National HBPA approves plan to set up offshore wagering hub

The National Horsemen's Benevolent and Protective Association has endorsed a plan to create an offshore wagering hub that would take bets from international locations, officials for the association said Wednesday.

The hub, which would be owned by a company called SimulTech and based in the Caribbean, would collect wagers from sites around the world in a separate pool for U.S. races, and would be prohibited from offering rebates or taking bets from U.S. citizens. NHBPA officials said they endorsed the plan because of concern about the spread of illegal bookmaking shops throughout the world that pirate U.S. racing signals and pay nothing in return.

"We're willing to work with anyone out there as long as they do two things," said John Roark, the president of the NHBPA. "Pay us a percentage of the handle, and give us access to the liability reports," or the data on the bets that have been made at the sites.

The NHBPA, which represents about 30 state horsemen's associations, has been studying offshore wagering for the past two years with the help of Stevenson and Associates, a wagering consulting company that also negotiates simulcast contracts for racetracks in the international market. The study has yielded the identity of more than 1,200 sites that take illegal wagers on American races, Roark said.

Stevenson submitted the SimulTech proposal to the NHBPA board at the organization's semi-annual meeting this week in New Orleans. The board endorsed it unanimously on Wednesday.

Under the proposal, SimulTech will be owned by a number of investors, including Stevenson, according to Roark. However, NHBPA officers will be prohibited from investing in the company due to a potential conflict of interest, Roark said.

To offer races to the foreign sites, SimulTech will contract with U.S. racetracks for the rights to sell their signals. SimulTech will then negotiate with international sites on a rate for the signals, provide legal sites with decoders to pull down the signals from satellites, and oversee the distribution of revenues from the wagers to tracks and horsemen in the United States, Roark said.

Roark said he was prohibited from talking in more detail about SimulTech because of a confidentiality agreement with Stevenson. He said Stevenson will report in full about the investors in the company at the NHBPA's next meeting, on April 7.

"We really don't know a whole lot yet about what it will look like or how it will work, but we hope to know just about everything" by the April 7 meeting, Roark said.

Roark said the creation of an offshore site was necessary to avoid U.S. tax laws that make it virtually impossible for many foreign countries to bet into U.S. pools. Under the tax laws, any winning wager made by a foreign bettor on a U.S. race is subject to a 30 percent federal withholding tax, no matter the size of the bet.

Over the past two years, lobbyists for the racing industry, led by the National Thoroughbred Racing Association, have been attempting to get the withholding tax repealed. Many racing officials feel that the elimination of the tax could lead to an explosion of betting on U.S. racing in international markets.

Bill Nader, a senior vice president of the New York Racing Association, said Wednesday that the NHBPA hub would suffer from an inability to give bettors access to the larger commingled pools in the United States. But he said it would be premature to dismiss the NHBPA's concept because of some "very good intentions."

"I think there are some good ideas in there," Nader said. "But I'm reasonably confident the 30 percent withholding will be gone by the end of the year, so it will be interesting to see if you can go back and reshuffle it somewhat."