Washington Horse Racing Commission
Meeting Minutes
August 10, 2006

Present were: Hartly Kruger, Chair; Jeff Colliton, Commissioner; A.L. Hallowell, DVM, Commissioner; Paul George, Commissioner; Carol Smith-Merkulov, Commissioner; Susan Carlson, Assistant Attorney General; Robert M. Leichner, Executive Secretary; Patty Sorby, Secretary.

Chairman Kruger introduced and welcomed new member Jeffry D. Colliton to the Washington Horse Racing Commission (WHRC). Chairman Kruger said Mr. Collition is from Spokane and has been in and around racing most of his life beginning with posting photo finish pictures and numbers at Playfair Race Course in Spokane. Commissioner Colliton is retired from the military, a Spokane businessman and member of several Spokane committees.

Commissioner Colliton thanked Chairman Kruger and spoke further of his background. Mr. Colliton said he recognized a few of the people involved in racing and was looking forward to working with the horsemen and the industry.

Item #1. Approval of the meeting minutes of July 13, 2006.

Commissioner George moved to approve the meeting minutes as submitted. Commissioner Hallowell seconded the motion. Unanimously approved.

Item #2. Chairman’s report.

Chairman Kruger recently attended board committee meetings with the Association of Racing Commissioners International (ARCI) and the National Racing Compact (NRC) and gave a brief report.

Chairman Kruger said he had been Chairman for some time and believed that the chairmanship of the WHRC should be rotated periodically. Chairman Kruger recommended Carol Smith-Merkulov to be Chair of the Washington Horse Racing Commission and called for nominations. Commissioner George nominated Carol Smith-Merkulov. Commissioner Colliton seconded the nomination. Unanimously approved. Commissioner Kruger handed over the gavel to Commissioner Smith-Merkulov to chair the remainder of the meeting.

Item #3. Emerald Downs’ report.

Mr. Ron Crockett, President of Emerald Downs reported the handle was down, although the sale of Emerald Downs signal is up and attendance is steady. The upcoming Longacres Mile nominations were good and advance deposit wagering is up. He said the average horses starting per race, was 7.89. The problems last year with a limited number of jockeys have not been experienced this year. There have been enough jockeys available for the horses scheduled to race.

Commissioner Kruger asked Mr. Leichner about the agency request legislation to repeal the sunset clause on the advance deposit wagering. Mr. Leichner said the legislation was delivered to the Governor’s office on July 21st and an expeditious review and decision was hoped for, but it could take as long as November before we have a decision on whether the WHRC could pursue the legislation.

Item #4. Labor & Industries Industrial Insurance Workgroup recommendations.

Mr. Leichner gave the background regarding the workgroup efforts to make revisions to the current structure of collecting Labor & Industries premiums. The makeup of the workgroup included two Commission members, three WHRC staff and representatives of the industry organizations. The recommendations presented for review today deal with changes that require no statutory revisions.

Mr. Leichner said the recommendations offered for approval were to: reduce trainer’s base premium; begin charging exercise riders and pony riders one-half of their assessed medical aid premiums; create two risk classes for exercise rider, (Major tracks, Class A and B and Minor tracks, Class C), to make it easier to monitor risk of injuries at the major and minor tracks; set the premium for an assistant trainer at the same price as a groom; create exercise rider slots to be paid by the trainer based on the number of stalls assigned; and short period coverage for class A, B and C tracks for trainers that ship in horses for a specific period of time.

Mr. Leichner requested approval of the proposed recommendations and then staff could work with Labor & Industries to finalize the recommendations into rule.

Chair Smith-Merkulov recognized the members present of the workgroup and thanked them for all their invaluable assistance.

a. Public comments.

No comments were received.

Commissioner George, a member of the workgroup, stated he supported the effort and also thanked the workgroup for their work.

Commissioner Kruger moved to adopt the recommendations as presented. Commissioner Hallowell seconded the motion. Unanimously approved.

Item #5. 2006 Walla Walla Fall meet officials.

Mr. Leichner presented the officials for the Walla Walla Fall meet. There were two changes, the entry days were listed incorrectly and Mr. Leichner corrected them to August 31, September 1 and September 2. Also, the designated outrider would not be available for the Fall meet and was changed to Mr. Dean Jolley who has been the outrider at the Sun Downs meet.

Staff recommended approval of the 2006 Walla Walla Fall meet officials.

Commissioner Hallowell moved to approve the officials as presented. Commissioner Kruger seconded the motion. Unanimously approved.

Item #6. WHRC 2006 Walla Walla Fall meet officials.

Mr. Leichner read the list of WHRC officials for the Walla Walla Fall meet. There were two changes from the Spring meet officials -- Mr. Scott Saito will be the second steward at the Fall meet and the security inspector will be Mr. Eddie Roderick.

Staff recommended approval of the Fall 2006 Walla Walla meet WHRC officials.

Commissioner Hallowell moved to approve the WHRC 2006 Fall meet officials for Walla Walla. Commissioner Colliton seconded the motion. Unanimously approved.

Item #7. WTBA proposal for rulemaking to establish a breeder certification program within the WTBA.

Mr. Leichner said that a request had been received from the WTBA to meet and discuss the certification program.

Mr. David Thorner, President, Washington Thoroughbred Breeders Association (WTBA) made a presentation to the members of the Commission requesting the WHRC begin rule making to establish the WTBA as the official certifier for Washington thoroughbreds. (Powerpoint presentation made a part of the record.)

Mr. Thorner explained the background relating to establishment of the certification program by statute, the rules regulating the certification and explained this program was never funded. Mr. Thorner requested the WHRC amend Washington Administrative Code (WAC) 260-16-060 and certify the WTBA as the official authority to certify Washington bred thoroughbred horses and provided suggested draft language to amend the existing rule.

Commissioner Colliton asked if Mr. Thorner had an idea of the cost of implementing this program and whether the number of foals produced in Washington is declining. Mr. Thorner responded that he did have an estimate included in the packet of information that he had prepared and that since the closure of Longacres in 1992, the foal crop has declined significantly to between 600 and 700 foals annually.

Chair Smith-Merkulov called for public comment.

Ms. Sue Coleman, a breeder, commented that with the foal crop declining, adding an additional cost would be a burden. Ms. Coleman also commented that if the program is instituted, the foal should be certified immediately upon being foaled.

Chair Smith-Merkulov added that if a program were implemented, the WHRC could not approve the imposition of fees.

Ms. Carlson said that the rule already designates the WTBA as the certifier of Washington bred horses. The WHRC has considerable discretion on establishing the certification process, except that the statutes do not provide any authority for the Commission to charge fees for certification.

Commissioner Kruger asked Mr. Thorner if he would like the WHRC to begin the process to amend rules. Mr. Thorner responded that he would. Commissioner Kruger stated that he would also like to include rulemaking related to the five percent administrative fee that is retained by the WTBA from the Breeder’s awards.

Ms. Coleman spoke regarding the five percent taken out of the Breeder’s awards and asked that an investigation be initiated.

Commissioner George stated that he was in favor of beginning the rule making process as long as the WHRC does not have any part in the setting of any fees.

Chair Smith-Merkulov moved to have the WHRC begin rule making on a certification program that would be administered by the WTBA, provided that the rules would make no mention of fees. Commissioner Kruger seconded the motion.

MaryAnn O’Connell, Horsemen’s Benevolent & Protective Association (HBPA) asked if the rules specifically identify that the Washington Horse Breeders represent the horse breeders. Chair Smith-Merkulov stated that it is specifically designated.

Commissioners Kruger, Colliton, George and Hallowell voted yes. Chair Smith-Merkulov voted no.

Break 11:10AM. Reconvened 11:20AM.

Item #8. Was moved forward on the agenda to accommodate the jockey’s hearings.

Item #9. Hearings:

b. Gallyn Mitchell.

Gallyn Mitchell appeared in his own behalf. Representing WHRC staff was Michael S. Tribble, Assistant Attorney General. Mr. Tribble requested admission of exhibits 1-7. The exhibits were admitted and testimony was heard from WHRC Presiding Steward Doug Moore and Gallyn Mitchell..

The Commission found Mr. Mitchell in violation of WAC 260-52-040 and imposed a fine of $500. Two commissioners dissented on the amount of the fine, finding that it should have been $250 as imposed by the Board of Stewards.

Hearing closed.

a. Ricky Lee Frazier

b. John Rochabrun

Ricky Lee Frazier and John Rochabrun did not appear for their hearings. Mr. Tribble recommended that they be found in default and that their matters be dismissed.

Chair Smith-Merkulov moved to find Mr. Frazier and Mr. Rochabrun in default and to dismiss their request for a hearing before the WHRC. Commissioner Colliton seconded the motion. Unanimously approved.

Break 12:05PM. Reconvened 12:20PM.

Chair Smith-Merkulov under Item #11 regarding other business stated that Mr. Tribble had information regarding a decision of the WHRC that had been appealed to King County Superior Court by a suspended licensee. Mr. Tribble explained that Jim A. Tracy, who had been before the Commission for a hearing in July, had filed an appeal, and explained the appeal process to the members.

Item #8. Discussion regarding clocking (WAC 260-24-650).

Mr. Leichner said that staff had been working on rulemaking regarding clocking on the grounds of the race track and clocking at off-track training facilities. The WHRC concern related to clocking is to make sure the horse has the appropriate number of works within the appropriate number of days of entering a race. Mr. Leichner said staff is requesting guidance on the regulatory scope of any amendments to WAC 260-24-650. Mr. Leichner said the question is whether or not every person who clocks a horse and then submits works must have a license and whether the WHRC should regulate training centers.

Commissioner George asked where to find the works for horses. MaryAnn O’Connell, HBPA said that works are published by Equibase and most recent works are placed in the program next to the horse’s name.

Commissioner Hallowell said there are two reasons for working a horse, one is to make sure the horse is ready and fit to run and the second is to get the information to the handicapping public. Commissioner Hallowell said he felt the WHRC should limit works to Emerald Downs.

MaryAnn O’Connell said the WHRC should not limit works to the race track. One reason horsemen needed to have the option of clocking at a training facility was if a horse in Eastern Washington was entered and needed a work, the horse would not have to be transported to the track just to have a work.

Mr. Ron Crockett agreed with Ms. O’Connell.

Chair Smith-Merkulov said the WHRC does not license off-track facilities. The clocker would be licensed.

Commissioner Kruger moved to begin the rule making process on WAC 260-24-650 and staff will develop language for consideration. Commissioner Hallowell seconded the motion. Unanimously approved.

Item #11. Other business that may be properly brought before the Commission.

Chair Smith-Merkulov said that the issue of the five percent charged by the WTBA to process the breeders awards should be discussed and rule making should be begun. She made a motion that the Commission begin rule making on the breeders awards. Commissioner Kruger seconded the motion.

Commissioner George said he was opposed to opening rule making for something that is the business of the organization not the business of the WHRC and believes the WTBA deserves a reasonable amount for processing the awards.

Commissioner Hallowell stated that he is not concerned with the five percent charge but is concerned that by opening the rule making process the breeder award program may be cancelled completely. He stated that if he could be assured the program would not be harmed, , he would be more comfortable regarding making any rule amendments. He expressed concern that the statute is not as clear on the distribution of breeder awards as it is for owner’s bonus awards

Mr. Crockett explained the distributions that are made for the breeder’s awards and the owner’s bonus awards, including how each is calculated.

Ms. Coleman said that her concern was that WTBA is making a profit on the awards and the breeders should receive the entire award.

Chair Smith-Merkulov called for a vote on her motion to commence rule making to address the breeder awards. Chair Smith-Merkulov, Commissioner Kruger and Commissioner Colliton voted yes; Commissioner George voted no. Commissioner Hallowell abstained.

Item #10. Executive Secretary’s report.

a. Longacres Mile TOBA testing.

Mr. Leichner advised the members that a minimum of ten samples will be charged by Truesdail Lab. The first, second, and third place horses will be tested and a random number of other horses will also be tested. The WHRC will be in compliance with the TOBA requirements to retain the graded stakes rating for the Longacres Mile.

b. L&I extraterritorial coverage approval letter.

Mr. Leichner said the Commission had received the approval letter for extraterritorial coverage acceptance by Labor & Industries, but the letter provided that under no circumstances may the trainer hire Washington employees to participate. Mr. Crockett and Mr. Hodge have agreed to hire pony riders under the coverage offered Emerald Downs employees so that out-of-state trainers will not need to hire their own pony riders.

c. Accountant’s recap July 2005/2006.

Mr. Leichner reviewed the accountant’s report comparing wagering year 2005 and 2006 and also a comparison of July 2005 to July 2006..

d. 2005/2007 budget.

Mr. Leichner updated the members on the agency revenues and expenditures. Mr. Leichner stated that expenditures exceeded revenue for July. The one time yearly billings occur in July and the expenditures are historically higher at this time of year. The fund balance has dropped due to declining revenue and an increase in expenses. The commitment of $300,000 to the non-profit meets will put the fund balance down to $500,000. Mr. Leichner said he will be watching the balances closely.

Mr. Crockett commented that the HBPA and the WTBA receive a check from Emerald Downs each year that is used to support each organization. Ms. O’Connell confirmed they do receive this and it is a major portion of their operating budget.

Meeting adjourned.

____________________________________
Robert M. Leichner, Executive Secretary