Colonial Downs and Virginia horsemen discuss 'divorce' terms

amayfield@tidewaterreview.com

NEW KENT — After 17 years together, terms of a divorce agreement and shared custody of the horse racing industry are in the works between Colonial Downs and Virginia horsemen.

The New Kent County racetrack and the horse-owners who raced their animals there are looking at going their separate ways, but don’t necessarily agree on how to split the money wagering brings.

They got to that point after each side asked the General Assembly to force the other to accept its version of the way racing ought to be run in Virginia – and after a nudge from one of the state’s most powerful politicians had horsemen and track executives cramming into state Sen. Jill Vogel’s office Thursday.

A crowd of anxious, high-paid lobbyists milled around just outside, where her neatly dressed 6-year-old son Tas played quietly. 

“I’m not interested in going out there and having some kind of fight on the Senate floor,” said Vogel, who represents a part of Virginia’s Horse Country and had sponsored the horsemen’s bill.

“My goal is to do something that in the end is equitable and recognizes the investment that has been made in New Kent, and that is good for New Kent County, and good for the industry and the state … It doesn’t just impact rural communities where there are horsemen,” Vogel said.

“It impacts everybody, and obviously its money and revenue that the states’ losing. It’s a great tourist [stop], [and an] amazing resource that we have,” she said after the meeting, as she and her son hastened to the Capitol for the day’s session.

Earlier Thursday, she’d quickly popped into a subcommittee meeting to ask its members to postpone considering racing bills that day, saying even though “it’s not what I want.”

But even earlier, Senate Majority Leader. Thomas K. “Tommy” Norment, R-James City, whose district includes New Kent, had been pushing for a compromise – and added weight to that by introducing a bill that gave Colonial everything it wanted.

“My real expectation was that the bill would serve as a catalyst, along with a little encouragement from me, for the parties to sit down,” Norment said. “Sometimes they just need a little encouragement. Even a horse needs to be whacked on the derriere with a bridle every now and then.”

Norment said that the bill was created as a “place holder to provide an alternative approach” to legislation proposed by the horsemen. His bill would let Colonial Downs cut back its schedule and increase purses, which the track says it needs to do to stay in business.

Vogel’s legislation would give the horsemen what they want, stripping Colonial Downs’ power to choose its horsemen. The bill would place the choice in the hands of the VRC, who currently support the Virginia Horsemen's Benevolent and Protective Association (VHBPA). It would also reallocate the source market fee paid in online wagering from Colonial Downs to a nonprofit stakeholder of the VRC’s choice.

“Neither side has really acted in good faith,” said Del. Chris Peace, R-Hanover, whose district includes New Kent County. “They have both said one thing, and then done another. They have attempted to make it look like they are working towards a goal then retreated towards various corners. We seem to have made some progress in this session, but it seems like its deja vu all over again.”

Both parties are remaining tight-lipped on the details of Thursday’s meeting.

But tentative terms of the agreement to part ways suggested by the VHBPA would give Colonial Downs free choice of the horsemen’s group for races at the track. It would also make an equal division between horsemen and racetrack of advanced deposit wagering funds and satellite wagering funds, according to a document Peace provided.

Colonial Downs interim president Stan Guidroz said in an email,  “We have exchanged compromise positions for each other to consider. I think you can call that progress. We are committed to growing horse racing in Virginia, but that is going to require a viable business model that allows Virginia horse racing to be competitive with racing in other states.”

Norment, the Senate Majority Leader, offered a hint about the next steps.

“There’s got to be an understanding about some autonomy with the Thoroughbred [Association] and Colonial Downs on determining their own race days,” he said.

“There’s got to be the opportunity for some reciprocity for participation by the thoroughbreds in the Colonial Downs race space. In other words, they can’t be locked out,” Norment added.

At a New Kent Board of Supervisors meeting on Wednesday, Colonial Downs attorney, Jeff Geiger, said that the passing of the horsemen’s bill would not only take away Colonial Downs’ ability to make money, but also strip New Kent of any of the tax benefits of hosting horseraces.

“All account wagering money would go to the horsemen and a percentage would go to the VRC to distribute as they see fit. None of that account wagering money would go to Colonial Downs, which in essence closes Colonial Downs,” Guidroz said on Wednesday before the session in Vogel’s office.

“We offered a bill that basically splits the perimutual purse funds that are generated, and expenses that are generated, from account wagering, where Colonial Downs would get a percentage of it, the horsemen would get a percentage of it,” Guidroz said on Wednesday. “The remaining purse money [the horsemen] could use to race wherever they want.”

Before its Nov. 1 closure, the racetrack operated eight off-track betting (OTB) sites across the state. Racing commission chairman Sarge Reynolds said that he hopes through legislation the commission will have future power to continue running OTBs, regardless of a contract between horsemen and race track.

“I told both parties [last year], if we close up those OTBs and stop that revenue stream it will be disastrous for this industry, and that’s what’s happened,” he said.

Colonial Downs shut its doors last year after Jacobs and the VHBPA failed to reach an agreement on a thoroughbred season.  Jacobs turned in the facilities racing license in October, effectively closing the only operating horse track in Virginia, and costing New Kent $400,000 in tax revenue and 280 jobs.

For 17 years the facility has hosted what VHBPA executive director, Frank Petramalo, calls “regular racing,” or a blend of high-purse derbies and low-purse races.

Last year Jacobs proposed doing away with low-purse races in favor of a five-day season with higher purses and high quality horses. This approach would attract more costly derbies and generate more revenue for Colonial Downs, as well as bring in even more out of state competition.

This proposal did not sit well with Virginia horsemen, who feel that reducing the racing season in that way would increase out of state competition to the point of eliminating room for most of them, said Debbie Easter, executive director of the Virginia Thoroughbred Association, in an interview two weeks ago.

With backing from Del. Peace, Colonial Downs has also proposed a bill to introduce historical (or “instant”) racing into the Virginia economy.  Historical racing involves placing bets on computers, similar to slot machines, and all parties involved in the conflict agree it would create revenue to support both high end and regular racing.

Historical racing bills have been proposed to the General Assembly at least twice before this year with no luck. Although Norment is not backing the bill publically this year, he supported a historical racing bill in 2011 that was left in General Laws.

This fashion of racing, as well as other gambling ventures, like casinos, are legal in several states surrounding Virginia, and causing the state’s horseracing industry to fall behind the competition.

“Virginia is behind the eight-ball because we don’t have alternative gaming that can help make us more competitive with other mid-Atlantic jurisdictions,” Reynolds said.

All parties also agree that the historical racing bill will probably not be passed in the General Assembly. Norment said that that social issues, like high gambling rates among some of the impoverished who hope to win their way out of poverty, situate some members of the house against historical racing on moral grounds.

“I think we need it. I think it would be a huge help. It would build the economic base for this industry. It would go a long way in helping us thrive instead of survive,” Reynolds said.

Mayfield can be reached at 804-885-0040.

Dave Ress contributed to this report.

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