Alex Waldrop, former President of Churchill Downs, current CEO of NTRA, and a graduate of UK Law, visited my equine law seminar yesterday to chat with us about legal issues in racing. Mr. Waldrop was very straight-forward, and answered questions candidly; it was an informative and interesting talk.
He started off by noting that the primary purpose of the NTRA is economic, which, quite frankly, surprised me – I guess I expected him to say it was marketing, but it makes sense. He discussed the legislative efforts of the NTRA, and the growth of its PAC from a gaming lobby that was mostly ignored to the prominent and influential PAC that it is today. He also discussed the NTRA’s purchasing program, NTRA Advantage, which is broader than I realized, and involves up to 30 breeds and various disciplines – it’s even the basis for the USEF’s member benefits.
The talk was generally geared toward an overall picture of what the NTRA does, but Mr. Waldrop did address the Racing Integrity and Safety initiatives, as well as the public outcry following Eight Belles’s breakdown. He mentioned, for example, that he did not anticipate the over 800 comments he received in response to his blog entry on the filly.
We were also given the opportunity to ask some questions. Originally I was going to ask him to give his best argument against federal intervention in / oversight of the industry, but during his talk he, in passing, mentioned that federal regulation is not appropriate for an industry that involves so many local issues. This is a rationale that’s hard to argue with – it’s supported by enough legal precedent that you could cite it all day, stressing the significant interest that a state has in preserving the integrity of horse racing, because gambling implicates the “health, welfare, safety, and morals” of the public.
Being naturally contrary, I actually do argue against this “local issue” notion (vox clamantis in deserto though I might be), based on (1) the degree to which certain, integral, issues are already federally regulated, via criminal statutes, (2) the fact that even the NTRA advocates national rules and has even influenced the imposition of the ban of anabolic steroids in all racing jurisdictions, (3) the argument that a state’s police power is based on the safety/moral implications of gambling wears thin as states introduce slot machines at tracks, lotteries, etc. to garner greater revenue, and (4) sometimes important issues are overwhelmed by local agendas when regulated on a local level.
But back to the Safety and Integrity Alliance …
One point that Mr. Waldrop made was that, when he served on the board of a hospital, he noticed how everyone jumped to their feet when the Joint Commission came through to do their accreditation process. I have some personal experience with this – my mom is the head of quality assurance at a home health agency, and they also get reviewed by the Joint Commission. It is a Big Deal, involving months of preparation, because, even though it’s a private commission, and not a part of state or federal regulation, Joint Commission accreditation will make or break a health care organization.
And that was the idea that Waldrop brought to the certification / accreditation process that’s built into the Safety and Integrity Alliance Pledge. The accreditation aspect of the Pledge is the carrot of the self-regulatory initiative, with the stick presumably being something like a lack of accreditation or a probationary status, or the AGSC withholding graded status for tracks that aren’t accredited, or the NTRA or other organizations withholding funding.
When it came time to ask questions, I mentioned that the first phase of implementing reforms in the Pledge, in addition to accreditation, was the creation of house rules at all the race tracks, and pointed out several sections in the pledge that referred to funding, including a provision that says the tracks and the horsemen are to agree on how to split new regulatory costs. My specific question was, “So … how’s that going?”
Mr. Waldrop laughed and said I’d asked the $600,000 question, but I think it’s the question mark in everyone’s mind right now. It’s easy to mandate changes, but whether tracks and racing associations can pay for those changes is a completely different matter. Acknowledging that funding is a problem, Mr. Waldrop made a couple of interesting comments.
He said that the accreditation process would begin with steps that were not going to be as costly to tracks. For example, it won’t cost the tracks anything (but possibly reputation) for the Jockey Club to release injury statistics for that track. Establishing connections between tracks and Thoroughbred retirement organizations, and requiring a certain level of track maintenance were other areas that wouldn’t involve significant additional funding by tracks. All three of these areas could contribute to improving the public image of racing and the public’s experience at the track.
As we were discussing various levels of accreditation, my professor, equine and gaming attorney Laura D’Angelo, suggested that a track that received a probationary accreditation could possibly use that status to lobby its racing commission for additional funding. Not a bad idea.
There’s no deus ex machina that’s going to drop in and fix the industry. Even if federal regulation were the right answer, the likelihood that Thoroughbred racing rates very high on the government’s agenda right now is pretty low. And to the extent that racing is going to fix itself, it will require creative, almost extra-legal solutions, to compel changes. I think the NTRA is headed in the right direction.
10 responses so far ↓
wind gatherer // February 13, 2009 at 6:13 am |
And then there was one; looks like the vox clamantis, now, is mine.
As much as the argument Mr. Waldrop makes, sounds rational, I’ll posit the NTRA is progressing with false assumptions.
1. The low cost approach-The game is too far gone, working with antiquated and crumbling infrastructure, to try and work out a low cost solution. Track management is trying to work on the cheap, while squeezing the player for every last penny. Churchill Downs and its ADW shift is a prime example. It is telling, when CD relies on the Derby, a single day, to put it in the black. Pimlico can’t break even with the Preakness.
There are certain fixed costs that must be spent and they are the cost of doing business. You can’t keep a plane flying with just duct tape.
2.Keeping everyone in the game-There is too much racing. Too many horses running at too many tracks during an interminable season. Some tracks need to go. Horses need to go. Does it suck? Yes. Burying their head in the sand and hoping nobody can see them is not a solution.
3.Trying to be friends-NTRA is trying to play nice with everyone. It is too mixed up with the players in the game to have any influence or stomach for making the tough choices. I don’t know federal intervention is the answer and I am leery of anything the government steps into but this Confederacy of Dunces we have now is not working.
What possible weight could the NTRA seal of approval have? What power do they have to enforce anything? Is the AGSC going to deny NYRA or Santa Anita any graded stakes if they recommend somethng and those executives tell them to go take a hike?
Hey Churchill, you’re ADW rake is too high; we need you to lower it. Hey Wally, sod off.
Is the casual fan going to know the NTRA didn’t grant their seal of approval? The only races they ever show on t.v. are from the major tracks and there is no way they are not going to get the rubber stamp. The Preakness stakes, brought to you by The Maryland Jockey Club, a track, by the way dear viewer, that doesn’t meet the minimum safety requirements, developed by the NTRA…The disparate tracks out there, Sam Houston or Hawthorne are toilets and nobody that isn’t a degenerate goes there(I go to Hawthorne all the time…).
Mr. Waldrop and the NTRA might have good intentions but their premise is flawed and their unwillingness to confront the problem and make tough decisions is misguided and disappointing. And THAT, is my problem with him and them.
Platitudes and weak effort do nothing for anybody except those already in control.
Thoroughbred Brief // February 13, 2009 at 6:39 am |
WG:
1. The low-cost approach is only the first step, to get the ball rolling; it is not meant to be the ultimate solution, but rather a way to start the process while the industry tries to figure out how to fund it. This isn’t magic. This is not a case of the tough decisions not being made – they’ve been made. The hard part is initiating them, and this is a way to get started.
2. The accreditation process, as well as the other mandates, might well put some of the smaller tracks out of business, if they can’t keep up. Additionally, one idea tossed around was requiring tracks to cap the purses of claiming races at 1.5 times the claiming price. Thus a $5000 claiming race could only have a purse of $7500, lowering the incentive to drop horses into claiming races to get rid of them. [This is not part of the Alliance code of standards.]
A good accreditation program, if it works, might weed out the tracks that can’t keep up.
3. NTRA has to play nice with everyone, because otherwise, everyone else won’t play.
“What power do they have to enforce anything? Is the AGSC going to deny NYRA or Santa Anita any graded stakes if they recommend something and those executives tell them to go take a hike?” – How do you think the national anabolic steroid ban was accomplished, especially in New York? The threat that the Belmont wouldn’t be a graded stakes race if they didn’t ban steroids was the deciding factor.
If accreditation means additional funding, grades stakes status, or other incentives, yeah, the tracks will want it.
Nothing in what I’ve written above says that the plan is perfect, or that it’s necessarily going to work. But we disagree on the basic premise – you believe the whole thing is platitudes and weak effort, while I think there is genuine initiative here, and that a lot of effort has gone into the plan thus far. Hopefully industry momentum will carry it forward, but it requires the support of all the players – so the NTRA will probably continue to play nice.
Edited for clarity.
Frank // February 13, 2009 at 7:21 am |
Point number 2 in your response noted that the NTRA is considering “requiring” tracks to cap purses for claimers at 1.5 times the tag.
This is one of the stupidest ideas ever to come from an industry that has a history of really bad ideas. It’s the type of nonsense you’d expect from an industry in which the blue-bloods all talk to each other and wonder why the rest of the idiots don’t pay attention. A move like that will make it worse — not better — for lower level horses. Purses are already so bad at the bottom levels that cheaper horses have to run all the time to have any hope of breaking even financially.
If the issue they’re trying to fix is a perception that bottom claimers are poorly cared for, this is the worst conceivable way to accomplish it. A much better way to encourage people to take better care of cheaper horses is to boost their purses, so that they can actually earn their way.
Thoroughbred Brief // February 13, 2009 at 7:26 am |
Frank – Don’t hold me to that being set in stone – I understood that it was an idea being tossed around, not that it’s actually a definite initiative or that the NTRA has taken a position on it one way or the other.
Your points are well taken, especially because you clearly understand much more about claimers than I do.
Keith // February 13, 2009 at 7:59 am |
i can confirm that the cap on claiming prices is NOT part of the alliance code of standards.
wind gatherer // February 13, 2009 at 8:59 am |
TB-When does this accreditation take effect? When are the criteria revealed? What funds are the racing commissions going to give the tracks? Aren’t they bleeding red ink?
If everything is about graded stakes and purses, then the AGSC should be the major player and the NTRA should be in bed with them. They could, today, lay out a set of criteria, clearly outlining what is and what is not acceptable, regarding tracks and their policies.
That laundry list in the Integrity Alliance release, could easily be laid out as the framework starting on Jan 1, 2010 or 2011. If they know what needs to be done, the fact that they are not implementing those changes, is telling.
I agree with you, they are playing nice because they can’t play right.
Thoroughbred Brief // February 13, 2009 at 12:11 pm |
WG:
I think this is pretty clear and comprehensive, and it also mentions BC and AGSC roles in implementation.
http://www.ntra.com/content/NTRASafetyAndIntegrityInitiativePledge.pdf
Also, if you go to Addendum G, it outlines implementation. When I look through it, I *believe* they are on schedule, at least with most of it. This financial quarter they should be putting together the auditing committee, which will begin the auditing process late 2009/early 2010. Also, Alex Waldrop mentioned that the first accreditation goal was to get all 3 Triple Crown tracks certified by the end of the year, and move on from there.
Steve Zorn // February 13, 2009 at 3:27 pm |
Asfor uniform national standards and regulation by the feds: every state has a securities regulatory office of some sort, but we still leave the heavy lifting, such as it’s been, to the SEC, FDIC, the Fed and other federal agencies. Ditto banking regulation, agriculture — I’m sure you read Schecter Poultry in first year Con Law — and all sorts of other issues. The feds are already in racing, through the Interstate Horse Racing Act. So why not just move to national regulation and be done with it.
Thoroughbred Brief // February 13, 2009 at 6:26 pm |
Steve: No arguments here, although I think a double regulatory scheme (a la state blue sky laws + federal securities regulation) might be a little onerous. I just don’t see anyone getting the ball rolling on it.
Beyond the Press Release: Comments on Churchill’s Sweeping Safety Measures « The Thoroughbred Brief // March 2, 2009 at 9:16 am |
[...] Equine Legal Resources ← The $600,000 question [...]