Racing and Wagering Board

EMERGENCY RULE MAKING

The Minimum Price for Which a Horse Shall be Entered in a Claiming Race

I.D. No. RWB-33-12-00002-E

Filing No. 1193

Filing Date: 2012-11-29

Effective Date: 2012-11-29

PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:

Action taken: Amendment of section 4038.2 of Title 9 NYCRR.

Statutory authority: Racing, Pari-Mutuel Wagering and Breeding Law, section 101(1)

Finding of necessity for emergency rule: Preservation of public safety and general welfare.

Specific reasons underlying the finding of necessity: The Board has determined that immediate adoption of this rule is necessary for the preservation of the public safety and general welfare and that compliance with the requirements of subdivision 1 of Section 202 of the State Administrative Procedure Act would be contrary to the public interest.

Between November, 2011 and April 2012, 18 thoroughbred horses in New York State that were entered in claiming races were injured and subsequently died. Their deaths prompted a comprehensive analysis of the circumstances and possible causes for the deaths of these horses. One common aspect in these races is the fact that the horse that broke down was involved in a claiming race. This rule is necessary to remove an incentive that a trainer or owner may have for entering an undervalued horse in proportion to the value of the purse that is offered in the claiming race. In other words, this rule will mandate a claiming price to purse proportion and thus establish a relationship between investment in a horse and the potential purse in a manner designed to provide a safer racing environment in which financial incentive is lessened to race a horse that should not be raced.

Given the danger of a horse breaking down, and the safety threat presented to both the jockey on the horse and the jockeys riding in close proximity, this rule is necessary to protect the safety of human and equine athletes. Thoroughbred horses travel over the racetrack at an average speed of approximately 40 miles per hour, sometimes exceeding that average as they sprint to the finish or to gain positional advantage. An outclassed horse in a superior racing field may be forced to race beyond its limits and result in a fatal breakdown.

This rule is also necessary to protect the general welfare of the horse racing industry and the thousands of jobs that are created through it. Public confidence in both the process of racing and in pari-mutuel wagering system is necessary for the sport to survive, and with it the jobs and revenue generated in support of government. Claiming races are an essential part of thoroughbred racing and pari-mutuel wagering. This rule is necessary to ensure integrity in the claiming process, and in turn promote the situation that when a horse steps onto a race track, it is fit to compete in the race in which it is entered.

Subject: The minimum price for which a horse shall be entered in a claiming race.

Purpose: To diminish the risk of injury to human and equine participants in horse racing.

Text of emergency rule: Section 4038.2 of 9 NYCRR is amended to read as follows:

4038.2. Minimum price for claim.

The minimum price for which a horse may be entered in a claiming race shall [be $ 1,200.] not be less than fifty percent of the value of the purse for the race.

This notice is intended to serve only as a notice of emergency adoption. This agency intends to adopt the provisions of this emergency rule as a permanent rule, having previously submitted to the Department of State a notice of proposed rule making, I.D. No. RWB-33-12-00002-EP, Issue of August 15, 2012. The emergency rule will expire December 19, 2012.

Text of rule and any required statements and analyses may be obtained from: John Googas, New York State Racing and Wagering Board, One Broadway Center, Suite 600, Schenectady, NY 12305-2553, (518) 395- 5400, email: info@racing.ny.gov

Regulatory Impact Statement

1. Statutory authority and legislative objectives of such authority: The Board is authorized to promulgate these rules pursuant to Racing Pari-Mutuel Wagering and Breeding Law sections 101(1). Under section 101, the Board has general jurisdiction over all horse racing activities and all pari-mutuel thoroughbred racing activities.

2. Legislative objectives: To enable the New York State Racing and Wagering Board to preserve the integrity of pari-mutuel racing, while generating reasonable revenue for the support of government.

3. Needs and benefits: This rulemaking is necessary to ensure that entries in claiming races in thoroughbred racing meet a minimum value, thereby ensuring that the horses are competitive in class proportional to the purses for which they are competing. The current rule was adopted prior to 1974 and continued when the Board's comprehensive rules were codified in 1974.

A claiming horse is, in effect, offered for sale at a designated price within the range of the claiming race at which they are entered by their owners. The potential buyer of a horse in a claiming race must enter his claim before the race. By entering a horse in a claiming race, the owner is offering his horse up for sale to another other individual.

The rule as written does not take into account principles of proportional economics in relation to current purses. Purses have increased due in part to the advent of video lottery terminals (VLTs). Video lottery terminals opened up at Aqueduct on October 28, 2011, making Aqueduct an attractive venue for owners to race their horses. This year, purses at the NYRA have increased substantially. As reported by The Saratogian newspaper on March 17, 2012, NYRA spokesman Dan Silver said that for the first two months of 2012, purses at Aqueduct have averaged $396,000 per day, which is up from $266,000 per day over the same period last year. Subsequently, doubts have been raised publicly in the pari-mutuel wagering community as to whether the quality of horses has kept pace with the growth of claiming race purses.

Horses drop in class, but still compete for larger purses than they did in the previous higher class. This disproportionate relationship has resulted in inferior horses competing for more money, particularly when other states have smaller purses for higher grades. This rule will establish a relationship between investment in a horse and the potential purse in a manner designed to provide a safer racing environment.

Not only does this rule removes the flat threshold of $1,200 (which the Racing and Wagering Board was unable to justify through archival research), the new rules adopt a sliding scale, which is more reasonable given that claiming purses may rise or fall in the future.

This rulemaking is consistent with one of the recommendation from the American Association of Equine Practitioners in its 2009 whitepaper titled "Putting the Horse First: Veterinary Recommendations for the Safety and Welfare of the Thoroughbred Racehorse," where veterinarians advised that purses should not exceed claiming prices by more than 50%.

4. Costs:

(a) Costs to regulated parties for the implementation of and continuing compliance with the rule: These amendments will not add any new mandated costs to the existing rules. Naturally, there will be an economic impact on horse owners who will not be able to enter their horses in races, but it impossible to gauge that number due to the speculative nature of whether an owner or trainer will decide to enter a horse in a claiming race, the changing value of a horse in relation to subjective performance and the performance of other race horses.

(b) Costs to the agency, the state and local governments for the implementation and continuation of the rule: None.

(c) The information, including the source(s) of such information and the methodology upon which the cost analysis is based: Board staff reviewed published results, claiming values and horses that may or may not compete in future claiming races. After considering the issue, it determined that there was no reliable formula for determining the costs of this rule by excluding horse based on their value in comparison to the value of the purses.

(d) Where an agency finds that it cannot provide a statement of costs, a statement setting forth the agency's best estimate, which shall indicate the information and methodology upon which the estimate is based and the reason(s) why a complete cost statement cannot be provided. It is not possible to ascertain the potential costs due to the variables involved in owner's discretion and the value of claiming horses.

5. Local government mandates: None. The New York State Racing and Wagering Board is the only governmental entity authorized to regulate pari-mutuel harness racing activities.

6. Paperwork: There will be no additional paperwork. The Board will utilize the existing documents for administrative adjudication to determine whether the suspension of a pre-race detention order is appropriate.

7. Duplication: None.

8. Alternatives: The only alternative that the Board considered is to retain the rule as currently written, which is not acceptable. This rulemaking reverses a 2006 amendment, which eliminated the consideration of a horse's value in proportion to the purse that is offered in a claiming race. Given the narrow purpose of requiring a specific value in proportion to the purse offered, no viable alternative could be presented.

9. Federal standards: None.

10. Compliance schedule: The rule was previously approved as an emergency rulemaking and has been in effect since April 2012. This emergency rulemaking will be effective upon submission to the Department of State on November 29, 2012. A Notice of Adoption for this amendment will be submitted to the Department of State and will go into effect on December 19, 2012 upon publication in the State Register.

Regulatory Flexibility Analysis, Rural Area Flexibility Analysis, Job Impact Statement

As is evident by the nature of this rulemaking, this proposal affects the entry of horses in claiming races proportional to the value of the horse. This will not affect jobs or employment opportunities because racetracks can still offer claiming races with purses that are proportional to the value of some lower-priced claiming horses. This rule merely requires a proportional economic relationship between the purse offered and the value of a claiming horse. This amendment will not adversely impact rural areas, jobs, small businesses or local governments and does not require a Regulatory Flexibility Statement, Rural Area Flexibility Statement or Job Impact Statement because it will not impose an adverse impact on rural areas, nor will it affect jobs. This amendment is intended to reduce an incentive to enter a horse in a claiming race where it is can be outperformed to the point of serious injury or death to the horse or jockey. A Regulatory Flexibility Statement and a Rural Area Flexibility Statement are not required because the rule does not adversely affect small business, local governments, public entities, private entities, or jobs in rural areas. There will be no impact for reporting, recordkeeping or other compliance requirements on public or private entities in rural areas. The rule does not impose any technological changes on the industry either. This rulemaking does not impact upon a small business pursuant to such definition in the State Administrative Procedure Act § 102 (8) nor does it negatively affect employment.

Assessment of Public Comment

The agency received no public comment since publication of the last assessment of public comment.