MEC Move Creates Account-Wagering Dilemma

by Tom LaMarra and Linda Dougherty

Magna Entertainment Corp. initiated restrictions upon or pulled its live racing signals from most account-wagering services effective Dec. 26, and at least one operator isn't happy about the developments.

MEC apparently is trying to funnel handle to its Xpressbet account wagering service. The winter and early spring is prime time for MEC, which operates the two premier winter meets at Gulfstream Park, which opens Jan. 3, and Santa Anita Park, which opened Dec. 26.

It's still unclear how each account-wagering provider is affected. With MEC's corporate office in Ontario, Canada, closed for the holiday, company officials couldn't be reached for comment.

The move comes at a time when horsemen and racetracks are looking at how much revenue they earn from account wagering. Horsemen in particular want an accounting of where signals go, and whether a fair share of revenue is going to purses. Ohio horsemen, for example, want their entire state to become eligible for source-market fees.

Youbet.com has struck a deal to offer California races from Santa Anita and Golden Gate Fields but no other MEC tracks. On Dec. 29, wagering from both tracks was available through Youbet.com. TV Games Network, with the exception of Maryland Jockey Club tracks, doesn't offer wagering on premier MEC meets.

TVG has long heralded exclusivity, and now it seems MEC is headed in that direction. For years, MEC chairman Frank Stronach has advocated a laissez-faire policy for the pari-mutuel industry.

Betting sites in the growing America TAB family were stopped from offering bets on all MEC tracks, company president Charlie Ruma said. America TAB, which hubs through Oregon and includes winticket.com and brisbet.com, expects to handle about $110 million in 2003, only its third full year of operation.

When asked if America TAB was negotiating with MEC to restore the signals, Ruma, also the owner of Beulah Park in Ohio, said: "There are no negotiations with these people. We're sitting here saying we'd love to get back in business with them, but we don't even know who to talk to.

"We've reached out to Magna for a long time. We weren't too sure what (deals) the other services were getting. We're growing, and they should be scared of us. We're a whole lot more competition than they need right now."

Ruma said America TAB would return money it has spent on "exorbitant host fees" charged by MEC to customers in the form of prizes, rewards, and contests.

"I don't believe the fans are going to put up with this," Ruma said of the cut off in signals. "We'll make sure their plight is softened by giving the money to them rather than Magna."

One complication for Ruma is that Beulah Park usually partners with Thistledown, an MEC-owned track in Ohio, for a live racing program known as the 7&7. The program appears dead for 2004 given the conflict over account wagering.

"They've killed the 7&7," Ruma said of MEC. "If there is a possibility to work out a deal for Thistledown, we'd want to. We're amenable to anything that will help out the racing fan."

Hal Handel, chief executive officer of Philadelphia Park, which operates the Pennsylvania-based Phonebet service, indicated the MEC move could have different effects depending on where customers reside.

"At present, my expectation is that Pennsylvania residents will experience no change at all, and will have full access to all Magna signals through Phonebet," Handel said. "The issue of non-Pennsylvania accounts is more complicated."

Handel said discussions are ongoing to find a way to assure out-of-state customers there will be no interruption in service, but so far no assurances can be made.

"Isn't this a great industry?" he said.

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