NEWS
New York report questions Grupo Caliente
Posted: Friday, July 13, 2007 5:53 PM
by Frank Angst
A New York report questions Thoroughbred racing’s dealings with Grupo Caliente, a simulcasting service based in Tijuana, Mexico, owned by that city’s controversial mayor, Jorge Hank Rhon.
A report prepared by New York Inspector General Kristine Hamann on the integrity of entities seeking the New York racing franchise reveals all of the North ¬American-based applicants have some dealings with Grupo Caliente. The report says United States and Mexican law enforcement authorities have suspected Rhon of money laundering and drug trafficking.
Despite those suspicions, the report notes that “on the surface [Grupo Caliente] appears to be a legitimate operation with more than 165 off-track locations throughout Mexico and Latin America. It is licensed for 25 years by the Mexican Department of Interior.” The report suggests any future dealings with Grupo Caliente by the new franchise holder would require the utmost scrutiny.
“To the extent that Grupo Caliente may be involved in money laundering, it could easily exploit its status as a licensed bookmaker to launder illicit proceeds through U.S. tracks’ pari-mutuel wagering pools,” the report says. “It is a relatively simple matter for a licensed ¬out-of-country bookmaker to partner with an offshore rebate shop with access to pari-mutuel pools in the United States.”
The report outlines current and past business dealings of the applicants with Grupo Caliente.
The New York Racing Association, the current franchise holder, sells its signal to Grupo Caliente’s Hipodromo de Agua Caliente for a flat monthly charge of $4,125. NYRA Director of Simulcasting Elizabeth Bracken said Grupo Caliente’s bookmaking customers do not enter NYRA’s pari-mutuel pool because the outlet is authorized to use the signal only for bookmaking operations.
Magna Entertainment Corp. and Churchill Downs Inc., key Empire Racing Associates members, each have dealings with Grupo Caliente. In a statement, Churchill said it conducted a limited due diligence review of Grupo Caliente and, as a result, does business with the entity. Woodbine Entertainment Corp., also part of the Empire bid, terminated its relationship with Grupo Caliente in 1998 after it failed to receive payment from the outlet.
Current Standardbred tracks operated by William Johnston Jr., whose Johnston family is one of the key members of Excelsior’s bid, allow Grupo Caliente simulcast signals through MIR International, which is owned by Arturo Alemany Salazar, Grupo Caliente’s U.S. representative for simulcasting events.
Grupo Caliente and some of its key associates have met opposition from regulators. The Nevada Gaming Control Board, one of the country’s preeminent gaming regulators, has cited Grupo Caliente in three different public hearings relative to licensing suitability. Essentially, companies were directed to end business with Grupo Caliente.
The Puerto Rico Racing Administration denied MIR International operator Salazar a license. Currently under review, the report notes that should the unsuitability finding be upheld, it could impact U.S.-based racetrack regulators.
Frank Angst is a Thoroughbred Times senior writer
