LEXINGTON, Ky. - On the eve of horse racing's biggest weekend, tribal
casinos appear to be pulling ahead in a long-running contest over their
off-track betting operations.
Churchill Downs Inc. (CDI), owner of the host track for the storied
Kentucky Derby May 7, relented on its earlier denial of broadcasting and
betting links to the Tonkawa tribal casino in Oklahoma. The reversal eases
a threat to other tribal casinos that run "rebate shops" for high-volume
"We're elated that Churchill Downs has been reasonable," said Chip Rogers,
director of Native American Customer Support for Las Vegas Dissemination
Corp., a leading provider of satellite simulcast signals, which serves the
The Tonkawas and the Coeur d'Alene tribal casino in Worley, Idaho had been
denied simulcast signals by the New York Racing Association (NYRA) at the
end of January. Although the cut-off followed a dramatic organized crime
illegal gambling indictment mid-January in New York federal court, in which
the Tonkawas were mentioned but not charged, neither tribal casino has been
accused of illegal activity.
Several racetracks followed New York's lead in shutting down the Tonkawas,
but Bob Bostwick, director of public relations for the Coeur d'Alene
Casino, said its other connections remained normal.
Bostwick said that talks with the NYRA were progressing and that casino
officials expected its signal to be restored "hopefully before the Triple
Crown is decided." The Belmont Stakes, third leg of the classic series,
will be held at NYRA's Belmont Park on June 11. Tribal casinos with
off-track betting are heavily advertising the Kentucky Derby and Triple
Crown, and even some casinos without race books have launched related
The signal cutoff also reflects a business struggle over high-volume
betting rebates, which several tribal casinos have found to be a profitable
sideline. The Churchill Downs reversal shows that tribes, and other
rebaters, have substantial economic leverage in the dispute.
CDI is the corporate parent of six tracks in addition to Churchill Downs,
which recently began its spring race meeting. It cut off simulcasting to
Tonkawa from its Fair Grounds track in Louisiana shortly after the Jan. 17
indictment. On April 28, however, the company announced it would
tentatively restore the signal at three tracks beginning their spring
sessions. The decision includes broadcasting of the Kentucky Derby, one of
the biggest betting days in racing.
Karl Schmitt, president of the Churchill Downs Simulcast Network, told the
Daily Racing Form that the restoration could be temporary and that the
company wouldn't open its betting pools to any new rebate operations. "We
have made it clear that our commitment to doing business with these
operators could well be short-term," he said.
But Rogers of LVDC said the Tonkawas had managed to meet CDI's demands for
more "transparency" in its operations. He noted that another racing giant,
Magna Entertainment Corp., decided against breaking off the signal after
receiving similar information. "Magna stuck with us," he said.
The current shut-off arose after charges that a gambling group, alleged to
have Gambino crime family affiliations, was laundering money and disguising
identities for patrons of the "rebate shops." But the high-volume off-track
betting sites were already controversial in the industry. Several tracks
had cut off signals to some sites, including the Coeur d'Alene, in earlier
years, charging they helped gamblers with sophisticated computer links gain
an edge on ordinary bettors.
Off-track betting at simulcasting sites now provides the bulk of the handle
for horse racing, and the impact of the signal shutdown shows how important
rebate shops have become.
The Daily Racing Form reported that after the New York Racing Association
cut off the 10 or so of the largest rebaters in January, its handle dropped
by 12 percent. Another track joining the boycott lost 10 percent of its
business. On the other hand, Magna Entertainment's Gulfstream Park in
Florida showed a 4.3 percent increase in off-track business. The growth,
attributed to its capture of the rebate shop business, helped Gulfstream
overcome a drop in live attendance due to unfinished renovation work.
NYRA Executive Director Bill Nadler acknowledged it would take an economic
blow when it shut off the signals. In a Jan. 25 statement, he said that
losing just the 10 rebate shops could reduce the annual handle by as much
as $300 million. But the NYRA had more to worry about than economics. The
Jan. 17 indictment described an incident of horse doping at Aqueduct, one
of the three tracks the association manages, and it couldn't have come at a
worse time for the state-chartered outfit.
The NYRA had narrowly avoided criminal prosecution for tax evasion among
its employees and was operating under a federal overseer. Its license is
due to expire in December 2006. A rival consortium has already formed. In
addition, the New York State Racing and Wagering Board, state regulator of
both race tracks and tribal casinos, has withdrawn approval for simulcast
contracts with the main high-volume sites, including the Tonkawas and the
Rogers said his Tonkawa clients had made less progress with the NYRA than
with other signal providers. "That's a tougher nut to crack," he said.