Shut Out: Questions halt Far Hills betting before it starts

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Pari-mutuel wagering on the Far Hills Races never left the starting gate due to issues raised by the New Jersey Racing Commission in thedays leading up to the Oct. 17 meet.

The commission cited violations of state and federal wagering laws when it threatened legal action against the National Steeplechase Association, prompting Canada’s Woodbine Entertainment Group to scrap plans to be the wagering hub.

“To accept wagering on races that originate in New Jersey, the host site needs to have a permit issued by the racing commission,” said Frank Zanzuccki, the commission’s executive director. “They did not have a permit, they did not apply for a permit and according to state law only permitted racetracks can offer simulcasting and intertrack wagering.”

NSA chief executive officer Lou Raffetto did not see it that way.

“Everything in state law speaks to permanent licenses and (the commission) has no jurisdiction over the NSA or Far Hills or a foreign entity that would make pools,” he said. “They felt it was in violation of state statute and the Interstate Horse Racing Act. My position is, it’s not necessarily the case.”

For its part, Woodbine entered into an agreement thinking there would be no legal issues and backed away once the potential problems came to light.

“We were being a service provider and we thought it would be an interesting opportunity since it had never happened before,” said Jane Holmes, the track’s vice president of corporate affairs. “We were made aware of some regulatory issues in New Jersey and we’re not going to get involved with regulatory issues in another jurisdiction. Our assumption, when we started into it, was the NSA was the racing commission, but that’s not our call.”

The historic attempt at off-site pari-mutuel wagering at an NSA meet took the following steps:

• The NSA reached an agreement with Woodbine, where the Canadian racetrack would host pari-mutuel pools on the races at Far Hills. According to an NSA press release dated Oct. 8, betting was scheduled to take place in Canada and Europe. The release announced wagering in Germany, England and Ireland and foreign television coverage via the horse racing channel At The Races and Satellite Information Services.

• The New Jersey Racing Commission learned of the plans Oct. 13 and contacted the NSA about concerns with regard to state pari-mutuel law and the federal Interstate Horse Racing Act.

• Raffetto met with commission officials Oct. 15 and expressed his opinion that the plan did not violate any laws – citing the NSA’s jurisdiction over the racing at Far Hills and making the point that the pools were being hubbed outside of the United States. Raffetto said he pursued a scaled back version of the plan where betting would only be offered outside the United States.

• On Oct. 16, the racing commission sent a letter to Woodbine and other racing jurisdictions stating the opinion and warned of potential legal action.

• Woodbine opted to not host the pools and no wagering occurred through any of the planned vehicles.

NSA attorney Alan Foreman said the racing commission’s letter stopped the plan.

“In the face of that letter, it would have been irresponsible to move forward,” he said. “My advice was to not proceed under those circumstances. We responded with an excess of caution and we opted to not proceed forward until the concerns of the regulators are addressed. The intent was in the best interests of steeplechase racing.”

Up until raceday, the racing at Far Hills progressed like that of a pari-mutuel track. The meet ordered color-coded saddle towels. Entries posted online included morning-line odds. Woodbine and account wagering platforms (Twin Spires, Youbet and XpressBet among them) listed Far Hills on their schedules as did At The Races. American-based racing channel HRTV announced  plans to televise Far Hills and interviewed  Raffetto days before the races.

No official announcement was made canceling the betting, but patrons who tried to bet Saturday were told wagering was no longer available.

Raffetto called the late notice a “devastating blow in terms of credibility and visibility for steeplechasing” even if it did not have a significant financial impact. He felt the compromise plan of no betting in the United States would have satisfied any legal concerns.

“We are arguably the racing commission for steeplechase racing and federal law speaks to the racing commission in the state where the racing takes place,” Raffetto said. “The (New Jersey) commission has no jurisdiction over Far Hills.”

The commission agrees, to a point. New Jersey never got involved in the racing at Far Hills until pari-mutuel wagering became part of the discussion. Far Hills and the NSA have discussed wagering with the commission for a few years, Zanzuccki said, and were told that the laws would need to be changed.

“They thought that by not having wagering on site and by contracting with a company outside the United States to create a common pool that made them exempt from New Jersey law and federal law,” Zanzuccki said. “We obviously have a different viewpoint. We told them that if they went forward with it, we would pursue it with the court.”

Timing didn’t help, though the racing commission’s response would not have changed with more notice.

“Our position would have been the same, whether we found out (when they did) or months ago,” Zanzuccki said. “They could have always gone forward with it, and run the risk of losing the argument in the courts but they would have faced serious penalties if they were wrong. For their sake, we’re glad they didn’t pursue it.”

Going forward, options for the NSA include applying to the state for a pari-mutuel license or using another track’s permit at an off-site location.

“Both would require legislation change,” Zanzuccki said. “We’ve had discussions about a way to go about getting approval to allow wagering on the event. That’s a long process. It involves local referendum, things of that nature. It takes time. We also suggested they seek special legislation to operate on one day a year. They chose not to pursue those options.”

And the NSA’s planned option did not pass the racing commission’s view on pari-mutuel regulation.

“It’s fair to say that if wagering is offered it would be an event that would be regulated by the state racing commission,” Zanzuccki said. “They could always challenge that if they’d like. If they believe the state racing commission or Interstate Horse Racing Act doesn’t apply, they could decide to try to find a way to challenge those.”

The Interstate Horse Racing Act permits the transmission of wagers between states within a framework that includes the host track, the receiving track, the host horsemen’s group, the host racing commission and the receiving racing commission. The NSA does not include pari-mutuel wagering in its rules, but acts as a racing commission in many ways – licensing participants, training and appointing officials, conducting drug testing, writing rules. In cases of wagering on NSA races at pari-mutuel tracks (Saratoga, Philadelphia Park, Colonial Downs, etc.), the host state’s racing commission rules and licensing policies are followed. When Fair Hill hosts NSA races with pari-mutuel wagering, the races are run under sanction of the Maryland Racing Commission.

In the Far Hills case, Raffetto said the NSA would have been the racing commission and that the Canadian Pari-Mutuel Authority would have provided the wagering rules.

“I don’t expect to have to tell (the New Jersey Racing Commission) because they don’t have jurisdiction over us,” Raffetto said.

Dennis Drazin, president of the New Jersey Thoroughbred Horsemen’s Association (which represents the state’s horsemen with regard to pari-mutuel racing at Monmouth Park, the Meadowlands and Atlantic City), understood the racing commission’s opinion.

“It sounds like it was stopped because people didn’t do what they were supposed to do, and knowing the racing commission I would think they feel a little slighted in this,” Drazin said. “The commission has some responsibility if racing with wagering is being conducted in New Jersey even if there is no wagering on that racing in the state.”

Drazin did not feel his group would have needed to be involved other than “as a courtesy,” but did mention a potential legal concern.

“From my perspective, I certainly wouldn’t want to have a precedent set where it was permitted to simulcast something out of the country without permission or some kind of payment,” he said. “I would be concerned if Canada decided to take our races and not pay (horsemen) anything for the signal and have an arrangement with Europe or somewhere where horsemen wouldn’t get anything. I don’t think that was intended, but I don’t think anyone gave a lot of thought to it.”

Kentucky attorney Doug McSwain called pari-mutuel wagering law a puzzle to decipher, but pointed to New Jersey’s concern as enough to stop the proposed betting.

“I don’t know if the safe position would be to try to go around the racing commission, it’s extremely dangerous,” said McSwain, a partner with Sturgill, Turner, Barker and Moloney, and general counsel for the National Horsemen’s Benevolent and Protective Association. “If New Jersey takes the position that it’s against the law, then it’s probably against the law. There are no implicit exemptions one could safely rely on and it’s not a situation where you could look at it clearly and say it’s right or wrong. But any time you have a state racing commission that takes a position then that tips the balance in favor of it being illegal. Everybody was smart in stopping it.”

Raffetto is pursuing wagering as a way to expand the sport. A key criticism when jump racing occurs at racetracks is the lack of betting opportunities – and bettors invest less in an unfamiliar product. More betting opportunities would in theory expand the wagering handles in jump races at racetracks. In addition, the exposure through wagering networks in the United States and abroad would mean extra attention for the sport while also creating another sponsor benefit to sell. Raffetto mentioned South Carolina and Tennessee, two states without racing commissions or racetracks, as possible steps for off-site betting though he won’t pursue additional wagering opportunities in 2009.

“It would have been great exposure for the sport, for Far Hills, for everyone,” he said. “We’re going to work hard to get over the hurdle and figure out ways to do it. It’s one way to grow the sport.”