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Emerald Downs

Muckleshoot Indian Tribe

Washington Thoroughbred Breeders Association

Washington Horse Racing Commission

President's Message - October 15, 2010

Greetings from your WHBPA:

We learned in the last 24 hours that the Washington-bred owners and breeders awards have been set for the 2010 season of racing. We also learned that the level of payment was off this year from that experienced in prior years.

To the extent that we were surprised, we should have all seen it coming. For those of us who were disappointed and angered, I apologize, as I did not recall the issue and overlooked addressing it earlier.

When Emerald Downs was opened, it was provided a break in the law allowing it to share in the Washington-bred owners and breeders awards that are inherent in the handle. That share was to assist the entity with the cost of its capital improvements that provided the facility to us. It was and is a 15-year agreement, which I understand expires at midnight on June 19, 2011. That is, commencing with races that begin on or after June 20, 2011, 100% of the funds for Washinton-bred owner and breeder awards will be returned to the owners and breeders of those horses (at present, and for the last 14 years, one-half of one and one-quarter of the other was retained by Emerald Downs). As of June 20, 2011, that will be no more.

However, based upon an opinion letter of the Assistant Attorney General written in June of 2009, the Washington Horse Racing Commission and Emerald Downs, as well as any members of the public who were there and could otherwise be aware, learned that the amount of monies from which the funding could take place pertained ONLY to the live meet, and not the entire year to include the simulcasting period. The Commission took no immediate action on this at that time, and Ron Crockett indicated that he would not want to make a change in 2009. That is, he continued to allow the “overfunding” of the owners and breeders awards that had taken place, in error, from 1996 through 2009. During those
years, Emerald Downs paid $5,100,000 for owners and breeders awards that it technically should not have.

Prior to the start of the 2010 racing season, the Washington Horse Racing Commission passed a rule to clarify what the law stated, in its February, 2010 meeting (I likely attended some part of that meeting). That rule made clear that only amounts from the live meeting were legally obligated to be paid out for Washington-bred owners and breeders awards. At that point, the deal was done; we all should have known that the reduction was coming in 2010, and we probably should have reported it at that time. Regardless, the ruling by the Commission took the entire process out of the hands of Emerald Downs and made the calculations and payments of those awards based upon the Commission’s actions.

The overall reduction this year is due to several factors, to include a decrease in handle over the course of the season and the percentage of Washington-breds winning stakes races. However, most significantly is the effort made this year by the Commission to “follow the law” at the beginning of this season.

In 2010, I understand that Washington-bred owner bonuses will be paid at the approximate rate of 8.7%, which is 37% less than might have been the case if the simulcasting money had been included. The Washington-bred breeders awards for first place are being paid at about 10.4% versus the likely would have been rate of 17.2%; second place is being paid at about 6.4% versus 10.6%; and third place is being paid at the rate of about 5.4% versus about 8.9%. This represents a reduction of about 39% for those awards; about $215,000 of the prior pool, generated by simulcast wagering, was not made part of that pool this year.

Again, in 2011, the rate will be going up, as Emerald Downs will not retain any of those funds for live meet races that commence on June 20, 2011, and thereafter.

There may be some attempt to paint Ron Crockett or Emerald Downs in a negative light because of this. Resist the temptation to unfairly criticize them. Keep in mind the following, please: 1) Mr. Crockett and Emerald Downs did in fact overpay in years past to the tune of millions of dollars, and he could have made an effort to reduce the payment in 2009 and elected to not do so; 2) Mr. Crockett and Emerald Downs works with the Muckleshoot Indian Tribe on an Economic Development plan each year that significantly augments our purses, and every dollar of that contribution goes into purses, and not into the coffers of Emerald Downs; and 3) Emerald Downs lost a very substantial amount of money in 2010; up 400% from its losses in 2009. Emerald Downs has made money in but one of its years of operations, the track and continues to provide our horsemen, their employees, their guests, and fans of racing with an incredibly clean and well-maintained facility, both front-side and back-side.

To the extent that we failed to point this out to you, or to the extent that the WTBOA equally failed to point this out to you, we share the blame for not making clear the issue and its impact upon horsemen this year, and we apologize for any lack of communication or confusion.

On a positive note, this is a one-year hit, as the 2011 figures will be up due to the expiration of the law that provided a sharing of the breeder and owner awards with Emerald Downs. On a further positive note, we have quality Thoroughbred racing in the state of Washington due to a partnership of horsemen, breeders, Emerald Downs, and the Washington Horse Racing Commission. While our times have never been economically more challenging in this industry, we also have never been more cohesive, communicative, or cooperative.

Thank you for your support in this past year, and for your support of our mutual industry in the coming years.

Ron Maus

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

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