Youbet at Impasse With TrackNet Media; Could Jeopardize Derby Wagering
Date Posted: 4/23/2007 6:45:46 PM
Last Updated: 4/24/2007 3:01:35 PM

By Ron Mitchell and Leslie Deckard

Youbet.com announced Monday that it is at an impasse in negotiations with TrackNet Media that could result in the online wagering company being unable to take bets on this year’s Kentucky Derby Presented by Yum! Brands  (gr. I).

According to Youbet.com chairman Charles Champion, TrackNet Media is requiring Youbet to drop other tracks and races if it wanted to have access to the Derby and other TrackNet-controlled content.

TrackNet Media is a joint venture of Churchill Downs, Inc. and Magna Entertainment Corp.
 
"Instead of the broader, more inclusive distribution formula the industry has been promised, TrackNet presented us with an unreasonable either-or scenario,” said Champion. “To carry this year’s Kentucky Derby and its other content, TrackNet wants us to forego races from, among others, Aqueduct, Belmont, Saratoga, Del Mar, Keeneland, Oak Tree at Santa Anita, Saratoga Harness, Turfway Park, Turf Paradise, and Los Alamitos. It ought to be obvious to everyone with a major investment in horse racing that we should not have to choose one content group over another when we are prepared to pay fair prices for both.

“Under these circumstances, we think the industry needs to assess the ramifications of the two most dominant content providers in our business coming together to dictate content alignment and economics by forcing choices on us and others that are sure to limit competition, thwart innovation, frustrate customers and stifle growth,” Champion added in a statement released by Youbet.com.

"For us, there is no option,” Champion said in a Monday conference call. “We won't risk key business relationships with tracks, horsemen, and customers or share holder value for a deal that strips us of this popular and productive content just to carry one race. What is more is that we don't understand why anyone in the industry should have to choose one content group over another if they are willing to pay one price for both. We are hoping the industry, particularly horsemen, who have the right to approve simulcasting distribution agreements, will step up and drive a solution that takes into account the needs of all stakes holders. If TrackNet does not relent, then regrettably we won't be able to provide our loyal customers with a way to wager on the most visable single racing event in our industry."

Champion said that on Derby Day in 2006, Youbet handled $1.8 million on the Derby and $3.7 million was wagered on total Churchill card. Youbet’s total handle for the day was $5.5 million.

Despite the impasse, Champion was confident that not carrying the Derby and other TrackNet Media tracks would have little impact on the company’s bottom line. Any negatives associated with the lack of TrackNet Media content and wagering would be offset by Youbet’s abililty to offer the signal and take wagers from the other tracks.

“Even if we can’t get the content,” Champion said, “the financial impact is likely to be a push,” as lost revenues would likely be offset by the schedule for the remainder of the year. “Our post-Derby schedule is very strong. It includes the Preakness, for which we already had an agreement with Magna, and the Belmont Stakes, plus a summer and fall’s worth of races from our most popular and productive track partners. We intend to turn up our marketing engines to go after customers of TrackNet affiliates and licensees who cannot carry these premier tracks in the months ahead.”

Youbet’s announcement comes less than a week after AmericaTAB, another interactive wagering entity, agreed to TrackNet’s terms in order to take the Derby wagers.

In agreeing to the TrackNet exclusivity contract, the Ohio-based account wagering provider decided not to renew its contract for access to exclusive content available through TVG. Therefore, wagering on races from eight tracks will not be available effective May 3.


AmericaTAB, which hubs through Oregon, is an umbrella company for wagering sites such as WinTicket.com and BrisBET.com. Affiliated online wagering sites have received TVG-controlled content through sub-licensing agreements.

“We had to make a decision,” AmericaTAB general manager Mike Weiss said April 19, a day after TrackNet Media Group, a partnership between Churchill Downs Inc. and Magna Entertainment Group, announced the AmericaTAB deal. “We had negotiations with TVG, but they weren’t successful. We also negotiated with TrackNet Media and had to decide which way to go.”



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