PETA, CHURCHILL DOWNS, AND THE SECURITIES & EXCHANGE COMMISSION

On January 20, 2021, the organization People for the Ethical Treatment of Animals distributed the following press release:

“Louisville, Ky. — This morning, PETA appealed to the U.S. Securities and Exchange Commission to reject Churchill Downs, Inc.’s, attempt to quash its resolution requesting that the corporation report to shareholders on the feasibility of installing a high-quality synthetic track at its signature track in Louisville. PETA, which became a shareholder in the company in 2008, points to the racing industry’s own statistics showing that fewer broken bones and deaths occur on synthetic surfaces than on either dirt or turf. 

Churchill Downs claims that shareholders should have no say in such ‘ordinary business.’

‘There’s nothing ‘ordinary’ about horses dying on a dirt track when a safer surface is available,’ says PETA Senior Vice President Kathy Guillermo. ‘We’re simply asking the track to produce a simple report on the feasibility of making the lifesaving switch to a synthetic surface.’

Churchill Downs has improved its deadly record since 2019, when its death rate from catastrophic injuries was 50% higher than any other reporting track. According to The Jockey Club’s Equine Injury Database, there were 1.19 fatal injuries per 1,000 starts on synthetic tracks vs. 1.94 such injuries on dirt tracks and 1.48 on turf.”

PETA’s assertion about the safety of synthetic racetracks is correct, but its appeal to the Securities and Exchange Commission is going nowhere. The SEC does not get involved in tactical decisions that are clearly within the purview of management in publicly-traded companies, unless some SEC rule or federal law is involved.

Moreover, PETA does not own a sufficient number of shares of stock to exert pressure on the Churchill Downs board of directors and the CEO.  Investopedia explains:

“It is important to keep in mind that, mutual funds, hedge funds, and other investment vehicles controlled by financial services companies usually control the majority of a corporation’s publicly traded stock. While individual investors may have opinions of various topics and are able to express those opinions by putting forth proposals, the biggest voting blocks are often the financial institutions, pension funds, and similar entities—all known as institutional investors—that hold large stakes in the firms.

Getting a handful of Wall Street firms to agree with the firm’s positions, either for or against a given proposal, is usually more than enough support to squash any dissent.”

PETA surely knows this and no doubt is simply trying to affect public sentiment.

Horse Racing Business 2021

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