RULING NUMBER COM GEN 006(a)/2009
COMMISSION HEARING TORONTO, ONTARIO – DECEMBER 16, 2009
REASONS FOR DECISION
Overview
1. Macranald Enterprises Inc. has a division called Sudbury Downs (“Sudbury Downs”) through which it operates a standardbred racetrack under that name. Sudbury Downs appealed a decision of the Deputy Director of the Ontario Racing Commission (ORC) dated December 1, 2009, where its revised 2010 live race date application was denied.
Issue
2. Was the Deputy Director’s ruling, by a letter dated December 11, 2009, reasonable given the moratorium mandate of the Commission as communicated to the industry in Policy Directive No. 6-2009?
Background
3. On December 16, 2009, a de novo hearing convened to hear the appeal. Maureen Harquail represented the Administration of the ORC as legal counsel. Andrew MacIsaac, the Director of Operations at Sudbury Downs, represented Sudbury Downs. The request for status at the hearing by the Northern Horsemen’s Association (NHA) was agreed to by the parties. Bob Bodkin acted as its representative.
4. On September 15, 2009, Sudbury Downs 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 fewer 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 any 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.
5. Wendy Hoogeveen, Director of Industry Development for the ORC, reviewed tabs 1 and 2 of Exhibit 1 and pointed out that the original race date application of Sudbury Downs, if approved, would have allowed Sudbury Downs to race with 56 race days in 2010, a decrease of 11 days (12.8% fewer days than its 2009 approved schedule). Other Ontario tracks had to submit their respective 2010 race date applications at the same time as Sudbury Downs. When added to the Sudbury Downs application, the total date reduction in 2010, if approved, would have been 150 fewer days of live racing in Ontario.
6. The Board of the ORC resolved that the potential impact of fewer race dates for 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 in 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.
7. On October 20, 2009, Sudbury Downs resubmitted a revised 2010 race date application (Ex. 1, tab 4, p 63). That application, if approved, would have resulted in Sudbury Downs racing 67 days, the same number of days as approved for 2009. The post times for the Sunday cards were to be 1:15 p.m. and Wednesdays and Saturdays were set at 7:15 p.m. The application would also have seen Sudbury Downs not race in January, February, March and April, 2010 and no racing after October 30, 2010 through to December 31, 2010.
8. The Deputy Director of the ORC, following the circulation of the Sudbury Downs revised application to the industry for comment, as per policy, issued a Ruling (Ex. 1, tab 5) denying the Sudbury Downs revised application. The Deputy Director stated in his ruling that shutting down racing for 8 weeks and reallocating the race dates within a shortened season is a major change to the approved schedule. He stated that: “A major change, such as vacating whole parts of the calendar, would also require similar analysis and effort through consultation with the industry.”
9. Other issues considered by the Deputy Director (Ex 1, tab 5, pg 2) were as follows:
"1. Lack of support from the horsepeople.
Insufficient analysis of the impact of a three day per week schedule and the ability of the racetrack to ensure horse supply.
Insufficient analysis addressing how vacating an 8-week period and compressing the season would impact on the industry.”
10. He went on to state that major changes to the schedule had been deemed not to be approved and the race dates and post times for 2010 would be the approved dates for 2009.
11. Ms. Hoogeveen testified that the indicators listed in the Directive were not the sole means by which the Administration judged an application. No evidence was led as to Sudbury Downs 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.”
12. The NHA responded to the revised application by way of a submission dated November 17, 2009 (Ex 1, tab 9) opposing the revised application. Mr. Bodkin confirmed the NHA’s opposition to the revised application. Also at this tab were 6 electronic mail comments from members of the public objecting to the amended race dates. The issue of the “lack of support from the horsepeople” was clear and acknowledged by Mr. MacIsaac.
13. The “impact of a 3-day a week schedule” was not demonstrated to the Panel in any meaningful way. Mr. MacIsaac presented a summary of attendance figures for selected months in 2007, 2008 and 2009 with the only constant monthly figure being for January. He stated that this information came from the attendance in the slot area and that it was provided by the Ontario Lottery and Gaming Commission (OLG). This did not deal with the impact of a 3-day race week on customers, and it is noteworthy that the January attendances showed increases in each year with 2009 having an attendance of 45,269 customers as compared to 35,753 in 2008 and 34,977 in 2007 (Ex 3, pg 6). While the statistics for the month of January attendance is interesting, it is not a month when there has been live racing and is not relevant except to show an attendance trend. In Exhibit 3, Appendix A, there are some yearly figures for weekly attendance and NHA revenue which show larger revenue in the 2009 example for parts of August, early September and May. This supports to some extent the statement of Mr. MacIsaac that there is a peak demand in July and August although July does not have the same revenue as in May. There is no indication from the OLG as to the accuracy of the attendance figures and it would have been helpful if there had been notes explaining if the NHA revenue may have been as a result of any promotions and/or the Ontario Sires Stakes program. The attendance figures in 2009 were shown as being fairly similar from early February through October except for a lower number in June. There was no note to explain the June reduction. There is no summary of the number of customers using the horse betting facilities and we can only assume that such information is unavailable. The attendance and NHA revenue figures were put in to help establish a business case to support a scheduling change; however, the information is not complete nor is it sufficient to support a business case for the “compressed season”.
14. There was considerable discussion on the “ability of the racetrack to ensure horse supply” and there was a focus on the number of stalls available for stabling, varying from 185 as stated by Mr. MacIsaac to 110 estimated by Mr. Bodkin. Mr. Bodkin is aware that there were 150 rented spaces with 10 to 15 being used for storage and 20 approximately for ship-ins. Both Mr. MacIsaac and Mr. Bodkin agreed that the ship-ins were at around 20-23. The problem is having sufficient horses for each card with 80 to 90 horses per card and how often a horse could be raced in any week even though back to back racing is possible. Mr. MacIsaac acknowledged that it would be possible to have a horse race 3 times in a month but not 4 on an average basis. On page 4 of Exhibit 3, Sudbury Downs did not agree with the suggested pool of 250 to 300 horses that would be needed to sustain 3-day a week racing. The example on that page to support a smaller horse supply at 192 horses with 5 starts per month, 160 horses with 6 starts per month and 137 with 7 starts per month. The number of starts per month was more than Mr. MacIsaac had stated and Mr. Bodkin testified that his horses would race once per week on average during the racing season.
15. The concern of the Panel is that there would be occasions where there would be insufficient horses for a race card and short fields which would be detrimental for the track and the horsemen. There was a lack of analysis of the number of horses needed and the Panel agrees with the Deputy Director that the analysis is “insufficient”. There was no evidence to show whether or not there is any problem for horsepeople being able to transport to the track the horses they would race over a Wednesday/ Saturday/ Sunday scenario.
16. Sudbury Downs produced (Exhibit 3, Appendix B), a summary of purse cheques issued to show where the owners originated but it was from 1996, showed no monetary amounts or the number of horses involved and is not relevant in the view of the Panel. A more current list of owners, the number of horses they race and where they came from would be helpful evidence.
17. There was insufficient evidence of how vacating an 8-week period and compressing the season would impact on the industry. There was no analysis showing any financial benefit to the track or the industry and no indication of any harmonization with Georgian Downs, the closest operating track. It was expected that there would be cooperation with Georgian Downs. There should be some information as to any effect on the Ontario Sires Stakes Program and the local horsepeople as it affects both Sudbury Downs and Georgian Downs. Mr. Bodkin advised how the long shut down would affect the families of the local horsepeople, the feed and tack companies as well as the area boarding and training farms. The Panel was concerned with the horse community having to look for alternate employment. The Panel disagrees with the statement made (Ex 3, pg 5) that: “The best interests of our industry as a whole cannot be sacrificed for the convenience of our local horsepeople.” The moratorium is designed to do what is best for the industry as a whole and a realistic balance is what is sought. The proposal of Sudbury Downs for a “compressed season” does not provide this balance and does in fact impact on the industry.
18. 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 67 race dates in 2010 as it did in 2009 albeit it would be what the track considered a compressed schedule.
Decision
19. After listening to the testimony and reviewing the evidence and the documents submitted, the Panel denies the appeal.
Reasons for Decision
20. 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 in the best interests of the public and all horsepeople particularly in this case, those in the track’s local area. The moratorium is the best means to ensure that mandate is fulfilled.
21. The Commission clearly is not bound to an inflexible application of the moratorium. The 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’s appeal.
22. With respect to the Sudbury Downs application specifically, no evidence was led that would prove the track would suffer irreparable harm by not having the revised application approved.
23. The application was reasonably denied as not complying 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 nor did it satisfactorily answer the Deputy Director’s stated issues in his letter of December 1, 2009 (Ex 1, tab 5).
24. The application did not have industry support. The NHA was clearly opposed and the track acknowledged this. There were realistic logistical issues that could affect horse supply as revealed during the hearing notwithstanding the track’s assertions they had sufficient horses for the planned race dates. No mention was made of the track’s customer base views. While the Panel acknowledges the importance of weather conditions in the 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 and the support of those dependent on the local horsepeople’s business. The customer support is critical to the success of the racing business.
25. The issue as to whether the proposed changes are major is relevant in this case. The moving of 14 race cards from one part of the year to another contravenes the intent of the moratorium. The compressed season creates a problem for the local horsepeople and there is no effort in the application to provide for race date harmonization. These items are just some of the matters the industry is expected to address via the moratorium consultation process.
DATED this 12th day of January 2010.
John Macdonald, Q.C.
Commissioner