Activities of The Jockey Club
  Dan Fick - Executive Vice President & Executive Director, The Jockey Club

Dan Fick: Thank you, Mr. Chairman, and good morning. As usual, covering this in 10 minutes is an all-out sprint to the wire.

So this year, in your packet with The 2005 Fact Book is a brief synopsis of the activities of The Jockey Club family of companies over the past year.

You will read that enhancing and expanding customer service is our primary objective. From simplifying Interactive Registration, to enhancing the equineline owner portfolios, or perfecting the Official Equibase Speed Figure, we strive to give our customers value and real-time efficiency in all our products and services.

You will also read how our foundations have continued to support our industry. Thanks to your contributions, Grayson-Jockey Club has provided over $1.6 million in the last two years for equine research, and last year, The Jockey Club Foundation provided $600,000 in benevolent support for racing industry participants and their families.

As always, The Jockey Club continues to be actively involved in a number of important industry initiatives. As many of you know, the profits from The Jockey Club family of companies are reinvested in our sport, in particular in support of these initiatives. You will be thoroughly briefed about three on today's program - the national economic impact study, Friends of New York Racing and the Racing Medication and Testing Consortium. I want to highlight three more in the next few minutes - equine identification, stewards' accreditation and wagering integrity.

Last August, we informed you of USDA's plans for a national animal identification system to establish a 48-hour trace-back capability in the case of an outbreak of a deadly animal disease. The plan is to database all locations where animals are kept or commingled and attach ID tags or microchips to livestock so the USDA can track animal movements starting in 2008.

Recently, the California Horse Racing Board has begun development of a microchip identification plan to track horses entering and leaving racing facilities.

As you can imagine, while many, including members of Congress, see national animal identification as necessary for disease control, there are significant concerns over cost, confidentiality and control by the federal government. Several livestock associations are proposing to privatize the national animal identification system under the control of a livestock industry consortium.

The American Horse Council Equine Species Working Group has ably represented the horse industry throughout this initiative and has developed a set of recommendations to the USDA for a national horse identification plan. The key elements are that the horse industry must be in control of any horse ID program, and we must incorporate existing horse ID systems. The recommendation has also been made that microchips should be the preferred method of horse identification for disease control.

The Jockey Club has been evaluating the long-term implications of a national animal identification system and, as you might imagine, has received inquiries from racetracks, sale companies and breeders. Our board of stewards has determined that The Jockey Club should take a leadership role with respect to the use of microchips as an aid to horse identification.

While microchips may assist the identification of horses during their lifetime, we do not believe that they significantly enhance the identification process at the time of registration. Therefore, The Jockey Club will not be requiring microchips for Thoroughbred registration at this time.

However, as a service to the industry, The Jockey Club will record, database and provide access to Thoroughbred microchip numbers at no cost to our breeders and owners.

Obviously, this is a very complex and controversial issue. The ultimate decision on whether the federal government or the livestock industry controls our national animal identification system has yet to be determined. We will continue to work through the American Horse Council and look for the most advantageous and realistic solution for the horse industry.

In July, a group of racing industry organizations established the Racing Officials Accreditation Program. Designed to increase the number of qualified racing officials, we have revised and expanded the former stewards' accreditation program founded in 1991. We have developed a broad-based curriculum, enhanced continuing education and formed an association of racing officials. Our goal is to accredit all currently employed racing officials, but more importantly, recruit, train and find jobs for the members of our racing community who want to start a new career as a racing official.

When we deal with difficult industry initiatives and issues, it is always our preference to build consensus and involve all industry stakeholders. However, if circumstances dictate, we are not hesitant to move forward alone.

The conversion of Canadian earnings to U.S. dollars for display in North American leaders' lists and in U.S.-based publications is a good example. After trying for several years without success to achieve consensus, we decided in 2004 that unanimity was not an achievable goal and chose to underwrite and implement a major software development project ourselves, which was successfully completed this spring.

But in some instances it is simply not possible for us to move forward alone. Such is the case with the upgrade of this industry's wagering system.

Two years ago at this venue, in the wake of the pick-6 attempted wagering fraud, we said, "The time has come for this industry to apply true virtual enterprise behavior using a central database methodology for racing's entire technology infrastructure, including our wagering systems."

Last year, we outlined a migration path toward a next-generation wagering system consisting of three basic concepts:

  • The live host, which is the track conducting the races, must be in control of the wagering event;
  • Simulcast receiving sites should transmit their wager details in real time to the live host, as opposed to the current practice of transmitting pool totals on a delayed cycle; and
  • Wagering transactions should be transmitted - and stored in - a central database to provide the necessary information for real-time monitoring for suspicious activity and to provide the opportunity for historical review of betting patterns.

To date, no one has argued with our vision for this next generation wagering system. In fact, it is widely accepted that moving in this direction is essential, not only for the purposes of security, but also to promote best practices in the pari-mutuel business.

But despite this widespread support, making any significant progress in the last year has been very difficult. So once again, we call on industry stakeholders, beginning with the racetracks and the regulators, to move forward with a greater sense of urgency and leadership in addressing this matter. For among all of the pressing problems that this industry faces, few are as important to the long-term health of our business, as ensuring that our wagering systems provide the necessary transparency to allow host tracks to know the source of all wagers being bet into their pools. The Jockey Club has supported this effort for many years, and we remain totally committed to providing the necessary assistance to secure the next-generation wagering network.

And now for our projection of the 2006 Thoroughbred foal crop. Each year we look at the number of active stallions, book sizes and report of mares bred at this point in time. While the effects of MRLS are for the most part, thankfully, behind us, the impact of the 2001 and 2002 foal crop still affects our ability to predict to some extent. This year, based on a slight increase in the stallion book size and a slight decrease in the report of mares bred at this point in time, we project the 2006 Thoroughbred foal crop for the U.S., Canada and Puerto Rico to be 37,300, which is 100 more than last year's projection.

Thank you for your attention and good luck at the races.

Ogden Mills Phipps: Dan, thank you, and I hope everybody here supports us in this wagering network back-office problem. It is a terrible problem within this industry and one that needs your support, and we need to get the racetracks on line to get that done.

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