10/15/2014 1:04PM

Colonial Downs surrenders racing license

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The owner of Colonial Downs in Virginia surrendered the track’s racing license Tuesday at a meeting of the Virginia Racing Commission and said the track and its seven off-track betting parlors would close as of Nov. 1.

Jeffrey Jacobs, whose family company opened Colonial Downs in 1997, announced he was surrendering the state’s only Thoroughbred racing license just prior to the commission taking a vote on whether to approve a 10-year live-racing contract Colonial had signed with a new “horsemen’s group” created by the track. Officials of the new group, called Old Dominion Thoroughbred Horsemen’s Association, had held meetings with commission members over the past several weeks in an attempt to convince the regulators the group had a legitimate claim to represent horsemen, but those talks went nowhere.

“I understand from private conversations that the commission support is not there for ODTHA and our contract with the ODTHA,” Jacobs said at the meeting, according to a text of Jacobs’ statement distributed by Colonial. “Rather than putting our industry through a painful public meeting, which will benefit no one and will just serve to polarize all the Virginia stakeholders, I am now withdrawing Colonial Downs’ Thoroughbred and Standardbred race-day requests.”

Federal law requires racetracks to have a live-racing agreement with a group representing the majority of horsemen in the state before they can simulcast. The Virginia Horsemen’s Benevolent and Protective Association has had a contract with Colonial since the track opened in 1997.

Colonial Downs did not conduct Thoroughbred racing this year for the first time in its history due to a dispute with the Virginia HBPA over race dates and other matters surrounding the live meet. In addition, its seven OTB parlors have not taken wagers on Thoroughbred simulcasts since February.

Frank Petramalo, the executive director of the Virginia HBPA, said the group will seek to hold flat races at several of the various steeplechase racing sites in the state, including Great Meadow, site of the Oct. 25 International Gold Cup. The Gold Cup card currently includes three flat races.

The Virginia HBPA has approximately $5 million in its purse account right now, according to Petramalo. He said the group also may consider forming a nonprofit company to bid on Colonial Downs in the future, but he called that and other plans “sketchy” at the moment.

“It’s certainly the short-term end to racing at Colonial Downs,” Petramalo said.

Asked if he had any regrets for the tack the Virginia HBPA took during negotiations with Colonial, Petramalo pointed out the group had accepted two separate proposals from the Virginia Racing Commission that Colonial rejected, and he said Colonial had no intention of negotiating in good faith.

“I don’t think it was a matter of economics, despite what they said,” Petramalo said. “Any objective observer would have seen that there wasn’t much difference between our positions and that there was room to compromise.”

Jacobs has threatened for several years to close the track if substantial changes weren’t made in how the track conducted its operations. This year, Jacobs insisted the track run a handful of race dates, even though horsemen were adamant in supporting a meet that ran for at least six weeks, as had been customary in the past.

Jacobs and his family had sought the racing license for Colonial in the late 1990s, in part because of a hope the state would authorize casinos for racing licensees. However, over the past several years, it has become clear that Virginia’s legislature does not have an appetite for expanded gambling at a time when many state legislatures, including Maryland’s, are turning away from reserving additional casino licenses for racetracks anyway.

In his statement to the commission, Jacobs alluded to the potential of casino gambling when arguing racing could not support itself in the state.

“If Virginia’s statewide elected officials who created the pari-mutuel system in the first place could come up with a way for the horsemen to increase their annual purse money from the current $6 million a year to $15 or $20 million a year, all of the industry objectives could be met,” Jacobs said.