IHHA Responds to SA-IL Springfield Update - June 3, 2005

To: Terry Hunt

From: Jack Kelly

I would like to thank you for pointing out in your legislative summary on how hard the IHHA has been working in Springfield these past few months. Your summary accurately sums up the last few days of the session. However, I would like to point out a few of my own observations on the following items that you alluded to, especially your contention that the “tunnel vision of the IHHA does not allow it to represent all horsemen”.

First, the IHHA has not now or in the past characterized itself as representing horsemen on all of the issues in Springfield.  The breeders are represented by ISOBA and always have been. The IHHA has worked hard to be in agreement with the breeders and as early as this past April met with Carl Becker, Ed Teefey and you to make sure the IHHA and ISOBA needs would both be advanced. The IHHA never represented to the legislators that we were the spokesmen for the breeders.

The proposed gaming bill used language that was introduced last year (HB 1067) as the starting point for this year’s language. There have been many variations of different gaming bills over the last three years but as far as I remember, HB 1067 was agreed upon by all of the parties involved in May of 2004. Two weeks ago when you and Ed Teefey were in Springfield we told you that HB 1067 was being used as the template for this year’s bill. At that time I assumed that the breeder’s language would be reviewed by ISOBA and any changes would be negotiated with the Senate staff which was working on the bill. The IHHA never heard from anyone at ISOBA or SA-IL that there was a problem with the language (Since there is so much overlapping of board members I assumed that talking with Ed was the same as talking to both groups at once).

The language that you mentioned that reverted back to the original language in the Horse Racing Act did not happen by mistake. The IHHA will take all of the credit for this. The current language in the Act says that breeder’s awards will be paid “from the organizations licensee’s share of the money wagered”. The language in Rep. Lang’s version of the bill changed it to read “from their accounts”. This change in language looked innocent enough when it was changed. But, after review and legal consultation it was determined that it would allow the race tracks to pay the breeders awards from any of their accounts, one of which is the purse account. In effect shifting payments now being made by the tracks onto the backs of the horsemen by taking it from purses. The stance of the tracks and one of SA-IL directors, Jim Reynolds, say that the current structure is a disincentive for the tracks to write ICF races. But, the gaming bill would have mandated the percentage of races that had to be ICF so this would be nothing more than a blatant money grab by the tracks   

Your contention that SA-IL was not invited or included at any key negotiating sessions brings to mind the SA-IL‘s contention that it looks “forward to working together for a change”. One of stated goals of hoping to have one organization represent all standardbred horsemen in Illinois is to have a unified voice in Springfield. The fact that SA-IL was lobbying as a separate entity did nothing but add to the confusion in the minds of the legislators and staff. The IHHA was invited to participate in the meetings being set up by President Emil Jones’ staff because of the relationship that our lobbyists team has with them. The first meeting we were invited to came about when one of our lobbyists received a call one evening and told us to be in a certain conference room at 10:00 the next morning. It was not our meeting and we were not sure until we arrived who else would be in attendance. The subsequent meetings were all set up in a similar fashion: Our lobbyist getting a call at the last minute telling us where to be. There was no negotiating over the time, place or attendees. The job of our lobbyist was to make sure we were at the table. We spend many hours in Springfield doing nothing but waiting and when last minute meetings such as these come about, we are able to attend. When actual bill language was printed up our lobbyist called me at 9:30 on a Monday evening and told me he had one copy of the language and I had until 9:00 the next morning to review the 120 pages. There was not much time to do anything except review it and get a few hours of sleep let alone get copies out to anyone else. The IHHA is committed to working with the breeders and their organization but we do not speak for nor represent them in Springfield (nor do we expect that they will ask). The contention that ISOBA was excluded from having any input is not true.

In regards to your statement that it was refreshing to see the horsemen and tracks on same side of the issue I agree with you that it was refreshing. But, this did not come about because they decided to have a change of heart about us. It came about because of some the various reasons that you stated throughout your summary: The IHHA lobbying efforts and our grassroots organization. But, most importantly, they knew our stance is that no deal is better than a bad deal. The tracks know how tough Tony Morgan can be as a negotiator and understand that we will not accept bad deals just to be included, as has happened in the past, when we got stuck with recapture and an unfair share of the OTB revenues. John Johnston told me two years ago, while we were negotiating with Representative Lang, that if we didn’t get on board the train now and accept the tracks version of a fair share of the slot revenue, that the train would be leaving the station without us. We told John that may be true but that they would be standing there at the station right next to us. They knew the horse industry would get nothing unless the horsemen were treated fairly. This is the reason we received a fair share of the proposed slot revenues during those negotiations and have continued to be on the same side of the issues with the tracks. Realizing that the train will leave the station without them aboard unless they treat us fairly is what makes them the good businessmen that you alluded to.      

I would also like to give our lobbying team a tremendous vote of support for all of their efforts this spring. They all worked hard to keep us informed on the status of not just the gaming bill itself but the other various issues that were in front of the legislators. The IHHA was able to help defeat an account wagering bill that had the potential to make recapture look like small potatoes. While we are in complete agreement that our industry is in need of account wagering this bill would have allowed the tracks to take a disproportionate amount off the top. Also, the Illinois Lottery proposed a bill that would have allowed the purchase of lottery tickets online. At first this sounded like an innocent enough of a bill that the IHHA, the tracks and the boats were not opposed while it was in the Senate. But, after some research by one of our lobbyist, we were able to see that this bill would not stop the lottery from offering the purchase of instant tickets online. On the websites of the companies that were touting this bill it was clear that the end result was to offer games that would mimic slot machines. This would obviously have had a negative impact on the horse racing industry. After much effort we were able to develop a coalition of gaming entity lobbyist to work together to defeat this bill in the House.

Your contention that the IHHA is good at representing drivers and trainers but not owners and breeders is contradictory. While the by-laws of the IHHA state that we also represent the breeders the fact remains that they have their own organization. But, the standardbred owners would have been the biggest winners of all from the IHHA’s lobbying efforts. By holding out for a fair share of the slots revenue while negotiating with Lou Lang, I estimate that the horsemen’s purse accounts will receive in excess of $20 million more per year than the share proposed by the tracks and endorsed by all other horsemen and breeders organizations except the IHHA. Once again the IHHA’s firm stance to not except a bad deal is what won the horsemen their fair share.

Another proposal that was being pushed in lieu of slots at the tracks was to give the horse racing industry a percentage of the riverboats revenues. While the IHHA agreed in concept with this proposal, we were adamant that the only way we could agree to fully support this bill was if recapture was eliminated, that there was language agreed upon by the breeders and that there were provisions for the backstretch workers. Again, I do not see how the IHHA’s stance on this issue would be adverse to any horsemen in Illinois.

Many Illinois horsemen and women share your view that one organization would serve the industry better, including many on the IHHA board. But, until the current organizations themselves resolve to find a solution to joining together, there is no way, in my opinion, that a third organization that was started by the officers self appointing themselves, can be beneficial to the industry. In fact it only causes more confusion, especially in Springfield, and is a detriment to what is in the best interest of harness racing in Illinois. This confusion with the legislators can and will be used by the tracks, the riverboats and the thoroughbreds (all of which we have issues with) to bolster their lobbying efforts at the expense of harness horsemen. Since success with a gaming bill in the veto session or a special session is unknown, our upcoming contract negotiations with Balmoral and Maywood are more critical than ever. Now is not the time for a group such as yours to be dividing the horsemen, but for all horsemen to give their support to the IHHA’s efforts in Springfield and at the negotiating table.

Sincerely

Jack Kelly