Washington Horse Racing Commission
Meeting Minutes
November 9, 2006

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

Item #1. Approval of the meeting minutes of October 11, 2006 and October 12, 2006.

Commissioner Colliton moved to approve the minutes of October 11 and October 12, 2006 as submitted. Commissioner Kruger seconded the motion. Unanimously approved.

Item #2. Chairperson’s report.

Chairperson Smith-Merkulov spoke about the new exercise rider risk class established by the Department of Labor & Industries for the horse industry account.

Commissioner Kruger asked if any indication had been received from the Governor’s office on the agency request legislation regarding the sunset clause on advance deposit wagering. Mr. Leichner stated he has received no word regarding the sunset clause legislation or the Commission budget submission.

Chairperson Smith-Merkulov said a legislative hearing with the joint legislative work session on gambling policy was scheduled for November 30, 2006 and the Commission has been requested to testify.

Item #3. Emerald Downs’ report.

Mr. Ron Crockett, President, NW Racing Associates LP, addressed the members. He said the purse projections were consistent with projections. Mr. Crockett gave a brief history on the evolution of the breeder award program. He also said the federal legislation banning Internet wagering specifically excluded horse racing.

Commissioner Hallowell wanted to clarify a statement that had been made at the last commission meeting regarding a statement he made about not caring about the five-percent charged by the Washington Thoroughbred Breeders Association to process the awards however, he felt that opening the issue regarding the breeder awards with the legislature may have detrimental effects on the program.

Chairperson Smith-Merkulov asked Mr. Crockett if he would be ready to request racing dates for 2007 at the December meeting. Mr. Crockett said he may not be ready to request race dates until the January 2007 commission meeting.

Item #4. Hearings:

a. Donald Wimmer.

Mr. Wimmer’s hearing was scheduled for 11:00 A.M. Since he had not yet appeared and it was not 11:00 o’clock, Chairperson Smith-Merkulov moved Mr. Wimmer’s hearing to later on the agenda.

Mr. Leichner explained the scheduling problem with the hearings and said it was anticipated that several hearings would be scheduled for today, but due to circumstances, staff was unable to complete the hearing files and anticipated those cases would be brought before the members at the January 11, 2007 meeting.

Item #5. Executive Secretary’s report.

a. Update regarding XpressBet.com bond.

Mr. Leichner said XpressBet.com had submitted a modified bond consistent with WHRC statutes and rules. Mr. Leichner had notified XpressBet of the approval of the bond on November 1.

b. Update on grant awards.

Mr. Leichner said the jockey incentive fund checks had been mailed and only four had been returned of which three of them were able to be forwarded to a corrected address, one was still pending. If it was determined that it could not be delivered the money would be turned over to the Department of Revenue’s Unclaimed Property Section.

Mr. Leichner said that all contracts had been executed except for the grant awarded to WSU for equine research.

Mr. Leichner had received a phone call from Mr. Schellinger at Sun Downs in Kennewick saying the renovation on the rail should be completed by November 15th.

c. State Auditor’s report on WHRC.

Mr. Leichner said he had received the final report by the State Auditor’s Office for the period of July 1, 2003 through June 30, 2006. There were no findings. The previous audit report indicated problems with the tracking of WHRC assets. Software has been purchased to assist in the tracking of WHRC assets.

d. Accountant’s recap October 2005/2006.

Mr. Leichner said that the report continues to indicate a downturn in revenues. He will be monitoring this closely.

e. Board of Stewards’ end of meet report for Emerald Downs.

Mr. Leichner stated the report reflected a good meet. Working relationships between WHRC staff and association staff was good. Mr. Leichner said he was pleased with the report and will be forwarding a copy to Mr. Crockett.

Commissioner Kruger commented on the team effort that was being shown and was very pleased.

Mr. Doug Moore stated that he was worried about the ability of the WHRC to retain qualified personnel. The ruling of the Ethics Board severely handicapped the staff ability to obtain off-season employment.

Chairperson Smith-Merkulov asked Mr. Leichner about off-season employment at the Olympia office. Mr. Leichner said there were three temporary positions available that he would be filling with five employees who had submitted applications. They would be working approximately 32 hours per week each and would begin November 1 with most employees returning to their regular career seasonal positions on February 1 if Emerald Downs’ opens as they did last year for training.

Mr. Crockett commented on how he understood the difficulty of the WHRC employees to obtain off-season employment and the ability to retain qualified help. He has to layoff 400 employees at the end of the season, but he also noted that the industry has always been seasonal. Commissioner Colliton stated the difference was the WHRC employees cannot find other jobs within the horse industry and Mr. Crockett’s employees could. Mr. Moore also reiterated that employees of the WHRC cannot work within the industry they regulate.

Mr. Moore said he felt they had a great meet was good and stated there were no controversies.

f. 2005/2007 budget.

Mr. Leichner explained the revenues and expenditures. He indicated the downturn in revenues was of concern. He would be monitoring this closely and was prepared to make adjustments in the testing program or not filling vacant positions if necessary, to address the revenue loss.

g. Historical information on revenue and expenditures FY90-FY06.

Mr. Leichner provided the members with an overview of the WHRC fund balance from Fiscal Year 1990 through Fiscal Year 2006. He expected the fund balance for Fiscal Year 2007 to be between $700,000 and $800,000.

Chairperson Smith-Merkulov thanked Mr. Leichner for his management skills. Mr. Leichner thanked WHRC staff for assisting in managing costs.

h. Approval of Commissioner Hartly Kruger to attend the University of Arizona, Symposium on Racing, December 4-7, 2006.

At the October 13th meeting, Mr. Leichner had been approved to travel to the annual symposium on racing. Mr. Leichner requested a change approving Commissioner Kruger to attend in his place. Mr. Leichner said with Mr. Lopez’ absence, he should remain available at the Olympia office.

Chairperson Smith-Merkulov moved to approve Commissioner Kruger’s travel to the Annual Symposium on Racing in Tucson, Arizona. Commissioner Colliton seconded the motion. Unanimously approved.

i. Reconsideration of Dr. Sally Calkins request to attend the AAEP conference in San Antonio.

Commissioner Hallowell requested reconsideration for Ms. Calkins to travel to the conference. He felt it was important that Dr. Calkins be in attendance.

Chairperson Smith-Merkulov moved to approve travel reimbursement for Dr. Calkins registration, airfare, lodging, per diem and taxi or shuttle service. Commissioner Kruger seconded the motion. Unanimously approved.

Item #6. Any other business that may be properly brought before the Commission.

Commissioner Kruger announced the National Racing Compact had been awarded the FBI contract to be a channeller for submission of fingerprints. Commissioner Kruger said that seventy agencies had applied for this contract and only nineteen were awarded contracts.

Mr. Leichner commented that without Commissioner Kruger’s effort with the Association of Racing Commissioners International this could not have happened.

Chairperson Smith-Merkulov said that she would be unable to attend the December meeting and asked Commissioner Kruger to be acting chair.

Mr. Crockett said he had received a billing from the Department of Revenue (DOR) in the amount of $480,000. When Emerald Downs was being constructed DOR had granted a ten-year tax deferment and it was now due. He also requested the WHRC remedy the problem of appellants not appearing for hearings when notified. Chairperson Smith-Merkulov said that problem is now remedied.

MaryAnn O’Connell, Executive Director, Horsemen’s Benevolent & Protective Association (HBPA) related the election of officers for the HBPA would not be announced until the run-off of the presidential race was decided. She expected the ballots would be counted on December 22nd with the new board taking office on January 1, 2007.

BREAK 10:56AM. Reconvene 11:05AM.

Item #4. Hearing:

a. Donald Wimmer.

Chairperson Smith-Merkulov opened the hearing for Donald Wimmer. Ms. Smith-Merkulov excused Commissioner Kruger who had to leave and Paul George was not present. Susan Carlson, Assistant Attorney General represented the Commission. Michael S. Tribble, Assistant Attorney General represented staff. Donald Wimmer was present and not represented by an attorney.

Mr. Tribble reviewed the circumstances regarding Mr. Wimmer’s case. It had been originally scheduled for hearing on October 11, 2006, however, Mr. Wimmer did not receive the notice of hearing and was unable to attend, so his hearing was rescheduled for November 9, 2006. At the October 11 hearing, Chairperson Smith-Merkulov admitted eight exhibits. The same exhibits were reintroduced and admitted at the November 9 hearing. The Commission granted Mr. Wimmer a license and provided that he would not have to appear before the members to renew his license as long as he remains a law-abiding citizen. Hearing closed.

Meeting adjourned.

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Robert M. Leichner, Executive Secretary