01/19/2005 12:00AM

Churchill, Oaklawn cut off rebate shops

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LEXINGTON, Ky. - Churchill Downs Inc. and Oaklawn Park have joined a growing number of racing associations to decide to cut off rebate shops named in a federal indictment released last week in New York in connection with an illegal gambling operation.

The rebate shops, which have not been charged with a crime, include Euro Off-Track, operating from the Isle of Man; the Tonkawa Indian Reservation, in Oklahoma; and both International Racing Group and Elite Turf Club, in Curacao. Another rebate shop named in the indictment, Racing Services Inc., is out of business and has been indicted in a separate case of running an illegal gambling operation.

Andy Skehan, the chief operating officer of Churchill Downs, said that Churchill has cut off the Tonkawa site, International Racing Group, and Elite Turf Club as well as Lakes Region Greyhound Park in New Hampshire. Skehan said Churchill did not have a relationship with Euro Off-Track.

Two of the 17 people who were indicted in the case, Rick Hart and Jonathan Broome, are employed by Lakes Region. Both Hart and Broome are on administrative leave from the track while the case is being resolved, according to Hart's lawyer, Harry Manion.

Oaklawn Park cut off only Euro Off-Track, according to the track's director of simulcasting, Bobby Geiger. Oaklawn, which opens on Friday, had already cut off the others named in the indictment as part of a policy announced last year to prohibit betting on the track's signal from rebate shops that allow their customers to use computer-assisted wagering platforms.

The indictment, which was brought by the U.S. District Attorney for the Southern District of New York, alleged that three associates of the Gambino organized crime family operated an illegal gambling business that wagered $200 million on horse racing and other sports over a four-year period. The indictment alleged that several of the people bet on a horse trained by Greg Martin at Aqueduct with the knowledge that the horse had been administered a performance-enhancing substance, in this case, a milkshake.

The indictment has produced a cascade of reactions in the Thoroughbred industry, from decisions to cut off rebate shops to the adoption of programs to test horses for milkshakes, which are cocktails of sodium bicarbonate, sugar, and electrolytes that are intended to reduce muscular fatigue. On Tuesday, the New York Racing Association announced that it had cut off the sites named in the indictment and that it would begin testing for milkshakes soon. Tracks in New Jersey cut the sites off on Friday.

The actions came after a call from the National Thoroughbred Racing Association for racetracks to cut off betting sites that did not comply with requirements for disclosure recommended in a report by an NTRA task force last year. The report recommended that racetracks know the identity and background of all owners of an offshore site, the name of the regulatory agency with authority over the site, and the ways in which the sites attract and reward their customers, among other details.

On Wednesday, Greg Avioli, an NTRA executive vice president who led the task force, said that several offshore betting sites have contacted the NTRA since the indictment asking what they needed to do to comply with the recommendations.

John Sullivan, the attorney for Las Vegas Dissemination Company, which handles bet-processing services for the Tonkawa site, International Racing Group, and Elite Turf Club, said that the sites understood why racetracks had made the decision to cut them off, but said they expected to be allowed back into the pools.

"There's nothing in [the indictment] accusing them of any wrongdoing, and I don't think you'll find they did anything improper when it's all said and done," Sullivan said. "At this point, we're working with the racetracks to try to come up with a formula to provide a little more transparency into these businesses so that the tracks can see that there is nothing wrong going on."

Euro-Off Track is owned by a partnership of U.S. Off Track, an account-wagering operation that principally takes bets on greyhound racing, and betinternet.com, a British company. Officials for U.S. Off Track asked that questions be e-mailed to Paul Doona, the managing director of betinternet.com, who did not respond to a message late Wednesday.

Churchill, which owns six racetracks, currently has only one open for live racing, Fair Grounds in New Orleans. Several of its other racetracks, including Churchill Downs in Louisville, Ky., and Hollywood Park in Inglewood, Calif., open this spring.

The winter racing schedule is dominated by tracks owned by Magna Entertainment, including Santa Anita Park in Arcadia, Calif., and Gulfstream Park in Hallandale Beach, Fla. Magna officials said that comment from the company would have to come from Jim McAlpine, the company's chief executive officer, who was traveling on Wednesday.