Amid Confusion About Purse Account, Arapahoe Park To Host 2022 Racing Season - Horse Racing News | Paulick Report

Amid Confusion About Purse Account, Arapahoe Park To Host 2022 Racing Season

Arapahoe Park

While the 2022 racing season at Arapahoe Park had previously been in doubt, it looks like horsemen will be able to count on another summer of racing in Colorado, per information released at a meeting of the Colorado Department of Racing Events this week.

Arapahoe had previously threatened to close its doors if a state senate bill changing the calculation of payments to the horsemen's purse account was not passed successfully. Now, the track has agreed to withdraw that draft legislation and will run 42 live racing dates for Thoroughbreds, Quarter Horses, and Arabians from July 3 to Oct. 4, with the backstretch opening June 3.

Read more about the purse account calculations dispute in this report from February. 

This year's meet will be run with the same purse calculation formula as previous years, and the horsemen, the track, and the state will meet ahead of next year's race season to come to an agreement on how to revise or clarify existing state regulations on purse account calculations.

Earlier this year, the horsemen, the track, and the state took different views of the way the track should allocate money to the purse account. Among other disputes, the track believed that in the case of money received from an out-of-state simulcast facility, it was cleared to take out its costs and taxes before calculating the appropriate percentage to the purse account. The draft legislation in the state senate had sought to change the definition of “gross receipts” to fit this interpretation. The horsemen believed the track was required to take out the purse percentage before expenses were paid from the remainder.

Last year, the Colorado Department of Racing Events requested assistance from the Thoroughbred Racing Protective Bureau (TRPB) to help sort out where money had gone and whether distribution complied with the statutes governing revenue to purse accounts. Racing commissioners were provided with an executive summary of the TRPB's extensive report on the issue at this week's meeting.

The executive summary seems to suggest that Arapahoe had been significantly underpaying the horsemen's purse account for years.

The TRPB wrote that it was unable to do as thorough a report as it would have liked, since at some point it stopped receiving cooperation from the racetrack. Initially, investigators received a number of documents from two members of the track's financial management team, including workbooks, simulcast contracts, and OTB agreements. When one person departed the company and was replaced, the new controller informed the TRPB the track would no longer provide additional information.

The TRPB also found that the statutes were confusing and “took considerable study and understanding.” Separate statutes exist governing purse distribution for OTB operators, simulcast operators, and track operators, although Bally's Arapahoe Park is the only operator of all three types of businesses in Colorado.

“While each state has different economics governing the funding of purses, the national average of purses to handle is 7.7%,” the summary read. “The current method of purse liability calculation in Colorado produces a ratio of purses to handle that is significantly lower than that percentage. Notwithstanding the differing application of statutes, the methods used to define gross and net in the calculation of purses as derived handle from was questionable in so far as having an even greater outcome of reducing purse liability.”

The summary stopped short of speculating on how the previous calculations came to be standard practice, or whether the track was subject to any legal liability as a result.

“The examination does not attribute blame for the source, method, or evolution of these calculations,” wrote the TRPB. “These are merely the findings from the evidence as presented and the results as they were documented. The backgrounds and actions of individuals, companies, or organizations are considered out-of-scope in this examination.”

Although the report is helpful in clarifying the current situation in Colorado, state regulators do not consider it the final word on what the regulations should look like moving forward.

“As the Division completes its review of the third-party examination, the report will provide an additional perspective on an incredibly cumbersome statute that is difficult to understand,” said Suzanne Karrer, communications supervisor for the Division of Racing events. “In our role as regulators, we will be holding stakeholder meetings to come to a collective agreement with our industry partners and stakeholders on how statutory liabilities are calculated and how we can make sure that all parties and programs involved are successful moving forward. It is our plan to collaborate with the track and the horsemen to construct future legislation that will provide a clear, unambiguous and equitable method for determining a minimum purse contribution that will ensure that horse racing in Colorado not only survives but thrives.”
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