Activities of The Jockey Club
James L. Gagliano James L. Gagliano - Executive Vice President & Chief Administrative Officer, The Jockey Club

James L. Gagliano: Thank you, Mr. Chairman, and good morning, ladies and gentlemen. It's a pleasure to be here. I've got a lot of ground to cover today so let's get started.

In all that we do at The Jockey Club, we seek to preserve the integrity of The American Stud Book and are dedicated to the improvement of Thoroughbred breeding and racing.

In many instances, our family of companies work closely together to serve the industry, and you'll hear some examples in a few minutes.

Integrity is a word you'll also hear a lot about today, and it is appropriate that I start with The Jockey Club Registry — where maintaining the highest degree of integrity in The American Stud Book is our primary mission.

The members of our registry team regularly analyze the information we receive during the registration process to identify trends and potential issues that require further study. In doing so, in early 2005 we identified a pattern of reported foaling dates during the preceding nine years.

During this time we received reports of about 1,900 foals being born during the first five days of January — but during that entire nine-year period we received reports for just 35 foals born during the month of December.

This trend raised an obvious concern as to whether foaling dates were being accurately reported, and as a result, in June 2005 the board of stewards approved a modification to the Principal Rules and Requirements of the American Stud Book providing for field inspections.

Last December, we began those inspections.

Senior members of our registry team visited 20 farms in six states over a two-week span. We did observe foals on the ground and took that opportunity to remind those respective owners and breeders that their foals would need to be reported as December foals. We will continue the inspection practice again this year and will review relevant statistics to see if this trend carries on.

And while I'm on the topic of foals, as you know, yesterday we announced the 2007 foal crop will be 37,500, an increase of 200 foals from last year's estimate.

Before I begin my report on our commercial companies, I'd like add that profits from each of them provide funding for many of the industry initiatives that The Jockey Club supports on a regular basis, such as many of those that are listed on the screen behind me.

Now in its 16th year of operation — yes, 16 — Equibase serves as a shining example for industry cooperation as it continues to provide innovative ways to bring value to its partners.

As the racing industry's Official database, Equibase has enjoyed continual growth, witnessed by the record 700,000 visitors to on the three days that comprised this year's Triple Crown races.

Earlier this year, Equibase completed a comprehensive recalibration of its speed figure such that it is now on par with all other international ratings, and also entered into a data exchange with Timeform, the European rating system.

Additionally, Equibase supported the international efforts of several partner racetracks by licensing North American racing information through European distribution networks, as well as developing a Spanish-language race program, which we also recently announced.

Over its 16 years of existence, the Equibase team has actively pursued numerous automated-tracking initiatives based upon evolving technologies.

Most recently, at Woodbine up in Ontario, Equibase assisted Boston-based Trakus with a trial installation by analyzing the accuracy of the data that their automated radio frequency system was collecting.

We believe initiatives such as Trakus have the potential to forever change the way we view racing — in many ways similar to the way instant replay and other graphical enhancements have affected televised American sports. As the industry's Official database, Equibase will continue to work with third-party developers like Trakus to bring these visions to reality.

Now on to The Jockey Club Information Systems — or TJCIS as we refer to it — which provides products for industry professionals such as its best-in-class Farm and HealthBook software.

Over the past year, TJCIS' flagship product line,, has undergone a series of product improvements, as the advertisement behind me indicates.

The addition of the Equibase® Official Speed Figure and Timeform ratings to catalog-style pedigrees in a new PDF format have increased the appeal of this traditional product to become one of Equineline's top sellers.

Our newest company, The Jockey Club Technology Services, which provides the technology backbone for the registry and all of our commercial companies, continues to broaden its base as a technology solutions provider to a variety of industry organizations, including the Daily Racing Form, New York Racing Association and, most recently, the Thoroughbred Racing Protective Bureau.

The final commercial company to report today on is InCompass. InCompass provides technology and software solutions to racetracks.

Attendees at this very conference four years ago will recall the introduction of InCompass and the ability that it sought to provide to racing offices across the country access to official pedigree and real-time racing information made possible by utilization of browser-based tools and a centralized database methodology.

From this foundation, InCompass now has installations at 85 racetracks and industry organizations. Of those, 77 use the InCompass Horsemen's Bookkeeper system, which is a market share of 85% and represents the critical mass necessary to launch additional broad-based applications using our virtual enterprise methodology.

By way of background, the InCompass Horsemen's Bookkeeper — or HB as we call it — functions very much like an on-track bank for owners, trainers and jockeys to receive purse earnings, pay stakes nominations and even handle the weekly jockey payroll.

However, it is still a process that relies exclusively on hard copy checks for fund transfers and distributions.

Here are some relevant statistics from this highly inefficient system:

  • In 2005, a quarter-million checks were written to owners, trainers and jockeys.
  • The lowest amount, 2 cents; the highest amount, $1.2 million.
  • The total dollars distributed through the HB system was $1.1 billion.

The benefits of streamlining this critical aspect of our business are significant, and as a result, earlier this year we began evaluating the feasibility of creating a system for owners and trainers to access their horsemen's bookkeeper accounts via the Internet and then manage those funds via electronic transfers.

Here's how we envision the system working:

First, the user accesses his account by logging in to the InCompass Horsemen's Bookkeeper Account Access.

Account Access was launched early in 2005 and is currently installed at 20 racetracks, including Saratoga, Belmont and Aqueduct, for the benefit of their horsemen. It allows owners, trainers and jockeys to check their accounts via the Internet. Horsemen can then view their combined accounts at all participating racetracks and print statements for IRS purposes.

Our concept for the next version of Account Access will provide horsemen with the ability to transfer monies between racetrack HB accounts as well as to their own personal bank account.

As with all things we do at The Jockey Club, ensuring integrity and implementing best practices in our business processes are of paramount importance. So our business model will need to be developed to ensure compliance with federal anti-money laundering regulations and the Patriot Act.

To this end, we have enlisted the services of the Washington, D.C., law firm of Arnold & Porter, who specialize in this area. Our business partner in this venture is JPMorgan Chase, who is represented here today by Glenn Leveridge and Susan Bunning.

JPMorgan Chase will provide the seamless back-end financial services necessary for electronic money transmittals through the ACH fund transfer system.

We have also received very valuable insight from Nick Nicholson of Keeneland, Bob Elliston of Turfway and their colleagues helping us model the system with the needs of the tracks and the horsemen in mind.

If all goes according to plan, we intend to launch this exciting new service early in 2007.

I'd like to end my presentation with a few words about our two foundations:

The Jockey Club Foundation continues to assist needy individuals from all aspects of our industry, not just backstretch workers.

When Hurricane Katrina hit the Gulf Coast last year, the foundation stepped forward with a $100,000 donation. It was one of the rare instances in which the foundation made public its gift.

Tragedy of another sort — Barbaro's life-threatening injury in the Preakness — reminded people in this industry of the importance of equine research and, more specifically, the work of the Grayson-Jockey Club Research Foundation.

Many members of the fine staff at New Bolton Center have worked on studies funded by Grayson. Barbaro was treated on Preakness Day with a tranquilizer called xylazine, for which proper dosage levels were determined in studies funded by Grayson several years ago.

This October, in furtherance of its mission, Grayson will host the Welfare and Safety of the Racehorse Summit, bringing together a cross-section of industry participants to discuss ways to improve the safety and soundness of the horse.

Our foundations rely on donations and charity events to raise money, and we had a good one back in June when NYRA designated Grayson-Jockey Club Research Foundation and World Hunger Year as the co-beneficiaries of the Belmont Bash.

The event was held at the Hard Rock Café in Times Square and more than 400 people attended and had a great time. As always, we thank NYRA for their gracious and on-going support.

In closing, I thank you for your time. We are proud of our achievements and anxious to continue our contributions to the future of this great industry.

Enjoy the balance of today's program.

Ogden Mills Phipps: Thank you, Jim.

There's one other important industry initiative that The Jockey Club proudly supports and that's the NTRA PAC. The Thoroughbred industry has benefited immensely on the legislative front in Washington over the past four years and we will continue to provide our support in the future. We hope other industry organizations will do the same.

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