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[Cannon Shell]

THOROUGHBRED HORSEMEN’S

GROUP, LLC


PURPOSE OF COMPANY



The Thoroughbred racing industry is changing. Thoroughbred racetracks are consolidating under common ownership as in the case of Magna, Churchill, Penn National, MTR Gaming and Harrah’s and most racetracks are now owned by publicly held corporations whose strategic interests may extend far beyond the business of horseracing. Moreover, Thoroughbred horse racing’s wagering network-the principal source of horsemen’s purse revenue-continues to evolve rapidly beyond horsemen’s traditional spheres of influence.

Where is the good news for the Horsemen? For the first time, a nationally recognized antitrust law firm has advised us that horsemen can legally collaborate when dealing with these companies: forming a separate legal entity for this purpose limits our antitrust exposure to an acceptable level.

The Company will be operated on a break-even basis and funded only to the extent to cover accounting, legal, managerial costs and possibly some of the costs of Member meeting expenses. Funding will initially come from Member contributions but will be changed to a small percentage of purse revenue generated pursuant to the agreements it negotiates as soon as such agreements are finalized.

What would the Company do for its Members?

¨ Negotiate - within parameters set by its Members - with the multi-jurisdictional racetrack companies regarding contractual terms and purse revenue with respect to both imported and exported simulcast races.
¨ Secure export authorization from its Members and relay to appropriate party on agreed export terms and conditions.
¨ Act as a clearinghouse for the collection and redistribution of certain funds, such as Source Market Fees from Advance Deposit Wagering companies, as directed by its Members.
¨ Serve as a liaison between its Members and other entities to achieve transparency of handle and distribution of takeout.
¨ Act as a resource for its Members performing due diligence on all export sites requesting permission to wager on Members’ races.

Our main goal is to be less dependent on racetracks to negotiate, collect and distribute our simulcast purse revenue. By collectively hiring and directing professional management, that no single association could likely afford or justify, horsemen and their associations can achieve greater influence and self-sufficiency in simulcasting matters.

Under the prevailing simulcast model, host tracks and betting agencies negotiate “host fees” paid by the betting agencies to the host tracks (which then share those host fees with their purse accounts). In certain cases advance deposit wagering companies pay “source market fees” to tracks in the area where the bettor resides in addition to the fees paid to the host track. These “source market fees” are also shared with the purse account at the track near where the person making the bet resides. Our Company will change this track-oriented model, in which host track/betting agency negotiations have failed to produce increased purse revenue from increased simulcast wagering, to a model that more effectively ties growth in simulcast wagering to purse revenue growth.

Now more than ever we need to be prepared to protect our own interest, since our goals may not be exactly parallel with those of racetrack ownership. Often we are competing with the racetrack corporations for a portion of the takeout, and it is prudent to be prepared to protect our own interests. This Company will move us in that direction.

[Cannon Shell]

Thoroughbred Horsemen’s Group, LLC

1. Purpose of the Company
Several Thoroughbred horsemen’s organizations, working together since early 2005 to address common and industry-wide simulcasting issues (the “Horsemen’s Study Group”), elected to form the Thoroughbred Horsemen’s Group, LLC (“THG”), on November 2, 2007, in accord with the recommendation of legal counsel, for the following purpose:

The purpose of the Company shall be to improve and promote the competitive position of thoroughbred horse racing in the sports industry by collaborative development and administration of new, more efficient and centralized mechanisms through which thoroughbred horsemen’s organizations may facilitate agreements with TrackNet Media Group, LLC, and other entities operating multiple thoroughbred venues with respect to horsemen’s rights approvals under federal law, wagering security, accounting and settlement services and other simulcasting matters.
[Operating Agreement of the Thoroughbred Horsemen’s Group, LLC; Article II.2.01]

On December 6, 2007, enrolling horsemen’s organizations ratified their Membership at the Company’s first formal meeting; elected officers (President, Bob Reeves, Ohio HBPA; Secretary/General Counsel, Frank Petramalo, Virginia HBPA; Treasurer, Joe Santanna, Pennsylvania HBPA) and a Company manager (Wilson Shirley); and initiated a program to implement a new advance deposit wagering (ADW) model incorporating enhanced purse retention and non-exclusive wagering. These initial Member horsemen’s organizations are:

Delaware THA, Florida HBPA, Kentucky HBPA, Louisiana HBPA, Ohio HBPA, Pennsylvania HBPA, Texas Horsemen’s Partnership, and Virginia HBPA.

Since that time, ten more horsemen’s organizations have become THG members (see attached list), and TOC president Drew Couto was elected a vice-president of the Company.

2. Benefits of the Company

(a) The Company proposes to implement a simulcast revenue distribution model ensuring that a fair share of revenue from all simulcast wagering on Thoroughbred races is allocated to Thoroughbred purse accounts. Under this model, a portion of the revenue from wagers placed at non-Thoroughbred betting agencies (harness tracks, dog tracks, casinos, etc.) will be distributed to Thoroughbred purse accounts in the jurisdiction of the betting agency: the Company will negotiate and collect from the betting agencies an additional amount (over and above the Host Fee they pay to the track), and will distribute that amount at the direction of the Member horsemen’s organizations to purses at the Host Track and at the Thoroughbred track(s) in the jurisdiction where the bet was placed, as in the case of a wager accepted by an ADW company.


(b) The Company will aggregate “content” for simulcast authorization purposes, enabling all Member horsemen’s organizations – including those not covered by the Interstate Horseracing Act – to be party to the simulcast distribution model implemented by the Company.

(c) The Company will collect and disseminate simulcast wagering information, including handle, revenue, fees, etc., for all Members, and will facilitate simulcast wagering proposals for Members.

(d) The Company will be the location of resources to be shared by its Members for the benefit of its Members. The Company will undertake research on issues pertaining to the industry and make recommendations to its Members as to the best course of action for its Members.

(e) The Company will be self supporting. In its role as broker for its Members, a percentage of revenue collected will be directed to the Company to cover its operating expenses.

[blackthroatedwind]

Chuck, if you could add some color coding I think it might help.

[Cannon Shell]

Originally Posted by blackthroatedwind

Chuck, if you could add some color coding I think it might help.

What about some color commentary?

[blackthroatedwind]

Originally Posted by Cannon Shell

What about some color commentary?

That would require reading it......which would result in my head exploding.....and there's nobody here to clean up the mess.