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Thoroughbred Racing, Wagering and Sales: the Keeneland Trifecta

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Thoroughbred Racing, Wagering and Sales: the Keeneland Trifecta THOROUGHBRED RACING, WAGERING AND SALES: THE KEENELAND TRIFECTA CLE Credit: 1.0 Thursday, June 14, 2018 12:00 - 1:00 p.m. Bluegrass Ballroom II Lexington Convention Center Lexington, Kentucky A NOTE CONCERNING THE PROGRAM MATERIALS The materials included in this Kentucky Bar Association Continuing Legal Education handbook are intended to provide current and accurate information about the subject matter covered. No representation or warranty is made concerning the application of the legal or other principles discussed by the instructors to any specific fact situation, nor is any prediction made concerning how any particular judge or jury will interpret or apply such principles. The proper interpretation or application of the principles discussed is a matter for the considered judgment of the individual legal practitioner. The faculty and staff of this Kentucky Bar Association CLE program disclaim liability therefore. Attorneys using these materials, or information otherwise conveyed during the program, in dealing with a specific legal matter have a duty to research original and current sources of authority. Printed by: Evolution Creative Solutions 7107 Shona Drive Cincinnati, Ohio 45237 Kentucky Bar Association TABLE OF CONTENTS The Presenter ........................................................................................................ i Thoroughbred Racing, Wagering and Sales: The Keeneland Trifecta ................. 1 Redmond v. The Jockey Club, 224 Fed. Appx. 663 (6th Cir. 2007) ..................... 11 THE PRESENTER William M. Lear, Jr. Stoll Keenon Ogden, PLLC 300 West Vine Street, Suite 2100 Lexington, Kentucky 40507 WILLIAM M. LEAR, JR. is the chairman emeritus of Stoll Keenon Ogden, PLLC, the Kentucky-based law firm that counts among its clients Keeneland, The Breeders' Cup, the Jockey Club, Thoroughbred Owners and Breeders Association, the Kentucky Thoroughbred Association and a number of Thoroughbred breeding and racing operations. Mr. Lear received his B.A. from Davidson College and J.D. from the University of Kentucky College of Law, where he served as editor-in-chief of the Kentucky Law Journal. His legal career has included stints as a part-time prosecutor and Commissioner of Law for the Lexington-Fayette Urban County Government, as well as the last 36 years at Stoll Keenon Ogden, for more than 20 of which he held the positions of managing partner or chairman. Mr. Lear's practice over the past 40 years has focused on litigation, real estate development, government relations and equine law. His involvement in the Thoroughbred industry dates back to the early 1980s and has included litigation, negotiation of horsemen's contracts with racetracks, state and federal legislation and medication regulation. Mr. Lear currently serves the industry as Trustee of Keeneland and a member of the Board of Stewards and vice-chair of The Jockey Club. He is one of the principal drafters of the Thoroughbred Horseracing Integrity Act sponsored by Congressman Andy Barr and Paul Tonko, which would standardize racing medication regulation throughout the United States. Mr. Lear served as a member of the Kentucky House of Representatives for five terms from 1985 through 1994. He has maintained an active role in Kentucky civic, business and political affairs. He is the immediate past chair of the Board of the Kentucky Chamber of Commerce. He has been inducted into the UK College of Law Alumni Hall of Fame, the Kentucky Economic Development Hall of Fame and the Bluegrass Business Leaders Hall of Fame. i ii THOROUGHBRED RACING, WAGERING AND SALES: THE KEENELAND TRIFECTA William M. Lear, Jr. I. THOROUGHBRED FUNDAMENTALS A. The Thoroughbred breed of horses traces its roots back to the Darley Arabian, the Godolphin Arabian, and the Byerly Turk. B. To qualify as a Thoroughbred, a horse must have both a sire and dam that are Thoroughbreds and must have been produced by a natural cover. The Jockey Club, which is the breed registry for the United States and Canada, maintains The American Stud Book, verifies the pedigree and parentage of horses submitted for registration by DNA testing and approves the names of Thoroughbreds according to an established set of rules. KRS 230.210 defines a Thoroughbred race as "a form of horse racing in which each horse participating in the race is a Thoroughbred (i.e., meeting the requirements of and registered with The Jockey Club of New York) and is mounted by a jockey...." Similar provisions are found in the statutes or administrative regulations of every state that allows Thoroughbred racing. C. Rule 6 of "The Principal Rules and Requirements" of The American Stud Book contains the rules for naming of Thoroughbred horses. Horse owners have enormous discretion in determining the names of their horses, provided that the requested names do not run afoul of certain restrictions including: 1. They cannot consist of more than eighteen characters (spaces and punctuation marks count the same as letters). 2. Names ending in filly, colt, stud, mare, or similar horse- related terms are prohibited. 3. Names that are suggestive or have a vulgar or obscene meaning, names considered in poor taste, names that may be offensive to religious, political, or ethnic groups are prohibited. 4. Names that appear designed to harass, humiliate, or disparage a specific individual, group of individuals, or entity are prohibited. 1 5. Names of past outstanding racehorses cannot be used again. A noteworthy case concerning Thoroughbred names grew out of The Jockey Club's rejection of the proposed name Sally Hemings for a foal sired by Jefferson's Secret. The Jockey Club's rejection of that name was challenged in court in a case originating in the Eastern District of Kentucky and ultimately decided by the Sixth Circuit Court of Appeals, in which the court held that an owner has no property rights in the proposed name of a Thoroughbred and upheld the rejection of the name. Redmond v. The Jockey Club, 224 Fed. Appx. 663 (6th Cir. 2007). II. KEENELAND ORIGINS AND STRUCTURE A. In 1935, Hal Price led a group of Kentucky horsemen and business leaders to establish Keeneland. This followed the demise of America's first racetrack, the Kentucky Association, in downtown Lexington which had operated from 1826 to 1933. Formed in the depths of the Great Depression, Keeneland's mission was ambitious: to "create a model race track to perpetuate and improve the sport and to provide a course that is intended to serve as a symbol of the fine traditions in Thoroughbred racing." To raise money to purchase property located on Versailles Road in Fayette County from horseman John Keene, and to complete the construction of a racetrack plus a clubhouse, the founders issued shares of preferred stock at $500 per share. In order to generate widespread local support for the venture, Keeneland issued 3000 shares of common stock at $1.00 per share with the unique provision that no dividends could ever be paid on the common stock. The prospectus was submitted to and approved by the Securities Exchange Commission. The founders also established a voting trust, held by three Trustees authorized to exercise full voting control over the shares of common stock. The three initial Trustees were Hal Price Headley, Arthur B. Hancock, and Fred Rankin. B. With the funds generated by the stock issues, Keeneland purchased the land and the track, completed the track, the clubhouse, and the initial grandstand. It did not, however, buy the mansion known as Keene Place. That property was not acquired by Keeneland until the early years of the 21st century. The first race was held at the track on October 15, 1936. Within a few years of the initial race meet, Keeneland paid off and redeemed all of the shares of preferred stock. In the early 1950's, the Trustees reacquired all but a handful of the shares of common stock and now hold those shares in trust. 2 C. From the earliest days of Keeneland, and continuing today, all proceeds from Keeneland operations are used to maintain the facility, to fund the operations of the organization, to benefit the Thoroughbred industry, and for donations to central Kentucky charities. Contrary to popular belief, Keeneland is a for-profit entity but with a nonprofit mission. If the track were ever to be sold, all proceeds would go to charity. III. STOLL KEENON OGDEN AND KEENELAND A. Stoll Keenon Ogden (then "Stoll, Muir, Townsend & Park") did all of the legal work to establish Keeneland and have served as its principal legal counsel ever since. One of the firm's attorneys, Richard Stoll, was on the initial Board of Directors; he and Wallace Muir were among the first shareholders. At least one member of the firm has been on the Board of Keeneland at all times since its inception. Two of the firm's attorneys have served as Keeneland Trustees. B. Gayle Mohney was one of the attorneys primarily responsible for the initial legal work with Keeneland. He and Mr. Headley were particularly close and together forged most of the unique legal underpinnings that have sustained Keeneland over the past eighty years. Another of the firm's attorneys, W.T. Bishop III, who served as both a Keeneland Board member and Trustee, was raised on the grounds of Keeneland while his father, also nicknamed Buddy Bishop, served as the first manager of the racetrack. C. The longevity of SKO's relationship with Keeneland is consistent with many relationships formed early and long maintained by Keeneland. The architect for the track's buildings, the landscape company that helped to produce and maintain the beautiful Keeneland grounds and the food provider, Turf Catering, all served Keeneland for decades and helped ensure consistent high quality. IV. INTERESTING FACTOIDS ABOUT KEENELAND A. It is a National Historic Landmark (1986) B. Its Main Gates Never Close C. It owns and maintains in its library all of the historic copies of the Daily Racing Form.
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