Account-Bet Licensing Fees Fuel Illinois Dispute

by Leslie Deckard and Tom LaMarra

A simmering dispute over licensing fees tied to account wagering has flared up in Illinois, where horsemen have pulled the Arlington Park signal from TVG in an attempt to get the signal from the upcoming meet at Hawthorne Race Course available through Youbet.com.

The Illinois Thoroughbred Horsemen's Association suspended the Arlington signal to TVG prior to the first race Sept. 6. The Arlington meet ends Sept. 12, and the Illinois racing circuit shifts to Hawthorne beginning Sept. 15.

Illinois THA president Joe Kasperski said horsemen denied the Arlington signal in an effort to force negotiations between TVG and Youbet.com over the licensing fee TVG plans to charge Youbet.com to offer bets on Hawthorne races. Earlier this year, Hawthorne signed an exclusivity contract with TVG, which means Youbet.com must pay TVG a licensing fee to carry the signal.

Youbet.com carried the National Jockey Club meet at Hawthorne this spring, but doesn't intend to carry Hawthorne's fall meet.

"This is happening because of a dispute TVG is having with Youbet," Kasperski said. "This will impact our Thoroughbred purse account at Hawthorne. There is litigation ongoing concerning Hawthorne signing the exclusivity contract with TVG without our consent. We allowed the signal to go to TVG during the spring meet, but we haven't given any simulcast contracts for the fall meet, and based on what we know, we would not give them exclusivity for the signal."

Kasperski said the Illinois THA is working with TVG in an attempt to facilitate a settlement and return the signal as soon as possible.

The decision to pull the Arlington signal from TVG came as a surprise to some Arlington-based trainers. "I would have thought the board of directors would have notified the rest of the members about what they were doing it before they did it," trainer Christine Janks said.

After the Illinois THA suspended the signal, TVG placed a scroll on the bottom of the screen urging viewers to call the horsemen's group to demand the return of Arlington to the network.

"Needless to say, I don't think it was very classy on TVG's part to try to inundate our office with phone calls without trying to explain their role in this event," Kasperski said. "It's not a one-way street. They are playing a significant role in this happening."

Spokesmen for TVG and Youbet.com couldn't be immediately reached for comment. But during a second-quarter earnings teleconference in August, Youbet.com chief executive officer Charles Champion discussed the situation regarding licensing fees. Youbet.com and TVG are in arbitration to settle a claim by TVG that Youbet.com owes it money.

Champion said Youbet.com has paid TVG about $100 million in licensing fees over the past five years. Other horsemen's groups in the United States have begun questioning such fees; they aren't a party to related contract negotiations.

Champion on the conference call with analysts referred to Evangeline Downs Racetrack & Casino and Hawthorne, both of which signed exclusive contracts with TVG this year.

"TVG approached the tracks and convinced them that exclusives are better for them," Champion said. "Why these tracks thought that, you have to ask them. We elected after looking at the economics not to carry these tracks, and if other tracks elect to go in that direction, we'd make our decision (on whether to pay the licensing fee) based on economics."

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