"count your fingers after you shake thier hand"
9:34 am
Fri June 6, 2014

The quiet war within horse racing

"You always have to count your fingers after you shake their hand," says horse trainer Rick Violette.
"You always have to count your fingers after you shake their hand," says horse trainer Rick Violette.
Credit Charles Lane

Their hooves pounding like cannon fire, dirt spraying in a blurred river of rushing legs and flying crops, that electrifying moment when the horses stretch toward the finish line heaving snout beside heaving snout. 

Most horse racing fans experience this excitement not at the race track but at off track betting parlors, like the one at Batavia Downs outside Buffalo, New York. It's a sunless maze of flashing technicolored video machines manned by dough-faced bettors just sort of passing the time on a weekday afternoon.

"Someone who wants to wager on a race can put in either cash or a voucher," says Michael Kane pointing to two grey computer terminals beside a wall of TV screens.

He's tall with kind eye-glassed eyes and a Walt Whitman beard. He runs Batavia Downs, a state run horse track, with a casino and OTB. During the Kentucky Derby last month, Kane says the place was packed with bettors on one of gambling’s biggest events of the year.

"We didn’t make any money," Kane says, "because the increased fees we actually lost money on the wagers we accepted for the Derby."

The increased fees Kane talks about are a thirty percent hike in simulcasting rates which are fees OTB parlors pay to show races.  A few weeks before the Derby, the company that controls rights to many races, including the Derby, hiked rates.

Churchill Downs Incorporated is an $800 million dollar conglomerate that owns more than a dozen racetracks, casinos, and online betting sites around the country. 

Michael Kane runs Batavia Downs. He says with increased OTB fees they didn't make any money on the Kentucky Derby.
Michael Kane runs Batavia Downs. He says with increased OTB fees they didn't make any money on the Kentucky Derby.
Credit Charles Lane

  "It’s not just here in New York," Kane says "it’s pretty much nationwide disgust with the operations at Churchill.

The fee hikes are part of a larger feud between the company and New York lawmakers. New York subsidizes the state's horse racing 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 is on a growing list of Churchill foes. Earlier this year a group of bettors boycotted Churchill's races after the company hiked fees on them too. Also, horsemen from Florida, Louisiana, and Illinois have all lodge public complaints against Churchill.

Essentially the jockeys, trainers, and stable hands say Churchill is taking more and more money from their pocket.

Louisiana Considers Punishing Churchill

Churchill operates the famous Fair Grounds in New Orleans. The company angered the local racing community by investing money in new slot machines, but not maintaining the historic racetrack.  The state legislature is considering a bill that would force Churchill to drive more slot machine funding into the race track.

"There’s weeds and flowers growing out of the gutters," said State Representative  Helena Moreno "I mean no one is even cleaning the gutter areas."

At a recent hearing on the bill Churchill's Vice President of Gaming Austin Miller responded that those slot machines are propping up an industry in peril.

"Racing is losing its popularity," Miller said, "The generation of people that were attracted and felt passionate about racing are leaving us. Part of what we’re trying to do is grow that sport."

Churchill's revenue comes increasingly from the casino side of the business. Only a third of the company's revenue comes from horse racing. Forty percent comes from gaming. Meanwhile the company has done well in the last two years, doubling its stock price and tripling executive pay.

The company did not respond to numerous requests for interviews. 

Horsemen also angry at Churchill

Violette is racing the feisty colt Samraat in Saturday's Belmont Stakes
Violette is racing the feisty colt Samraat in Saturday's Belmont Stakes
Credit Charles Lane

"You always have to count your fingers after you shake their hand," says Rick Violette.

He has been a horse trainer for more than thirty years. He's racing the feisty colt Samraat in Saturday's Belmont Stakes. He says Churchill is taking money from his jockeys and stable hands by dodging the tax meant to subsidize New York horse racing. 

"They are much more interested in the stock price than the racing itself and maybe the animals"

The Belmont Stakes won't be affected by this feud between Churchill and state lawmakers. But when the race is over there will be another volley. Michael Kane, who runs Batavia Downs, says he and New York’s other OTBs plan to stop taking bets on all of Churchill's races.

"It could have a very large impact," Kane says, "We do about $95 million dollars in handle on CDI race tracks so we’re not talking nickels and dimes here."

Kane hopes a boycott against Churchill will pressure the company to pay more taxes to New York and do its part to keep horse racing on the right track.