NEWS
RGS confronts Magna on pari-mutuel settlement
Posted: Thursday, April 02, 2009 3:10 PM
by Frank Angst
Offshore rebate shop Racing and Gaming Services hopes to confront bankrupt racetrack owner Magna Entertainment Corp. on the issue of unpaid pari-mutuel winnings in court.
RGS filed a motion this week with the United States Bankruptcy Court for the District of Delaware requesting an adversary proceeding on the issue of wagering settlements. Magna filed for chapter 11 with the court on March 5 and included settlement payments among its list of creditors.
Magna owes RGS at least $2.38-million in unsettled winning wagers made by RGS customers. These settlement issues occur when players at an outlet like RGS win more money than they lose on races conducted at host tracks.
RGS pays or credits its players immediately, trusting the host tracks will pay off the balance. Because some host tracks square these pari-mutuel winnings only once a month, a large racetrack owner like Magna can quickly build up significant settlement deficits.
Magna Entertainment listed four wagering settlements among its ten biggest creditors. The other three include Northern California Off-Track Wagering, Southern California Off-Track Wagering, and the New York Racing Association.
RGS wants a specific hearing on the settlement money Magna owes it—a ruling that could provide clarity on all of the settlement money and set a precedent for future settlement issues.
“It is clear that there are legitimate issues concerning whether the pari-mutuel pools constitute property of the debtor’s estate,” RGS argues. “RGS believes the issue of whether the pari-mutuel pools constitute estate property must be resolved in an adversary proceeding.”
With offices in Las Vegas and its phone account betting operation in St. Kitts, RGS has used rebates to attract many top horseplayers. Because these players typically profit from race wagering, host tracks typically owe RGS money. When a host track does not pay winnings, or delays payments, RGS’s operation suffers.
That said, when Magna Entertainment filed for Chapter 11 on March 5, its tracks were owed pari-mutuel money from other off-track outlets. Based on the New York Racing Association bankruptcy of 2006, it is likely that all outlets will receive their money, but long delays are likely.
Noting expedited payment requirements would reduce the exposure of everyone involved, RGS spokesman Dick Powell has asked California regulators to require host tracks and off-track outlets to square pari-mutuel accounts every 15 days. He noted that with electronic banking, parties could settle accounts each day.
Frank Angst is senior staff writer of THOROUGHBRED TIMES
