Illinois Racing Board Recapture Accounting Methods Questioned By ITHA

The “recapture” rule designed to help horse racing tracks in Illinois avoid losses, which has been a source of consternation in recent years as Arlington Park, Hawthorne Race Course, and Fairmount Park struggle to fund overnight purses at a competitive level in the Midwest region, became an unexpected flash point during Tuesday’s Illinois Racing Board meeting.

The IRB unanimously voted to recapture a combined $11.5 mm from the 2020 purses to the three tracks, but representatives from the Illinois Thoroughbred and Horsemen’s Association called into question the accounting methods for the funds. Arlington Park, which is slated to receive $4.5 mm in recapture funds, will be the only track of the three that will require such funds for this fiscal year.

That is because Hawthorne and Fairmount Park are pursuing racino licenses as part of the gaming expansion bill signed into law last summer, and that is expected to help fully fund their overnight purses. The decision by Arlington Park owner Churchill Downs Incorporated not to seek a racino license last August is a contributing factor to the track continuing to need recapture and the current impasse between Arlington Park and the ITHA regarding daily overnight purse size.

ITHA’s McCaffrey explains potential recapture flaw

The funds that are paid in the “recapture” come out of the overnight purses and are given to the track. The purses, though, are expected to be reimbursed according to state law, though that provision has not been enforced in recent years through the Department of Agriculture, which oversees horse racing in Illinois.

ITHA President Michael Campbell and Executive Director David McCaffrey addressed the board in impromptu fashion — their remarks were not scheduled on the agenda — because they had noticed a potential irregularity in the accounting methods in the days immediately leading up to the meeting.

Campbell conceded to the IRB recapture is a “statutory responsibility you serve by … and we agree with that” before letting McCaffrey explain how he arrived at the possibility the accounting methods may be incorrect. He noted how the Twin Spires app for mobile betting had “no location services in the setting” and examined the recapture statute with regards to Advance Deposit Wagering (ADW).

“At Arlington Park, they encourage people to bet on their ADW devices, they have signs throughout the building that say, ‘Skip the betting lines and open an ADW account,’ which is perfectly fine,” McCaffrey said. “But there are a tremendous number of betters betting on their ADW account. And per the law, those are supposed to be tracked and considered to have been placed at that wagering facility.

“Maybe this is being done, and I’m not aware of it, but I don’t see it on any purse reports … if it is, then terrific. But if it’s not, and I suspect it’s not because I don’t know how you’re doing it if the people don’t have location services on the phone, then I don’t know how you can calculate recapture accurately because you’re not including handle that’s taking place at the wagering facility.”

IRB’s Brincat volleys back

McCaffrey’s use of the phrase “per the law” and saying the recapture amount should not be certified so close to the deadline — which is Jan. 31 — appeared to rankle IRB Chairman Jeffrey Brincat. He asked, “Where is Mr. Belmonte wrong,” referring to Mike Belmonte, who is the Director of Mutuels for the IRB. After McCaffrey pointed out he made no such reference to Belmonte, Brincat rephrased his question to, “if you feel there’s an error, where is the error?”

When McCaffrey’s answer included “that the law requires,” Brincat interjected, asking again, “Where is the error,” to which McCaffrey responded, “I’m trying to answer.” At that point, Brincat retorted, “Don’t try to talk over me.”

Campbell then asked, “is geolocation being taken advantage of? Is it being accounted into that formula? That’s all we’re asking.”

Brincat noted his objection was not having the issue brought up, but said, “if your idea is to come into these proceedings and question potentially a methodology, I would say then exert more effort before the meeting. It doesn’t mean you’re right or wrong, but you certainly can’t expect this body to consider a potential theory and say, ‘Hey there may be a mistake we’d like you to look into this’ before we certify these numbers.”

Bringing the issue up so close to the certification deadline was a point of contention for the IRB chairman, who noted the recapture process has been going on 26 years. Brincat conceded there could be an error in the methodology but added, “to wait for every January and certification to wait and say, ‘Hey wow, I see this, we may have an issue,’ I question your approach in this.

“If you have questions on the methodology, I wholeheartedly support you getting those answers. But to not provide anything in advance, not query the parties directly doing this in advance, and come in and verbally pontificate about a potential error, I certainly question that a lot more.”

A second back and forth

After the two sides briefly discussed the technical aspects of ADW pertaining to the site of the wager, McCaffrey circled back to Brincat, starting his remarks with “Accusation is a little pejorative.” Brincat quickly cut him off, saying, “Mr. McCaffrey, I appreciate your comments, I really do. I don’t think there’s any purpose to be served by you trying to read into what you think is the intention of my comments.

When McCaffrey tried to recall Brincat’s comments about the timing of bringing up the potential flaw, the IRB president again talked over him.

“I’m going to ask you one more time not to talk over me. I’ll be happy to talk to you outside after the meeting and clarify any concerns you might have. Don’t try to gauge my intentions.”

McCaffrey noted he had received “backlash” at a weekend ITHA board meeting because he did not want to talk about recapture given it has been so contentious over the past 10 years. He recounted his and Campbell’s comments at the 2018 meeting regarding the subject and also noted Brincat said, “if the math is bad, if Bob (Lang’s) numbers aren’t right or there’s something in the statute not being followed, we’ll entertain that.”

The ITHA executive director stressed his comments were not a “sneak attack,” pointing out he had not even discussed his thoughts with Campbell and Trainer & Trainer-Owner Director Chris Block on recapture until they all arrived at the Thomsen Center on Tuesday morning.

“I want to talk about recapture in a different way because I found something and I don’t know if it’s being followed, I don’t know if it is or isn’t but I think it’s worth bringing it up,” McCaffrey said. “They didn’t know anything about this until an hour ago.”

At that point, IRB member Thomas McCauley asked to “assert a personal point of privilege” and requested a five-minute break, which was agreed to.