California Horse Racing Board chairman Roger Licht said he favors changing state law to allow the pari-mutuel industry to pay rebates to its customers.
Licht believes that would be the best way to combat the influence of companies outside California who use rebates to attract bettors, many of them California residents who can't legally place wagers with firms not licensed within the state.
"The industry needs to look at rebating," Licht said. "I'm a strong believer in that. It would be a tool to attract the large gamblers back to the track."
Simulcasting and now account wagering, which was legalized in California 14 months ago, have changed the game, Licht said. "The whole (pari-mutuel) system needs to be re-evaluated and modernized," he said.
As it is, Licht said outside wagering companies are taking advantage of the situation. On-track wagers are subject to a 15% to 20% takeout (depending on the type of bet), which is split by the state, horsemen, and several other entities. Companies doing business off of California tracks' television signals are paying roughly 6% depending on their simulcasting agreement.
"So they're paying 6% and keeping 14%," Licht said. "Of that, they rebate 10% to the bettor and they get to keep 4%. They aren't doing anything except taking the signal from us. We provide the product."
Keeping California residents from betting outside the state has become a top priority of the CHRB. After it shut off in-state signals to Coeur d'Alene Casino in Idaho March 7 amid allegations the signal importer was taking bets from California customers, CHRB executive director Roy Wood issued a pointed set of guidelines before service was restored.
Coeur d'Alene was reinstated March 11 after it issued a letter of compliance. The operator agreed to:
-- Require a valid state-issued driver's license or identification be on file for any account holder and make such information, including account numbers, available to CHRB regulators upon request;
-- Make all new applications include a notary and certification the customer's residence is outside of California;
-- Accept no bank deposits or make no withdrawals for any person or entity within California;
-- Block all wagering phone lines to calls from California and provide phone company documentation of execution of the blockage;
-- Require unique signatory for every wagering account.
Officials concede that to require such documentation from every company would be a daunting task for CHRB investigators. A recently approved operating license for Bay Meadows, for example, listed nearly 200 out-of-state simulcast operators and account-wagering providers that have agreements with the track.
"It'll be done one by one," CHRB spokesman Mike Marten said. "(Licht) has made this one of his highest priorities. Through his leadership, we're ferreting out those entities that aren't playing by the rules."
"I think it's going to ensure compliance," Licht said. "(California racing) provides a significant amount of resources to the providers that they depend on."
Marten could not provide an estimate on how much the industry is losing to illegal bets made by California residents. "To know that, you'd need to know how many are doing it," he said.
In the case of Coeur d'Alene, the amount was not significant. (It puts about $150,000 a week total into California pools.) But others, such as Racing and Gaming Services, have significantly more to lose.
"Del Mar did $100 million in on-track handle," Licht said of the results of the track's 2002 meet. "RGS handled $10 million on Del Mar alone."
There are three licensed account-wagering providers in the state: the TV Games Network, XpressBet, and Youbet.com.