RULING NUMBER COM GEN 004/2009

COMMISSION HEARING TORONTO, ONTARIO – DECEMBER 10, 2009

IN THE MATTER OF THE RACING COMMISSION ACT S.O. 2000, c.20;

AND IN THE MATTER IN THE APPEAL AND REQUEST FOR HEARING OF

WINDSOR RACEWAY INC. OPERATING WINDSOR RACEWAY

Windsor Raceway appealed the Notice of Decision dated December 1, 2009, issued by the Deputy Director. The Notice of Decision declined to approve the application by Windsor Raceway to race 86 race days but carding 25 race programs through “doubleheaders”.

On December 10, 2009, a Panel of the Ontario Racing Commission consisting of Chair Rod Seiling, Commissioner David Gorman and Commissioner John Macdonald convened to hear the appeal.

Maureen Harquail appeared as Counsel for the Administration. Ryan Teschner appeared as Counsel for Windsor Raceway. Darryl MacArthur appeared on behalf of the Ontario Harness Horse Association.

Upon hearing the evidence of Wendy Hoogeveen and Christopher Kruba, and upon reviewing the evidence and hearing the submissions of Counsel for the Administration, Counsel for Windsor Raceway and the Ontario Harness Horse Association, the Panel denies the appeal.

The Panel’s Reasons for Decision is attached to this Ruling.

DATED at Toronto, this 16^th day of December, 2009.

BY ORDER OF THE COMMISSION

Rob McKinney

Deputy Director

REASONS FOR DECISION

Overview

1. Windsor Raceway appealed a decision of the Deputy Director of the Ontario Racing Commission (ORC) wherein its revised 2010 live race date application was denied.

Background

2. On December 10, 2009 a de novo hearing convened to hear the appeal. Maureen Harquail represented the Administration of the ORC as legal counsel. Ryan Teschner acted as the same for Windsor Raceway. The request for status at the hearing by the Ontario Harness Horse Association was agreed to by the parties. Daryl MacArthur acted as its representative.

3. On September 16, 2009, Windsor Raceway filed an application for its 2010 race dates (Ex. 1, tab 2). The application was made in accordance with ORC Policy Directive No. 3-2007 (Ex. 1, tab 1). The Policy stated that if a track was applying for the same number of race days that it had approved in the preceding year, its application was deemed to be approved. If a track was applying for less dates, it had to support its application with a business case. Attached to the Directive were 6 indicators that tracks were required to address in making their case for change. They were as follows: customer satisfaction and demand for product, adequate purse levels, racing opportunities and available horse supply, financial condition of the racetrack association to deliver, harmonization of date schedule with other Ontario tracks and motivation to engage in the conduct of live racing.

4. That application, if approved, would have allowed Windsor to race 86 race days in 2010, a decrease of 25 days or 23% fewer days than its 2009 approved schedule. Other Ontario tracks had to submit their respective 2010 race date applications at the same time as Windsor. When added to Windsor’s application, the total date reduction in 2010, if approved, would have been 150 less days of live racing in Ontario.

5. The Board of the ORC resolved that the potential impacts to the Ontario horse racing industry could be significant. As a result, it instructed the Administration of the Commission, by way of a unanimous resolution, to issue a moratorium on race dates for 2010 (Ex. 1, tab 3). “The effect of this moratorium will be that any application for reduced 2010 race dates will not be considered and the number of race dates awarded for 2010 will be the same as 2009. An application for change in scheduling of those days (days of the week, post times, etc.) will be considered when a business case supporting that change is provided, as prescribed on Policy Directive 3 -2007.” Kawartha Downs did have a change of dates approved. The Administration approved that track’s request to move a third day of racing in July to November on the basis that the July dates had proven not to be successful. The change did not result in a loss of any race days and was supported by a business case according to Ms. Hoogeveen.

6. On October 21, 2009, Windsor resubmitted a revised 2010 race date application (Ex. 1, tab 4, p 14). That application, if approved, would have resulted in Windsor racing 86 days, the same as its original application, but carding 111 race programs. The 25 race dates were made up via “doubleheaders” on Sundays. Post times for the Sunday cards were to be 5:05 p.m. and 8:05 p.m. The application would also have seen Windsor not race in either May or September.

7. The Deputy Director of the ORC, following the circulation of Windsor’s revised application to the industry for comment, as per policy, issued a ruling (Ex. 1, tab 5) denying Windsor’s revised application. The Deputy Director stated in the reasons “racing two cards on one day does not constitute two race dates and therefore does not meet the requirement of Policy Directive 6-2009, and, regardless, would be a major change to the approved schedule.” He went on to say major changes to the schedule had been deemed by the Director not to be approved. Mr. Kruba submitted that the Administration had never communicated information relative to minor/major changes.

8. Wendy Hoogeveen, Director of Industry Development for the ORC, testified that the indicators listed in the Directive were not the sole means by which the Administration judged an application. Chris Kruba, legal counsel and a director and officer of the operating company for the track, testified that he was unaware of that fact. No evidence was lead as to Windsor making any inquiry as to whether there were any other factors that the ORC utilized in its decision making related to race date applications. The wording in the Directive is clear. “The Administration is proposing the following indicators and has presented some indicators relevant to each factor by way of example.”

9. The OHHA responded to the revised application by way of a letter dated November 18, 2009 (Ex 1, tab 10) opposing the revised application. Mr. Teschner submitted that this letter confirmed OHHA’s support for the revised application. The President of OHHA, Mr. MacArthur, confirmed his association’s opposition to the revised application.

10. Ms. Hoogeveen stated that the Administration did not consider a doubleheader to equate to 2 days of racing. She admitted that the Commission did not have an official definition as it relates to a doubleheader. Mr. Kruba submitted that a doubleheader did equal 2 days of racing and referenced a Standardbred Canada communication (Ex. 3, tab K). That document was reporting on race cards in New Brunswick that were approved for 2009. Those race cards included a number of doubleheader days. It did not reference each race card as a race date. Mr. Kruba also submitted that the approval by the state of Florida’s Pari-Mutuel Division for 140 “performances” for 2009 and 2010 that included Saturday doubleheaders provided additional support for Windsor’s assertion that two race cards on one day equalled two days of racing. Again, a racing performance was not referenced as a race day.

11. Windsor’s economic plight is well documented. The impacts from 9/11, competition from casinos, border issues et al are beyond dispute. Windsor’s owners would have been aware of these facts when they purchased the track in 2004. Notwithstanding, these factors have had negative impacts on Windsor Raceway’s business, both the pari-mutuel handle and slot revenues accruing to the track which is shared 50% with horse people. Both of these factors have resulted in lower purses at Windsor Raceway. Mr. Kruba submitted that those factors impacted on the track’s ability to attract sufficient horses for its races. These facts have been noted previously by this Commission in making decisions that allowed Windsor Raceway to reduce race dates and do not need repeating.

12. Comparisons between Windsor Raceway business levels versus Woodbine in Toronto and the respective economies were submitted by the appellant. That information was irrelevant to the issue before the Panel.

13. In moving to doubleheaders on Sundays, Mr. Kruba submitted that the track was attempting to maximise simulcasting revenues as Sundays were a “good” day for the track as other tracks wagered more money on Windsor races that day than Saturdays which were being proposed to be dropped. The track had not considered any doubleheaders in its original 2010 application, even on a trial basis.

14. In terms of logistics for the doubleheaders, Mr. Kruba submitted that track management had a feasible plan to deal with the extra load on its backstretch the doubleheaders would create. Windsor, at one time, it was noted, did race doubleheaders, but this was at a time when Windsor’s backstretch barns were full of horses racing at the track. Those barns now sit empty except those utilized for ship in purposes. It was evident from questions posed to Mr. Kruba that the track had not adequately considered the potential logistical issues that horse people might face from doubleheaders. Some horse people might not be able to transport to the track the horses they would race over a Saturday/Sunday scenario versus a doubleheader on Sunday because their respective horse trailers could not accommodate the extra horses.

15. The track was of the opinion that it had successfully met the criteria set forth in Policy Directive No. 3-2007 and on that basis their application should be allowed in as much as it would be racing the same 111 race dates in 2010 as it did in 2009. Furthermore, that the Administration had made three errors in its ruling, those being the reference to Windsor’s application being major, two cards of racing being counted as one and that it had horse people support and that the Commission had to treat Windsor differently because of its economic situation.

16. Mr. Teschner referenced the Panel to a recent Court of Ontario Appeal, Mavi v. Canada (Attorney General), 2009 ONCA 794 and specifically to para 124 which reads, “Discretion is fettered or abused when a policy is adopted that does not allow the decision maker to consider relevant facts of the case, but instead compels an inflexible and arbitrary application of the policy.” He added that under S. 6 of the Racing Commission Act, the Commission, under that public interest mandate, was compelled to keep Windsor racing.

Issue

17. Was the Deputy Director’s ruling reasonable given the moratorium mandate of the Commission as communicated to the industry in Policy Directive No. 6-2009?

Decision

18. After carefully listening to the testimony and reviewing the evidence and the documents submitted, the Panel denies the appeal.

Reasons for Decision

19. The Deputy Director’s ruling was reasonable based on the intent of the moratorium, that is, to prevent any substantial change to future race dates that could impact the horse racing industry in Ontario. The horse racing industry in Ontario is comprised of a number of segments besides racetracks, and the Commission, under its mandate to protect the public interest, was and is compelled to act. The moratorium is the best means to ensure that mandate is fulfilled.

20. The Commission clearly is not bound to an inflexible application of the moratorium. Proof of that statement is the approval of the requested date changes by Kawartha Downs by the Deputy Director and the acceptance of the Western Fair appeal that is being released concurrently with this decision.

21. With respect to Windsor Raceway’s application specifically, no evidence was led that would prove the track would suffer irreparable harm by not having the revised application approved. Reduced pari-mutuel handle and slot revenues do not offer such conclusive poof.

22. Notwithstanding, the fact that the application was reasonably denied with respect to the moratorium criteria, the application clearly did not meet all indicators outlined in Policy Directive 3-2007 as submitted by the appellant. It did not have industry support. The OHHA was clearly opposed despite the track’s different view, there were realistic logistical issues that could affect horse supply as revealed during the hearing notwithstanding the track’s attempt to categorize its contract with OHHA ensured sufficient horses for the races. Mr. Kruba was unaware that Pompano Park has a large on track stabling capacity that provides it with an adequate supply of horses that supports its ability to card doubleheaders. No mention was made of the track’s on track customer base views. While the Panel acknowledges the importance of simulcasting in the current business of horse racing, it also recognizes the need for tracks to both hold and build its live business for the future of the sport. Customer support is critical to success as every business knows.

23. The issue as to whether the proposed changes were major or minor is irrelevant. Moving 25 race cards to doubleheaders, some 23% of the track’s racing is a substantial change and clearly would violate the intent of the moratorium. On a similar basis, the Panel need not address whether a double header represents one or two days of racing. The Panel notes the concept of doubleheaders were not included in the track’s original application. It certainly becomes a stretch to see them appear on the second application that somehow results in the same number of actual race days for 2010, 86, as was rejected previously.

24. Doubleheaders may very well be an excellent innovation for Windsor Raceway, or, for that matter, other tracks as well. That concept, along with a number of other pressing matters such as race date harmonization, appropriate rates of return, are just a few of the matters the industry consultations are expected to address via the moratorium consultation process.

DATED this 14^th day of December 2009.

Rod Seiling

Chair