CHARLESTON, W.Va.-- Penn National Gaming got approval from the state Racing Commission on Tuesday to transfer ownership of its Charles Town horse track and casino to a Real Estate Investment Trust -- over objections from thoroughbred owners and breeders who fear the move is a way to evade state racing regulations.
"This is a wide-open door to affect the integrity of racing," David Hammer, attorney for the Charles Town Horsemen's Benevolent Association, told the commission.
However, Brandon Moore, senior corporate counsel for Penn National, argued the REIT is a restructuring to protect Penn National's investments in an era of "cannibalism and movement" in the gaming industry nationwide.
Besides providing tax incentives, the publicly traded REIT should help Penn National attract new investors usually not interested in gaming company stocks, he said.
"We believe this will bring a whole range of investors into the gaming market," Moore said.
Hammer said thoroughbred owners fear that shifting ownership of the track facilities could have multiple repercussions on horse racing at Charles Town. He envisioned a scenario where Penn National representatives would tell horse owners that, since they no longer own the property, they are no longer able to provide stalls for horses free of charge.
Moore insisted the REIT will be a "passive landlord" and nothing will change in the day-to-day operations at the track.
"For better or worse, the REIT does not provide a solution to issues between the horsemen and the track," he said.
Hammer also asked that commission Chairman Joe Rossi recuse himself from voting, arguing that Rossi had received confidential emails regarding the REIT from an attorney representing Penn National. Hammer argued that constitutes a "repeated and willful violation of the [state] Open Meetings Act."
Rossi declined to recuse himself, saying he had requested information in order to do his "due diligence" to understand a complicated business transaction.
Also Tuesday, the commission:
* Deferred action on funding an economic impact study of horse and dog racing in the state.
Commission executive director Jon Amores said he was advised by the state Purchasing Division that the study would have to be put out to bid.
Horse and dog racing interests had requested a study by the West Virginia University Bureau of Business and Economic Research.
"We want to move this study forward as quickly as we can," Charles Town Horsemen's Benevolent Association president Randy Funkhouser told the commission. "We think it's important for you to know the economic impact of horse and dog racing in the state."
* Opted not to refer the cases of three people disciplined for abusing greyhounds to the Ohio County prosecutor for possible criminal charges.
One of the three, former trainer James Grace, told commissioners via teleconference that he has end-stage colon cancer, and said he takes full responsibility for depriving an injured greyhound of medical care.
* Postponed a vote to adopt an official commission policy clarifying when instances of animal cruelty, mistreatment or neglect are to be referred to authorities for possible criminal prosecution, after greyhound breeder Sam Burdette requested time to review the draft policy.
"The question came up from Jon [Amores] about when should these cases be referred to local law enforcement for criminal prosecution," said Kelli Talbott, the senior deputy attorney general who represents the Racing Commission. "That can just be a case-by-case determination. Every time someone yanks a dog's lease too hard, does that get reported to the county prosecutor?"
Reach Phil Kabler at firstname.lastname@example.org or 304-348-1220.