Without question, the TV Games Network has fallen short of the mark in its first 18 months of existence. Yes, it is available on the basic package of the fast-growing DISH Network, and it is on cable in Kentucky's two major cities, Lexington and Louisville. And, yes, TVG programming has been innovative, entertaining, and invaluable to many people.
But the amount wagered on TVG through the Oregon betting hub operated by a subsidiary of the National Thoroughbred Racing Association has been lower than anticipated. TVG has account holders in a limited number of markets, and no cable systems outside of Kentucky have opted to offer the network to their subscribers.
That doesn't mean the industry should be ready to give up on TVG now or any time soon.
First, let's not forget the corporate muscle behind TVG. When the network launched in July of 1999, its parent corporation was TV Guide, a large media company with a major presence in print and cable television. A few months later, TV Guide merged with Gemstar, an even bigger company with patents on interactive technology perfectly suited for wagering on racing via computer or a television's remote control. The bottom line: its corporate parent was willing to make a huge bet on TVG--upwards of $200 million--that dwarfed any other outside investment in our industry. That investment represents a very real opportunity to introduce horse racing to a new audience.
The other important factor that TVG brings to the Thoroughbred industry is an equitable revenue sharing program that introduced the concept of source market fees. Simply stated, a source market fee is the amount paid back to the industry in the state where the bettor resides. In other words, if a bettor in Maryland wagers on a race in New York through TVG, approximately 10.5% of the amount wagered is returned to Maryland tracks and horsemen, improving that state's racing and breeding economy.
Until TVG introduced source market fees, Maryland would receive nothing in return on a wager made by a Maryland resident betting on an out-of-state race via account wagering systems in Pennsylvania or New York. Those account wagering systems were making a healthy profit at the expense of horsemen and tracks in other states by poaching bettors from throughout the country.
It is interesting to note that Philadelphia Park--run by former English bookmaker Bob Green--is now publicly recognizing that its policy of bettor poaching is politically incorrect. In a Jan. 19 press release, Philadelphia Park CEO Hal Handel noted that $500,000 was generated to horsemen and tracks in nine states last year by what he described as "local market fees."
"The growing industry acceptance of local market recognition provides horsemen and tracks with assurances that wagering from defined markets is being distributed equitably," Handel said in the statement.
In other words: TVG has forced Philadelphia Park to deal with the fact that they have been unfairly taking money from other states without sharing any of the revenue.
What do you suppose the Philadelphia Parks of the world will do if TVG does not succeed? My bet is that source market fees will be a dead issue for horsemen and tracks throughout the country.
For the record, despite having significantly less handle than Philadelphia Park's account wagering system, TVG paid three times as much--$1.5 million--to Kentucky tracks and horsemen in source market fees over a one-year period from September 1999 to September 2000.
Horse owners everywhere have much to gain if TVG succeeds. They have more to lose if it fails.