Between the lines

Harness racing’s one per cent integrity fee

January 26, 2018

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The game should follow the lead of the NBA, which is proposing a one per cent “integrity fee” should sports betting become legal nationally.

by Brett Sturman

This week, the National Basketball Association (NBA), in advance of a U.S. Supreme Court ruling in the coming months that could strike down a federal prohibition against legalized sports betting, made it known that they would be seeking a piece of the action should the ban on state sponsored sports betting be lifted.

The NBA is calling for an “integrity fee” of one per cent, which would be based on the total handle legally wagered and paid by sports gaming operators (i.e. sportsbooks, as an example). The NBA is citing that the controversial one per cent fee would be necessary for the league to implement new efforts related to ensuring the integrity of the game is maintained while intertwined with legalized betting. Whether you believe the NBA’s reasoning for the fee, there are things that harness racing can take away from this.

For years, there have been people in the harness racing industry who are proponents of redirecting a small percentage of money from tracks with alternative gaming (slots) and using it towards the betterment of the sport.

GM and COO of Meadowlands Racing & Entertainment Jason Settlemoir is one of those individuals, and he sees some parallels between what the NBA and professional sports leagues are proposing, and harness racing.

“I think what the NBA is proposing as far as the earmarking or allocating money for what purposes they are describing, correlates very well with something that myself and Mr. (Jeff) Gural have been huge proponents of for the last 10 to 12 years,” said Settlemoir. “And what that is, is taking a percentage of our gaming revenues and earmarking it for not only an integrity initiative, but also a marketing initiative, so I think there are plenty of parallels there.

“I truly feel that we need to have a percentage of money earmarked nationally for marketing and integrity, and along with that, money towards two types of super labs right here in the U.S. Testing can then be sent directly to these super labs and money can be used to get on the cutting edge of (drug testing). In our industry, the chemists are always one step ahead so I think this would go a long way in combating that.”

In the past, a number that has been floated as the percentage to take from slot tracks or slot states towards integrity and marketing initiatives has been as low as one per cent, the same fee proposed by the NBA. But for the sports betting industry, one per cent would be far more detrimental than one per cent would be to harness racing. Nevada sports books operate on tight margins (only 3.5 to five per cent revenue according to the American Gaming Association), so a one per cent fee would on all handle would equate to 20 per cent to 29 per cent of its total revenue. On the other hand, race purses in many states with slots continue to be distributed as if the money will never run out.

I know, it’s easy for me to sit here and say what’s only one per cent to be taken from purses and redirected elsewhere. But I’ve spoken with various owners – both large and small – on the topic and all would be for such an initiative if it were professionally organized and managed by reputable groups completely independent of harness racing.

It’s a fair assumption that most people involved in the industry wish for the future security of the sport and have a responsibility to help ensure it. A type of harness racing integrity fee – if applied intelligently – would help to secure that by assuring money provided to the sport is properly being reinvested back into it.

While the NBA and USTA are undeniably two very different types of organizations, could the USTA exert any influence over tracks when it comes enforcing an integrity fee? In previous occasions, the USTA has stated that it doesn’t have power to implement changes as its purely a record keeping organization. But is that entirely the case? Just last year, the USTA temporarily suspended the membership of Northfield Park over an issue of financial responsibility, so a recent instance exists of it operating in a capacity of control over membership.

Similarly, Settlemoir doesn’t necessarily buy into the notion that the USTA is powerless either. “The USTA has our biggest tool in their agreement they have with Trackmaster, and that’s the racing programs, and our membership into the USTA from the racetrack standpoint. We pay for the data, and to facilitate the process of making the programs and send those to our customers. So, I don’t think the USTA is powerless from that standpoint.”

The point in this isn’t to denigrate the USTA but rather to point out the unique position it may be in if it wishes to help tackle these issues that have been only talked about to date for quite some time. While some tracks do well at promoting harness racing, there are some tracks that do everything in their power not to promote racing.

In these instances where tracks haven’t been able to create a model where they can stand on their own, it would be well warranted for a governing or overseeing body to step in and take measures on its own to help ensure a quality harness racing product. Marketing of a product only goes so far if the product itself is bad, and the product will only improve when it’s cleaned up. Only then will both owners and gamblers return – the two things that were necessary for racing prior to alternative gaming.

I understand that right now slots are the name of the game and if I were in charge of things, preserving slots would be the most immediate priority just like it is for those running things today. But there is nothing to say that sustained national campaigns revolving around integrity and marketing can’t occur at the same time.

If the NBA can somehow find a way to charge a one per cent fee on something most people would argue it shouldn’t be entitled to, maybe harness racing can find a way to come together to find one per cent to fund initiatives that would benefit everyone. To borrow from the 1980’s NBA, perhaps harness racing can be FANtastic.a

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