2002 - Harness Tracks of America, Inc.

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HARNESS TRACKS OF AMERICA Executive Newsletter A daily fax and e-mail report on racing and gaming developments in North America and beyond Stanley F. Bergstein, Editor SCIOTO SOLD FOR $19 MILLION MTR Gaming Group, which owns and operates Mountaineer Race Track and Gaming Resort in Chester, West Virginia, has agreed to buy Scioto Downs in Columbus, Ohio, for $19 million. The offer represented a 146% premium on Scioto stock, which had been trading at $13, but after announcement of the impending sale Scioto stock zoomed upwards by 126%, to $29.50 in over-thecounter trading. Scioto opened on October 9, 1959, the proud possession of popular beer distributor Charlie Hill, who built it as a model track with its soaring cantilever roof and interior materials, including tile, that needed little maintenance. Hill and his wife LaVerne were two of HTA’s strongest supporters, never missing a meeting, and LaVerne still maintains that record after 43 years. She was awarded HTA’s Messenger Award, the association’s highest honor, two years ago, and is Scioto’s largest stockholder with 208,341 shares. Under the sales arrangement, MTR Gaming agreed to pay $32 a share for the track’s 595,767 shares, although stockholders were offered an alternative of taking $17 a share up front with 10 annual contingent payments based on 10% growth of Scioto earnings before interest, taxes, depreciation and amortization. Closing is set for next spring. MTR also plans to build a track in Erie, Pennsylvania, and president Ted Arneault said he will not back away from that commitment, which is being challenged in court by Magna Entertainment, which owns The Meadows near Pittsburgh. MTR also owns the Ramada Inn and Speedway Casino in North Las Vegas, Nevada, and a Ramada Inn in Reno. Arneault said the present Scioto management group will remain in place, including president Ed Ryan. Mrs. Hill is president of Mid- America Racing Association, which splits the racing season with Scioto Downs. December 26, 2002 DETAILS OF MAGNA’S ERIE SUIT The Magna Entertainment challenge to MTR’s construction of a new track in Erie, in extreme northwest Pennsylvania, was filed in Commonwealth Court in Harrisburg, Pennsylvania’s state capital. It is based on a claim that the Pennsylvania State Horse Racing Commission granted the license without giving Magna and other interested parties an opportunity to challenge the application. Magna says the new track, to be called Presque Isle Downs, would damage the Pennsylvania racing industry by diluting it, and the site is not economically viable, two other race tracks having died there. Magna contends the license award was not supported by adequate evidence, was arbitrary and capricious, and represented an “abuse of discretion,” and is asking the court to reverse the commission’s decision. MTR’s decisions both to build Presque Isle Downs and to buy Scioto are assumed to be based on the clear likelihood of slots at tracks in Pennsylvania, and the considerably longer odds on that prospect in Ohio. LAWYERS’ DAY IN IOWA, TOO Big money is on the line in Iowa, too, and is in court and possibly headed for the U.S. Supreme Court. At issue is a 4-3 decision in the Iowa Supreme Court last June, which ruled that the state’s tracks should be taxed at the same 20% rate as the state’s riverboat casinos, and not at a sliding scale in the 30 percentile and heading higher. After the decision the state’s tracks sued, saying they are owed $112 million in refunds and interest for tax overpayments since 1997. A Polk county district judge is hearing the case, but state officials, in a surprise move, are appealing the Iowa decision to the U.S. Supreme Court, which will decide in the next few months whether or not it will hear the case. HTA’s member Prairie Meadows seeks $53.7 million.
HARNESS TRACKS OF AMERICA Executive Newsletter A daily fax and e-mail report on racing and gaming developments in North America and beyond Stanley F. Bergstein, Editor STRIKE THREAT IN CHI...AGAIN Tony Morgan was Harness Tracks of America’s Driver of the Year in 1997, and shared the honor with Luc Ouellette a year earlier. This week he won his 8,000th race, putting him in an elite group of only ten other drivers that have attained that lofty total, and he is second in races won this year, with 688 winning drives, 12 behind Walter Case. But Morgan is an unhappy man, and he is back on the warpath in Chicago, not on the racetrack but in his role as president of the Illinois Harness Horsemen’s Association. He is flexing his muscles and fighting with the Johnstons again, threatening the third OHHA strike in four years. The issue is recapture money, which belongs to the tracks by Illinois law, but which OHHA wants, law or no law. The Johnstons have offered compromises on sharing the money, but they say the horsemen have rejected the idea and want it all. So a strike appears imminent. Duke Johnston of Maywood Park told Larry Hamel of the Chicago Sun-Times that if there is one, he hopes it will be brief, and added, “I can guarantee you this: we can wait longer than they can. As long as they stay on 100%, we’ll be forced to wait them out. We will not agree to a deal that would put us out of business.” AND IN ONTARIO, TOO The Ontario Harness Horse Association has set a 6 p.m. deadline tonight for a new contract with Woodbine Entertainment, or the group will boycott the entry box at Canada’s biggest track. The issues are veto power over simulcasting -- the horsemen prefer to call it ‘approval rights’ -- and “a recognition that they are partners.” That may seem strange to some, since they share 50% of virtually everything with Woodbine right now. With slots money pushing purses to all-time highs, there would seem to be one explanation: the horsemen can’t get accustomed to prosperity. December 27, 2002 TEXAS TALKING SLOTS, TOO Facing a state budget deficit of $10 billion or more, Texas is the latest state to begin talking about slots at tracks. Or the Astrodome. One Houston Democratic legislator thinks big-thinking Texas should turn the Astrodome into the world’s biggest casino. The Indians are powwowing, too, and this week’s $314.9 million Powerball payoff has resulted in a bill that would allow Texas to join the multistate lottery game. One consultant put it about as bluntly as possible: “There’s nothing like a budget crisis to reassess your morals.” A WEEK TO REORGANIZE They wanted two extra months, until March 10, but a federal bankruptcy judge in Chicago gave lawyers for the ill-fated Emerald Casino just one week past the original deadline of Jan. 8 to come up with a reorganization plan for paying its deep debts. U.S. Bankruptcy Judge Eugene Wedoff set a Jan. 14 deadline before creditors are allowed to step in with their claims for $46 million for breached contracts and other debts. The casino is facing another deadline in March, for soliciting bids on their revoked license. TWO MORE ‘GRAY’ DRUGS The Association of Racing Commissioners International does not rush into things, but at least it moves on the issue of jolts that can move up horses. The ARCI has added two new substances to its list of items that it considers “Prohibited Practices.” The two are Oxyglobin and Hemopure, both manufactured by Biopure. The fact that Oxyglobin has been approved for use in the treatment of anemia and oxygen crisis in dogs, and that Hemopure is being tested for human use, is not likely to stop edge-seekers among trainers. If they use Clorox, as some do, something for anemia in dogs won’t stop them. Kudos for the ARCI.
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2002 - Harness Tracks of America, Inc.

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