New York OTBs drop Churchill's signals

New York’s five offtrack betting corporations have terminated a simulcasting contract with Churchill Downs Inc. and dropped the signals from the tracks controlled by the company, officials for the corporations said on Thursday.

The corporations, which negotiate collectively for simulcast signals, notified Churchill late last week that they would exercise an opt-out clause in their existing contract with Churchill, and they pulled the signals on Friday, according to Mike Kane, the president of Western OTB. Kane said the corporations objected to the price Churchill charged for the signals.

The pulled signals included Arlington Park, Hoosier Park, and the Meadows. If the two sides do not resolve the dispute, signals from Churchill Downs and Fair Grounds also would be unavailable later this year.

Kane said the terminated contract was signed just before this year’s Kentucky Derby, an event that commands the highest price of any simulcast signal in the U.S. He contended that Churchill raised the rates for all of its signals by approximately 25 percent at that time.

“We paid the rates because it was the only way we could get the Derby,” Kane said. “We think this is best for our customers and our owners,” which are the municipalities in which the OTBs are located.

William Mudd, the chief financial officer for Churchill, said in an e-mailed statement that New York’s OTB corporations were paying “well under fair market value” for the company’s signals by using their power as local monopolies.

“The [New York] OTBs underpaid for our signals for years, and the increase they are complaining about is an indication of the bargain that they demanded through their state monopoly and protection over the past several years,” Mudd said.

He also said the companies were being charged a higher rate than some Churchill customers because they did not operate live tracks or pay purses.

Arlington is two weeks away from its summer racing festival, which features the Arlington Million, Beverly D. Stakes, and Secretariat Stakes.
Kane said a law passed in 2008 requires the New York Racing Association to negotiate on behalf of the OTB corporations if the OTBs request NYRA’s representation. He said the OTBs have already asked NYRA to represent them, but any agreement reached by NYRA would go into effect at the start of a new contract with Churchill. NYRA’s current contract with Churchill expires in January, Kane said.