagering (“ADW”) accounts from people in the State of Washington on Emerald Downs and other tracks, and wagers made by ADW account holders outside the State of Washington on races from Emerald Downs. All of these various forms of wagering are transparent to the bettor as to the payback they receive on the wager, but each of these forms of wagers makes a varying contribution to the needs of the track, purse account, and WHRC.

Because the mix of wagering is significant, and the “takeout” depends upon whether straight bets or exotics are included, the following example is just that – an example based upon a hypothetical mix of wagers at Emerald Downs, and on races at Emerald Downs. The straight bet “takeout” is about 14% and the exotic bet “takeout” is about 20%. Assuming that the two were 50%/50% in terms of the wagering for the day, then about 17% would be taken out (the “takeout”) from the pay being returned to the bettors. Of the example “takeout,” about 20% goes to the WHRC (for WHRC administration, a small amount earmarked previously for Class C racing support, plus amounts for Washington Bred Owners’ Bonuses and Washington Bred Breeders’ Bonuses [at present, 50% of the Owners’ Bonuses and 25% of the Breeders’ Bonuses are earmarked in support of the Capital Improvement Fund to build the racing facility, which became Emerald Downs]), 30% - 40% of the example “takeout” goes into the purse accounts (in accordance with the contract between the track and the WHBPA), about 1% goes to the WHBPA for its Administrative and Benevolent Trust purposes, and about 40% to 50% of the example “takeout” goes to Emerald Downs. The breakdown for selling the Emerald Downs racing signal out of the state to other tracks, and the breakdown from ADW providers differs in terms of what is paid to the WHRC, to the purse accounts, and what is retained by Emerald Downs. It is the responsibility of Emerald Downs to properly account for the wagering dollars and sales of the signal, and the responsibility of the WHRC to ensure that its laws, including the proper reporting of all monies, are complied with. The WHBPA reviews all of the information relating to wagering activity and ensures that the purse accounts and the WHBPA are properly funded. If you would like more detailed information on the statutory requirements relating to takeout, please take a look at the Revised Code ofWashington, at chapter 67.

So, who works for whom? I believe that it is clear that no party in this industry works directly for the other, but I also believe that given the current adverse economic conditions under which we all labor, that we must work together to initially survive and ultimately thrive. The Commission, Emerald Downs, the horsemen and their WHBPA, the breeders and their WTBOA, and the bettors all play an important role in the industry. Each of us needs and relies upon the other, and the loss of one is a loss to all.

By the way, theWHBPA does not pay its fully volunteer Board members and does not provide them with any perks, other than a ready lunch to consume during our meetings.

I hope that this lengthy discourse has answered some of the various questions posed to me by a number of members.

If you have questions that your WHBPA can assist you with, please feel encouraged to contact the WHBPA office, at 253 804 6822. Either Lanna or MaryAnn will be happy to be of assistance to you.

Best of luck in 2010. I am currently “off the Schneide” having broken the 2009 shutout I was pitched at Emerald Downs in 2009 with a win last Friday night. Woo-hoo!

Ron Maus

If you have comments or questions, I can be reached at ron@buffalostables.com.

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