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WFD Purse Fund Application Approved

Published: May 7, 2013 5:10 pm ET

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On May 3, 2013, the Ontario Racing Commission (ORC) issued a Notice of Decision to Western Fair Association (Western Fair) approving their application for 2013 purse support.

Attached to this Notice to the Industry is a copy of the application and supporting materials submitted by Western Fair, as well as a copy of the Notice of Decision.

Reasons for Decision

In mid-April the Director of the ORC received an application from Western Fair for additional purse monies to support its purse account at The Raceway at Western Fair District through to the end December 2013. The request was reviewed and considered by the Implementation and Monitoring Group (IM Group) and based on additional information received, a recommendation to approve the application was forwarded to the Director.

Issue

Western Fair entered into an agreement with government for racetrack operating funds for approximately 100 live race cards. On April 12, 2013, the ORC released approved race date calendars for May to December 2013. A number of live Signature race dates that approximated the agreement with government was assigned to Western Fair. The Reasons for Decision relating to that April 12, 2013 decision were released on April 29, 2013 and acknowledged that “Western Fair has stated additional purse money (purse pooling) will be required in order to fulfill the new proposed calendar if it is to offer competitive purses and be attractive for horse people to race at the track.” It is further acknowledged that without the extra dates assigned during this period, a certain level of purse funding would still have been required.

On April 16, 2013, Western Fair submitted an application for additional purse funds. In the days following, the IM Group gathered additional information relating to the request.

Consideration of the issue led to three options:

1. Adjust Western Fair’s Signature live race dates down to match purse availability (At $65K per day, this would have resulted in a loss of 41 race dates, a level which could jeopardize the financial viability of racetrack operations;

2. Reduce Western Fair’s Signature purse levels to match the approved race dates. This would have resulted in a drop of purses at Western Fair to Grassroots level.

3. Approve the request for additional purse (subject to the availability of purse monies).

The principles of the Ontario Racing Program (ORP) were applied to this application. The ORP is a provincial approach to horseracing issues that balances a number of factors to focus on the customer. Specifically, attention to wagering and customer demand is a key component of the ORP.

Customer demand for Signature racing product has been historically strong and is necessary to be maintained at a certain level to support the sustainability of the industry. The level of Signature racing required by the ORP anticipated a quantum amount of racing at the remaining central and southwestern Ontario racetracks, which include Flamboro, Georgian, Grand River and Western Fair. The circuit of racing between Flamboro and Georgian already has inactive months, creating “gaps” in the supply of Signature racing to customers. The ORP, in considering the 2013 schedule, made changes to address these gaps by adding dates to Western Fair in May and October. To reduce Signature race dates, due to lack of locally generated purse would have had long term negative impacts on customers, wagering, and the horse people. Further, historical customer demand for Western Fair product and expected available horse supply in the region supports their role in providing this level of racing. For these reasons, the IM Group recommended the option of identifying available purse funds and approving its use for Western Fair Signature race cards.

Similarly if the purse levels had been adjusted to service the approved race dates, Western Fair would have had to offer Grassroots purses. In trying to attract the best horses to the simulcast product and provide a strong product for the customer, this would not serve the long term interests of the province.

The IM Group, as part of its on-going monitoring of the industry, tracks purse accounts and forecasts under or over payment of purse by track. Information provided by track management is corroborated by information gathered by the IM Group to prepare reliable purse account reports for the province.

With this information, the issue then became one of defining “availability” of the purse monies.

The ORP defines how much purse is needed to support racing. In more specific and practical terms, this would mean purse monies could be defined as “available” where:

a. the related racetrack is no longer racing (such as Quinte Raceway or Windsor Raceway); or

b. the IM Group forecasts that purse monies in a particular purse account are significantly greater than the “need” where “need” is defined as the number of ORC approved race dates (by type of card - Grassroots, Signature, or Premier) multiplied by the maximum purse range for that level of racing.

It was further considered that if there were multiple sources of “available” purse monies, the following guidelines would be applied to determine the “best” source of funds.

1. Breed: Purse monies earned by one breed should remain to be raced for as purses for that breed.

2. Geographical Proximity: Racing for purse should occur close to the market where it was earned. The ORC acknowledges and understands that stakeholders in all markets feel that they should race locally for money earned in that market. With the provincial focus of the ORP, purses, which are now a limited economic constraint, must be used where they generate the most benefit (wagering or other economic benefit) in the best interest of the Ontario industry. This acknowledgement is reflected in this “closest to the market” principle.

3. Impact on racetrack operating costs: Use of purse monies should not have a material negative affect on racetrack operating costs (without compensation to the racetrack operator where requested).

4. Administrative considerations: Purse transactions must be transparent, accountable and as simple as possible. For example, one transfer of $100,000 from one source is preferable to ten transfers of $10,000 from a various sources.

5. Opportunity costs: Other alternative uses of the purse funds should be considered in assessing the “availability” of funds. These alternative uses will be similarly considered using the same ORP factors and principles to ensure fair and objective comparison.

Based on this methodology, the Director approved Western Fair Association’s application for addition purse monies. These monies, totalling approximately $2.7 million will be administered through specific budgeted amounts and timelines, as outlined in the Notice of Decision.

The first transfer (to take place on or around May 10, 2013 for $350,000) will be sourced from funds that the ORC currently holds in trust as a result of the closure of Windsor Raceway in 2012.

In a separate matter on May 3, 2013, the ORC also conditionally approved Winrac’s request to cancel its licence regarding operations at Woodstock Raceway. A condition of this pending cancellation is the transfer of Woodstock purse monies to the ORC in trust for Standardbred horse people. These funds have been identified to be used to amend the purses at Western Fair if necessary.

Additionally, the ORC has requested that Windsor purse monies currently being held by external counsel of the Ontario Lottery and Gaming Corporation (OLG) be released to the ORC in trust for Standardbred horse people. These funds relate to horse persons’ share of OLG slot revenue earned during a period following the closure of the Windsor Raceway slot parlour but prior to the March 31, 2013 cancellation of the Slots-At-Racetrack Program.

These funds, once released to the ORC in trust, provide an additional source of possible funding for additional purses at Western Fair or other tracks in the Province of Ontario. Please be advised that any aggrieved party has the right to appeal the Director’s decision to the Commission.

(ORC)


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