1998 Annual Report

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State of Indiana
Indiana Horse Racing Commission
Frank O'Bannon, Governor

Letter to the Govenor

April 15, 1999

The Honorable Frank O'Bannon
Governor of the State of Indiana
Room 206, The Statehouse
Indianapolis, IN 46206

Dear Governor O'Bannon:

The pari-mutuel horse racing industry moved forward at a rapid pace in 1998. The Commission has seen several promising trends develop which are indicative of a maturing and thriving horse racing industry in Indiana. Significant growth in size of foal crops, upgrading in the quality of stallions and higher prices paid for Indiana sired or bred horses are just a few indicators. Much of the racing industry's success is due to the revenue generated by the portion of riverboat admission tax that is allocated to the racing industry. This revenue has proved vital to both Indiana horsemen and Hoosier Park.

As in the past, the Commission continues to focus its energies on diligently regulating the pari-mutuel industry. The results of our regulatory efforts, along with statistics of interest, are highlighted in this report.

I am pleased to report that Indiana has gained a reputation throughout the Midwest for clean, honest and competitive racing. The Indiana Horse Racing Commission is determined to provide the strong leadership that is needed to assist in the continued success and maintain the integrity of our new pari-mutuel racing industry. Each Commissioner is proud and grateful to have the opportunity to serve you in this endeavor.

Respectfully submitted,

Michael G. Schaefer, Chairman
Indiana Horse Racing Commission

Table Of Contents

• Letter to Governor O'Bannon
• Commission and Staff
• Year in Review
• Live Racing at Hoosier Park
• Simulcast Wagering by Location
• Distribution of the Wagering Dollar
• State Revenues
• Breakdown of Handle by Breed and Type
• Purses Paid
• Purse Trends
• Purses Earned by Type
• Simulcast Handle - Hoosier Park as Host Track
• Simulcast Handle - Hoosier Park as Receiving Track
• Occupational Licensing
• Equine Drug Testing
• Human Drug Testing
• Standardbred Breed Development Program
• Thoroughbred Breed Development Program
• Blood Gas Analysis Program
• Riverboat Revenue
• 1999 Live Racing Dates

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Indiana Horse Racing Commission

To further assist the Commission with its regulatory responsibilities, the following individuals provided professional or technical service at Hoosier Park during the 1998 racing season.

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Year In Review

May

• Hoosier Park and its satellite facilities set a single day handle record of $1,881,082 on Kentucky Derby Day. The handle surpasses the record of $1,858,178 set on Derby Day in 1997.

July

• On July 11th, a crowd of 7,472 on hand for the Dan Patch Invitational witness Pacific Fella and driver Cat Manzi shatter Hoosier Park's track record, pacing to victory in a time of 1:48.2.

August

• Tony Morgan (252 wins) and Ernie Gaskin (82 wins) lead the driver and trainer standings for the second year in a row. Each also establish all-time Hoosier Park money earning records. Morgan's earnings total $3,015,716 while Gaskin becomes the first trainer to top the million dollar mark with an overall total of $1,324,519.

October

• On October 3, Hoosier Park attracts the largest crowd in history of the facility for the $300,000 - added Indiana Derby. A total of 8,088 fans poured into the facility to see One Bold Stroke and rider Robby Albarado outduel Dixie Dot Com and David Flores.

• On October 13, Vic's Rebel took a giant stride for the Indiana-Bred program by establishing a track record of 1:33.4 for the mile. Six days later, Vic returns to win the open $65,000 added Indy Mile.

November

• Jon Court (118 wins) and Gary Patrick (22 wins) capture the riding and training titles, respectively. Court's 118 victories establishes a single season record, eclipsing the old mark of 91 he set in 1996.

  On November 6, Timothy H. Sams is appointed by Governor O'Bannon to serve a four year term on the Racing Commission. Sams replaces outgoing Commissioner K. Clay Smith who had served the Commission with distinction since its inception in 1989.

December

• Governor O'Bannon reappoints Ernie Gaskin and Nat Hill to the Standardbred Breed Development Advisory Committee.

• On December 4, 1998, the Indiana Supreme Court ruled in favor of the Commission in the first racing related action ever brought before the State's highest court. The high court denied a petition to transfer an appeal made by Cathy Rheinheimer regarding a wrongly issued injunction, thus letting stand an Indiana Court of Appeals decision in favor of the Indiana Horse Racing Commission.

• On December 17, Robert Ossenberg is unanimously elected Vice-Chairman of the Racing Commission.

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Live Racing At Hoosier Park

Standardbred

Thoroughbred

Combined Standardbred and Thoroughbred

The statistics above represent attendance and handle at Hoosier Park on live racing only. Thoroughbred handle includes Quarter Horse races. Additional wagering on Hoosier Park's live racing at Indiana OTB's is as follows - Standardbred ($2,050,349), Thoroughbred ($1,749,094) totaling ($3,799,443). Such wagering is included in OTB handle statistics on the following page.

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Simulcast Wagering by Location

Total Simulcast Handle       $139,064,711

Hoosier Park statistics represent all wagering on out-of-state simulcasts (no live racing). The number of simulcast dates at Hoosier Park reflect any dates on which full card simulcasting took place. Special race simulcasting at Hoosier Park is included in the handle, but not in the number of dates. All OTB statistics represent all wagers at each location on both in-state and out-of-state simulcasting.

Admission is not charged at the Indianapolis OTB, the Ft. Wayne OTB and at Hoosier Park for simulcasting. Consequently, attendance is not counted. Attendance at the Merrillville OTB was 92,609.

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Distribution of the Wagering Dollar

The following is a breakdown of the distribution of all monies wagered at Hoosier Park and its satellite facilities:

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State Revenues

The following are the direct state revenues collected in accordance with the pari-mutuel statute IC 4-31:

Pari-Mutuel Tax	$4,096,088.00
Track Reimbursement for Officials	227,346.58
Admission Tax	26,179.40
Fines and Civil Penalties Paid	21,950.00
Track Permit and License Fees	8,000.00
Total Revenue	$4,379,563.98

The direct revenue received by the State of Indiana exceeded the cost of regulation. Indiana Horse Racing Commission expenditures for calendar year 1998 were $1,118,850.28.

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Breakdown of Handle by Breed and Type

Breed	Live Handle	%	Simulcast Handle	%	Total Handle	%
Standardbred	$7,512,027	5.0	$22,862,752	15.3	$30,374,779	20.3
Thoroughbred	$7,084,384	4.7	$112,402,516	75.0	$119,483,124	79.7
Combined Breeds	$14,596,411	9.7	$135,265,268	90.3	$149,861,679	100.0

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Purses Paid

The following is a breakdown by breed of purses paid at Hoosier Park. Breed Development purse supplements and some horsemen's fees are included. Purse monies from Breed Development bonuses for Indiana sired or Indiana owned are not included. The Kentucky Sales Company's and Hambletonian Society's contributions ($1,258,995) are not included.

Breed	Dates	Purse Paid	Average Daily Purse Distribution
Standardbred	95	$12,186,805	$128,282
Thoroughbred	58	$11,468,830	$197,738

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Purse Trends

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Purses Earned by Type

Type	Amount	%
Riverboats (*)	$ 12,084,168	55.2%
Simulcast - Receiving	6,763,263	31.0%
Breakage & Outs (*)	1,220,342	5.6%
Live Racing (Intrastate)	1,053,754	4.8%
Simulcast - Host (Interstate)	750,817	3.4%
Total	$21,872,344	100%

(*) Assumes 75% of breed development funds are allocated to purses.

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Simulcast Handle Hoosier Park as Host Track

The following is a breakdown, by breed and track, of monies wagered out-of-state on Hoosier Park's live race meets.

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Simulcast Handle Hoosier Park as Receiving Track

The following is a breakdown, by breed and track, of monies wagered at all in-state locations on simulcasts originating from out of state.

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Occupational Licensing

Pursuant to IC 4-31-6 and 71 IAC 5-1-1, all persons participating in pari-mutuel racing under the jurisdiction of the Commission are required to be licensed. The licensing process is the backbone of the Commission's regulatory efforts. Each prospective licensee is fingerprinted. The Federal Bureau of Investigation (FBI) and the Indiana State Police provide the Commission with criminal histories of all applicants. The Commission may refuse or deny the application for licensure of any person whose criminal or racing violation record is contrary to the public's best interest.

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Equine Drug Testing

Pari-mutuel horse racing can succeed as a legitimate major league sport only if its races are perceived by the wagering public to be honest, competitive contests, free from manipulation by man or drugs. With the exception of furosemide (lasix) and phenylbutazone (bute), under regulatory restrictions, state law and Commission rules prohibit the presence of any drug in horses racing at a pari-mutuel track. The Commission's drug detection program is one of the nation's most comprehensive and its laboratory one of the most respected in the racing industry.

Truesdail Laboratory in Tustin, California, serves as the primary testing laboratory for the Indiana Horse Racing Commission. Truesdail Lab has been a leader in racing chemistry and drug-related research for over 50 years.

The following table indicates, by breed, the number of samples analyzed and the number of positive tests reported. In each instance, the offending horse was disqualified and placed last. In accordance with the pari-mutuel statute, all purse money earned is ordered returned and redistributed.

The table below represents a further breakdown, by breed, of the name and types of drugs reported by the laboratory.

* non-steroidal anti-inflammatory

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Human Drug Testing

Commission regulations provide that a licensee or an applicant for licensure may be required, if reasonable suspicion exists, to submit to a drug test. Commission rules require a minimum suspension of thirty (30) days for a positive test for an illegal drug.

Human Drug Testing	1994	1995	1996	1997	1998
Number of Samples Tested	1	14	15	33	24
Number of Positive Tests	0	3	8	14	12

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Breed Development Programs

Overview

Pursuant to IC 4-31-11, breed development funds have been established to promote the breeding of horses while stimulating the agri-business sector of the state's economy. All breakage and unclaimed winning tickets are statutorily earmarked for breed development. In addition, twenty percent (20%) of the riverboat admission tax allocated to the racing industry is distributed to breed development funds. Standardbred and thoroughbred breed development advisory committees make recommendations to the Commission regarding the distribution of these monies.

Standardbred

The Standardbred Breed Development Program continued with a lucrative program at Hoosier Park in 1998 that included a series of Early/Late Closing events, the GENESIS Series and the Indiana Sires Stakes. The Early/Late Closing events for Indiana sired, owned and bred horses, Indiana sired, owned or bred overnights and the GENESIS series competed for $3,481,877 in purse money. The GENESIS is a series of races for two and three-year-old Indiana owned or sired fillies, provided as an incentive to encourage ownership of fillies in Indiana to improve the quality of broodmares thereby enhancing the value and quality of yearlings produced in Indiana. Most important, the Breed Development program has provided an opportunity for the Indiana Sires Stakes to become one of the industry's premier programs. A total of $1,446,894 was paid in purses in 1998 to the Indiana Sires Stakes for two and three-year-old and aged Indiana sired horses. The success of the Indiana Standardbred Breed Development Program during 1998 has resulted in nearly five million dollars paid in purses at Hoosier Park and premium prices received for Indiana sired yearlings at the Indiana sales. More than 1,680 broodmares were bred to registered Indiana stallions in 1998, assuring continuous growth of our state's Standardbred industry.

The successful county and state fair purse supplement programs were continued with increased purses to the fairs. Owners of Indiana sired horses winning in open company at Hoosier Park received a bonus award. Breeder awards were made to the breeders of the winning Indiana sired horses of the finals of the Sires Stakes and the Indiana sired Early/Late closing events. Through these continued efforts, the Standardbred Breed Development Program is developing and promoting a fast growing and high quality Standardbred industry in the state of Indiana.

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Breed Development Programs

Thoroughbred

The Thoroughbred Breed Development Program provides incentives and awards to three important elements of the Indiana Thoroughbred industry: the owner, the breeder and the stallion owner. Indiana bred or owned horses earned over $5,000,000 during the 1998 Hoosier Park meet. Seven of the top ten money earning horses of the meet were from Indiana bred or owned. In 1998, the program initiated out-of-state breeder awards to breeders of registered Indiana bred horses winning races during the time there is no Thoroughbred racing at Hoosier Park.

The highlight of the 1998 Thoroughbred racing season was "Indiana Championship Day" held on September 13, 1998. Eight stake races for Indiana owned and foaled horses were contested and purse money totaled in excess of $600,000 for the championship day events. Trainer Bob Baffert and jockeys Pat Day and Shane Sellers appeared in conjunction with the festivities for the day's events sponsored by the Thoroughbred Breed Development Program.

Purse supplements include $600,000 distributed on Indiana Championship Day.

* Outstanding ticket revenue is based on tickets purchased in 1997 which expired in 1998.

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Blood Gas Analysis Program

The purpose of the Blood Gas Analysis (BGA) program is to deter and detect the practice of "bicarbonate loading" or what is known in the racing business as "milkshaking." This practice generally entails giving a horse a large quantity of an alkaline substance, usually baking soda, prior to a race. The alkaline substance neutralizes the lactic acid that is produced during exercise and, as a consequence, delays the onset of fatigue. Research has demonstrated that this practice induces some horses to race faster times. Bicarbonate loading can give a horse an unfair competitive edge and thus compromise the integrity of the sport. This practice is strictly prohibited by the rules of the Commission.

The BGA Program is operated by the Commission in a small laboratory located in the paddock at Hoosier Park. Blood samples of selected horses are analyzed prior to the race on a state-of-the-art blood gas analysis machine. Each sample is analyzed by a certified lab technician under contract through St. John's Hospital in Anderson.

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Riverboat Revenue

The statute permitting riverboat gaming in Indiana earmarks sixty-five (65) cents of the three dollar admission tax to the pari-mutuel horse racing industry. These funds are distributed to various segments of the racing industry in accordance with Commission rule 71 IAC 12-2-15.

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1999 Hoosier Park Live Race Dates

Red indicates Standardbred Dates Green and Underlined indicates Thoroughbred Dates

Post Times
5:30 p.m. Sundays
7:00 p.m. Weekdays & Sundays
^* Denotes Special Post Times

Approved - December 17, 1998