04/24/2016 8:13PM

California racing could reap $60 million annually if Internet poker legalized

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CYPRESS, Calif. - California horse racing could gain $60 million annually through legislation that would permit Internet poker and compensate racing for the loss of exclusive online gambling.

Currently, horse racing is the only form of legal online gambling in California, which would change with the development of legalized Internet poker. The $60 million would be divided primarily between racetracks and horsemen, in the form of purses.

An update on the legislation was part of an hour-long presentation of racing issues conducted at Los Alamitos on Saturday morning by Nick Coukos, the president of the Thoroughbred Owners of California.

Other topics discussed before a small group of owners and trainers included off-track stabling, the distribution of revenue from account wagering, the development of mini-satellites in Southern California, and purse revenue from Santa Anita.

The Internet poker legislation (Assembly Bill 2863) would allow Internet poker licenses to be awarded in the state, and dictates that racetracks must receive compensation of at least $60 million each year from license holders.

The bill is scheduled to be heard by the Assembly Government Organization committee in Sacramento on Wednesday. Any potential vote by the assembly or senate is unlikely to occur for several months. The bill would require the signature of Gov. Jerry Brown.

Coukos, who has a background in Ontario racing and joined the TOC last winter, was a co-signor of a three-page letter sent to California assemblyman Adam Gray on April 21 emphasizing that California racing interests wanted at least $60 million in annual revenue to be divided primarily between horsemen and tracks offering live racing. Racetracks that close would no longer be eligible for the funds.

Gray is a co-author of the Internet poker legislation. The letter was signed by executives with Del Mar, Los Alamitos, the fair circuit, California Thoroughbred Breeders Association, California Thoroughbred Trainers association, Jockey’s Guild and two labor unions representing racetrack employees.

Coukos told the TOC forum that the $60 million would be a massive boost for purses throughout the state. Coukos said the revenue would allow California racing to compete with other states, which have subsidized purses through revenue from casinos and slot machines.

“It will be the first time we get some other form of revenue which we need eventually,” he said. “We’re running at a complete disadvantage to other states in the nation.”

Currently, California horse racing has exclusivity for legal gambling in the state through account wagering providers. Legislation to legalize fantasy sports and sports wagering are being considered in the legislature. In the letter to Gray, executives said California racing interests could chose to participate “in future Internet gambling activities that do not include Internet Poker.”

On other subjects, Coukos said the TOC is working with the California Horse Racing Board on a way to redistribute revenue from account wagering customers who place bets while ontrack. Coukos said revenue from such bets generate smaller fees for purses than a bet made ontrack through parimutuel machines.

“We want to make sure we get our fair share of the wagers,” Coukos said. “It will be millions of dollars that could be directed to purses and commissions for the racetrack.”

The TOC is seeking long-term solutions to provide stabling for approximately 3,400 horses in Southern California. Year-round stabling is currently offered at Los Alamitos and Santa Anita and at the Galway Downs and San Luis Rey Downs training centers, with seasonal stabling at Del Mar during race meetings.

Coukos said the TOC would like to have a 20- to 25-year commitment from racetracks for year-round stabling, but that such an arrangement is unlikely.

Mini-satellites, which offer betting at venues such as restaurants, card clubs, and bowling alleys, were introduced in late 2010. Coukos said betting from such locations represents 20 percent of the satellite network with expectation for additional growth.

Purses paid at Santa Anita were down slightly from the start of the track’s winter-spring meeting on Dec. 26 through the end of March. Coukos said $17.679 million was distributed this year, compared with $17.937 million in 2014 and early 2015. The 2015-16 meeting began with an underpayment of $575,000, which has been reduced.

 “The meet at Santa Anita, from a revenue handle perspective, has not met our expectations,” Coukos said. “Unless we have a turnaround, we could have an overpayment issue that we could have to address. We’re confident we can turn that around.”