CHRB regulatory fees decrease for Santa Anita, Del Mar

At its monthly meeting June 20 at Cal Expo in Sacramento, California, the California Horse Racing Board reluctantly adopted a compromise split that would fund the CHRB before the July 1 start of the regulator’s fiscal year.

The changes increase regulatory costs for California racetracks that race Thoroughbreds and night tracks that race primarily Quarter Horses and Standardbreds. Conversely, part of the regulatory costs for Saint Anita Park AND DelMarmajor thoroughbred racing tracks in the state, are now lower than under the previous model, although both tracks still cover most of the costs needed to support CHRB’s $18.2 million budget.

The regulator’s financial action was necessary when industry stakeholders could not agree on a fair cost allocation that the CHRB believed met legal requirements. Meetings between racetracks and CHRB commissioners were held in the weeks prior to Thursday’s meeting and no agreement could be reached.

The approved funding split did not place as heavy a burden on Santa Anita and Del Mar, the state’s highest revenue-generating racetracks, but was not as beneficial to them as a split based on brackets or race dates would have been. Los Alamitos Racetrackwhich takes place most of the year and includes meetings of Quarter Horses and lower-level Thoroughbreds, as well as several short afternoon meetings of higher quality Thoroughbreds, advocated a phased approach in which tracks other than Santa Anita Park and Del Mar would contribute to a higher percentage of regulatory costs.

Most agreed that tracks should bear the direct costs of hosting racing events to fund research, veterinarians, stewards and other positions necessary for CHRB operations. Indirect costs, which constitute the largest portion of the CHRB budget, have been largely the subject of debate.

“We believe you should pay for what you use. “We don’t think paying for what you use is a radical idea,” said Eric Sindler, general counsel of The Stronach Group, which operates Santa Anita Park as 1/ST Racing.

Some track officials argued that a drastic increase in the cost of Los Alamitos’ mixed breed evening programs and Watch And Wager’s Standardbred meets would be detrimental to already under-resourced tracks in California.

Many California racetracks have been overdrawn, leading to purse cuts. Unlike other leading racing states, California has no games to increase profits and purses.

While the CHRB concluded that a change to the funding mechanism was necessary based on its legal interpretation of state law, Commissioners Wendy Mitchell and Damascus Castellanos indicated that the need to change the funding model came to the fore shortly after the CHRB decided not to redirect simultaneous submissions money from Northern California to Southern California after 1/ST Racing announced its closure Fields of the Golden Gate in Northern California.

“It’s a situation where people didn’t like the decisions that were made. We didn’t agree with what everyone expected us to do (in) previous meetings, and I think that’s, frankly, punitive,” Mitchell said at her last meeting before her planned departure from the CHRB board. “And that is disappointing. … If we get to (the approved allocation), because that’s the best compromise we can come up with, I think I’ll sign off on it. … I think the timing is fishy.”

According to a spreadsheet prepared by CHRB, Del Mar’s compensation is expected to be about $4.68 million, compared to $5.35 million under the previous financing method. The reduced fees will be offset by higher fees at other tracks in the state.