Thoroughbred racing delay costing New Kent County

NEW KENT — New Kent County residents and business owners are already experiencing losses from the 2014 thoroughbred season debate between Colonial Downs and the Virginia Horsemen's Benevolent and Protective Association.

According to VHBPA Executive Director Frank Petramalo, the VRC meeting set for Friday morning was canceled without notice because the racetrack had planned on surrendering its license, which caught Virginia Secretary of Commerce and Trade Maurice Jones' attention. Petramalo was unsure if the racetrack still intends to surrender the license at this point in the negotiation process.

As of Monday, VRC Executive Director Bernard Hettel had not heard of “a final resolution to the impasse between the two parties.”

To save the 2014 thoroughbred season, Colonial Downs President Ian Stewart and the track's attorney, James Weinberg, are currently in talks with track owner Jeff Jacobs, of Jacobs Entertainment Inc., and Jones.

Stewart and Weinberg met privately Friday with Jones, members of the VHBPA, Virginia Racing Commission chairman J. Sargeant Reynolds Jr. and Vice chair D.G. Van Clief Jr., said Hettel in a phone interview Monday.

“It is Mr. Jones' and the VRC's fervent desire to run live racing here in Virginia in 2014,” Hettel said.

A costly debate

Colonial Downs and the VHBPA have been unable to reach an agreement on the Virginia Racing Commission's request for a five-week, 25-day thoroughbred season this summer. As a result, four of the eight Off-Track Betting (OTB) facilities were shut down after arguments over the length of the thoroughbred season led to the contract's expiration in January. The remaining four OTB facilities also cannot take bets on any Virginia thoroughbred racing, since a contract has not been signed between Colonial Downs and the VHBPA. The thoroughbred contract deadlock does not affect harness racing.

The horsemen's association is a nonprofit organization made up of 1,300 thoroughbred owners and trainers who race at Colonial Downs and who awards purses, or set amounts of prize money, to the winners.

The debate between the two sides has been costly. Colonial Downs has lost $1.5 million, fired 40 employees and reduced 50 employees' hours throughout the company, said President Ian Stewart said.

Additionally, the racetrack has not hired its usual 300 employees for the thoroughbred season, costing residents job opportunities.

“It's a shame because we are a big part of summer jobs, especially for high school students,” Stewart said.

The VHBPA has also lost $800,000 in its purse account as a result of the contract negotiations, and mainly from the OTB closings, said Petramalo.

Last year, the VHBPA had a $5 million purse account, which was used to pay the winning thoroughbred teams. Purses can run from around $7,500 to $500,000 depending on the horse's track record. Additional money can also be earned if the horse is Virginia-bred.

“A lot of horse owners are losing money because they can't race their Virginia-bred horses in Virginia,” said thoroughbred owner Chris Kuhn. “It's a very bad situation.”

The losses are not limited to local businesses and horsemen. They are also spread countywide and will affect every resident of New Kent. County Administrator Rodney Hathaway is estimating a $402,200 loss in revenue in this year's budget for fiscal year 2015 (FY15) if Colonial Downs is not able to salvage the 2014 thoroughbred season. The thoroughbred contract deadlock does not affect harness racing.

Most of the money is attributed to the loss of OTB revenue but does factor in meals tax and admission tax, said Hathaway.

The $402,000 loss in revenue caused Hathaway to make cuts to the FY15 budget that were originally planned for this fiscal year. Although the budget does not include a tax rate increase, residents could see one in future fiscal years to make up for the lost revenue - if Colonial Downs continues to operate without thoroughbred racing at the track and OTBs.

“Another $402,000 debt could very well affect taxes,” Hathaway said. “That amount alone could mean a one or 2-cent tax increase.”

“If our annual operating costs get higher, the domestic services grow, and expenditures go up but we have less revenue, we will most likely have to raise taxes,” he said.