Ontario horse breeders want $65 million in damages for program's cancellation

Friday, March 14, 2014

by MATT MCINTOSH

Several people and businesses involved in Ontario’s standardbred horse breeding industry allege confidential agreements between the Ontario Lottery and Gaming Corporation and Ontario’s racetracks caused standardbred breeders to incur huge losses after the Slots at Racetracks Program was cancelled in March of 2012.

About 50 people and breeding businesses made the allegations in a notice of action and statement of claim filed at the Ontario Superior Court in Guelph on Monday. No allegations have been proven in court. The statement alleges the gaming commission breached obligations that it owed the breeders. The breeders are claiming $65 million in damages.

The Slots at Racetracks Program was an agreement between Ontario’s racetracks and the gaming commission that divided slot-machine revenue between multiple parties: five per cent went to the local municipality, 20 per cent went to the racetracks and breeders, and the remainder went to the province.

Tammy McNiven, vice-president of the Standardbred Breeders of Ontario Association claims the confidential agreements between the tracks and the provincial gaming corporation contained “out-clauses” which allowed the corporation to cancel the Slots at Racetracks Program without a fair period of notice. Because breeders had no idea the gaming corporation could cancel the slots program in such a short period of time, she says, they were unable to prepare for the financial trouble brought by the cancelation.

“The provincial government started reviewing the racing industry in February of 2012, and cancelled the slots program a month later without consulting any of our breeders,” asserts McNiven.

“We all had a lot of product in queue, and couldn’t adjust overnight. Had we known about the out-clauses, we would have been better prepared for this kind of thing.”

John Snobelen, a former member of the provincially-appointed Horse Racing Industry Transition Panel who is working with the Ontario Horse Racing Commission to help implement changes to the Commission and the industry, says that the out-clauses referred to by McNiven were part of confidential site holder agreements that allowed the gaming corporation to withdraw support from the slots program after 11.5 months. This means, he says, that slot revenue still made its way through the racetracks, breeders and owners until March 2013. However, many standardbred breeders still found themselves in a less-than-favourable spot.

“Breeding season starts in February, and at the time the cancelation was announced in March of 2012, breeders had about two years worth of inventory,” says Snobelen.

Unfortunately, says McNevin, race horse owners stopped purchasing standardbred horses once the cancelation of the slots program was announced. Demand dropped, and the number of breeding mares in the province was reduced to 1,700 in the months following the announcement from 4,000 in 2011.

At the annual London yearling sale, Walter Parkinson said his farm, Seelster Farms Inc. in Lucan, sold an average of 50 yearlings before the announcement. After the cancelation, they averaged about half as many.

“We are one of Ontario’s larger breeders, and we couldn’t plan for it,” he says.

While Ontario’s standardbred breeders are filing a lawsuit, however, the province’s thoroughbred and quarter horse breeders have actually signed what Snobelen refers to as “advanced” agreements that build off support programs already in place for the entire horse breeding industry.

For instance, the Ontario Racing Commission announced in a March 11 press release that the Ontario division of the Canadian Thoroughbred Horse Society and Quarter Racing Owners of Ontario have agreed to the Commission’s plans to invest an additional $18 million, collectively, into breeder support programs.

Despite what the thoroughbred and quarter horse sectors do, McNevin says standardbred breeders are in a unique situation. Because standardbred horses made up so much of Ontario’s racing industry – 13 of 16 racetracks according to the Ontario Racing Commission’s website – McNevin claims its breeders were set to lose more from the cancelation of the Slots at Racetracks Program.

“We didn’t want to take legal action yet, but filing has a two-year deadline so we were forced to do it now,” she says. “We still want to work for a plan going forward but the province has refused to discuss compensation.”

Snobelen says the provincial government has yet to formulate a response to the lawsuit.

According to the court documents, if the gaming commission wants to defend against the court proceeding it must file a statement of defence within 20 days from the date the notice of action was served. BF