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Colonial Downs ordered to sign 2015 thoroughbred racing contract, may forgo 2014 race season

NEW KENT – The Virginia Racing Commission (VRC) is considering calling the 2014 thoroughbred racing season at Colonial Downs a lost cause and is instead striving to secure the 2015 season.

“I personally think it’s awful and very disappointing that we may not run in 2014. But, at the same time, it is what it is and maybe there’s a silver lining in that we can put that behind us and move forward,” said VRC Chairman J. Sargeant Reynolds, Jr. during a special-called meeting Monday with Colonial Downs and the Virginia Horsemen's Benevolent and Protective Association (VHBPA).

The VRC ordered Colonial Downs Monday to enter into an eight-week and 24-day 2015 thoroughbred season contract with the VHBPA by July 1. Doing so would immediately reopen the four Off-Track Betting (OTB) facilities that were closed in January after the two parties refused to sign a 2014 thoroughbred season contract.

As a part of the proposed agreement, the VRC will recant its request for a 2014 thoroughbred season, meaning that the season will be canceled.

The horsemen's association is a nonprofit organization made up of 1,300 thoroughbred owners and trainers who race at Colonial Downs and award purses, or set amounts of prize money, to the winners.

According to VRC Executive Secretary Bernie Hettel, a major part of the decision to close the 2014 thoroughbred season was impacted by the possibility of reopening the OTBs.

“Our responsibility as a commission is to make sure that the [parimutuel wagering] licensee that has the authority to run thoroughbred racing in Virginia runs racing or at least operates in such a matter that it is has a positive economic benefit to the agribusiness and industry,” said commissioner Clinton Miller.

Jacobs Entertainment, Inc., headed by CEO Jeff Jacobs, currently owns Colonial Downs and “is a developer, owner and operator of gaming and entertainment facilities in four regions of the United States,” according to the company’s website.

Colonial Downs has been in operation for 17 years and has three years left on its 20-year pari-mutuel wagering license.

In parimutuel betting, all bets of a particular type are placed together in a pool and payoff odds are calculated by sharing the pool among the winning bets.

“We have been battling back and forth since January but we’re no closer than we were in January,” said Reynolds.

The VHBPA and Colonial Downs have been at odds for six months over the 2014 thoroughbred season schedule. As a result, four of the eight OTB facilities were shut down after arguments over the length of the thoroughbred season led to the contract's expiration in January. The remaining four OTB facilities also cannot take bets on any Virginia thoroughbred racing, since a contract has not been signed between Colonial Downs and the VHBPA.

The thoroughbred contract deadlock does not affect harness racing.

Reynolds reiterated that although none of the commissioners want to scrap the 2014 thoroughbred season, the five week 25-day schedule would be nearly impossible to run at the track, especially with other events taking place throughout the summer.

VHBPA Executive Director Frank Petramalo agreed with Reynolds, adding that, “because we are so late racing this season, many horsemen have shipped their horses to other places.”

“Although not having a 2014 thoroughbred season is not desirable, it’s the most realistic,” Petramalo said.

It is unclear whether Colonial Downs will agree to an eight-week 2015 thoroughbred season schedule. Colonial Downs President Ian Stewart told the commission Monday that Jacobs did not want to race eight weeks next year in part because of the track’s continued loss in revenue.

Jacobs has been pushing for a shorter thoroughbred season with higher purses, or prize money, which in part led to the dispute between the Colonial Downs and the horsemen’s association earlier this year.

Stewart’s comments prompted Miller to question the track owner’s motives.

“I just don’t understand why Jacobs is forgoing that stream of revenue and keeping the status quo that we have right now,” Miller said.

“You’re saying in the 17 years the hasn’t made a profit, and that may well be, but [Jeff Jacobs] applied for the license and as a licensee he has a responsibility to meet that primary responsibility of supporting the agribusiness industry in Virginia while hopefully making a profit.”

“If [Jacobs] can’t meet that responsibility, he needs to surrender the license and let someone else give it a go,” Miller added.

Miller suggested that if the racetrack does not sign a 2015 thoroughbred season contract with the VHBPA by July 1, that Jacobs either voluntarily surrender his license or the VRC force him to surrender the license.

“You have a decision to make. You either keep the store open or close it,” Miller said.

To date, Colonial Downs has lost in excess of $2 million, while the VHBPA has lost $1.5 million and the VRC has lost $337,000 as a result of the contract dispute.

However, all three, as well as the Virginia Thoroughbred Association (VTA), still profit from the racetrack’s online wagering website, EZHorseplay. Colonial Downs and the VHBPA both receive five percent of these wagers. The VTA receives one percent and the VRC receives 0.5 percent.

New Kent County has estimated a $402,000 loss in local revenue from the lack of the 2014 thoroughbred season and has factored it into its fiscal year 2015 budget.

According to County Administrator Rodney Hathaway, most of the money is attributed to the loss of OTB revenue but does factor in meals tax and admission tax.

Residents could see a tax increase in future fiscal years to make up for lost revenue if Colonial Downs continues to operate without thoroughbred racing at the track and OTBs.

“Another $402,000 debt could very well affect taxes,” Hathaway said. “That amount alone could mean a one or 2-cent tax increase.”

“If our annual operating costs get higher, the domestic services grow, and expenditures go up but we have less revenue, we will most likely have to raise taxes,” he said.

Martin can be reached by phone at 804-885-0040.



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