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Mini-Satellite Approved as CHRB Looks Ahead

Development of new wagering network is part of effort to reverse revenue declines.

The mini-satellite wagering network in California expanded to Santa Maria with the California Horse Racing Board's approval Aug. 25.

The latest, the Original Roadhouse Grill just off of Interstate 101 in Santa Maria, is about 65 miles north of Santa Barbara. Approved for a two-year license beginning Sept. 1, it replaces The Horse Man's Club, which was being operated on an interim basis by the Southern California Off-Track Wagering Inc. after the closure of the Santa Barbara County Fair satellite facility.

The CHRB took the action at the Surfside Race Place, Del Mar's satellite wagering facility, during its regular monthly meeting. In addition, the board questioned Rick Baedeker, SCOTWINC's coordinator for mini-satellite development, about the potential for adding restaurants and bars.

The board, following the California legislature's approval of up to 45 such facilities in late 2007, has so far established only three mini-satellites. Unintended consequences of the original legislation, such as  requiring a waiver from any existing facility within a 20-mile radius of a proposed site, has slowed addition of more restaurants and bars.

But Baedeker said the success of the OC Tavern in San Clemente, approved last year, has "blazed a trail" for future expansion of the network.

He said he plans to place quarter-page advertisements in the Los Angeles Times aimed at restaurant and bar owners interested in adding "substantial new revenue to your business through horseracing wagering." The ads, four in all, are to be paid for by the California Marketing Committee.

Baedeker said the original satellite fair racing facility in Santa Maria was handling $16,000 a day in wagers. He estimated the Original Roadhouse Grill would handle $22,000 a day to start.

The facility will have seating for 220 patrons and 26 televisions. Wagering through clerks and bet machines will be conducted by SCOTWINC.

Stephen Mongeau, representing the ORG Restaurants, said other establishments in the chain may also be interested in adding mini-satellites. The only other existing mini-satellite facility is the Commerce Club, a card club also located in Southern California.

Baedeker said he is concentrating on Calibassas and downtown Los Angeles for future regional sites. "We have several opportunities there," he said.

Baedeker also noted that objections in Northern California from existing fair satellite facilities seems to be abating. But he said the complexity of getting applications approved has been detrimental to the cause.

"It's really kind of mind-boggling how cumbersome the process is," he said. "All we're doing is renting space."

CHRB chairman Keith Brackpool asked Baedeker to come up with a proposed budget and marketing plan for the mini-satellite expansion push.

The CHRB is squarely behind mini-satellites as a way to reverse serious revenue losses at the existing satellite facility network, which has lost ground to advance deposit wagering in recent years. The board also supports mini-satellites as a way to introduce the sport to novice bettors.

In addition to reducing the 20-mile radius requirement, it is also considering proposing legislation to extend the licensing period from two years to five. Mini-satellites businesses get just 2% of the betting handle, but hosting a facility attracts additional customers for food and beverages.

The CHRB is also looking at ways of widening distribution of the state's racing signal internationally to maximize wagering revenue.

Scott Daruty, representing Monarch Content Management, said his company is concentrating on making deals with countries in South America. Monarch is the company that negotiates rates and sells all simulcast signals for tracks in California and elsewhere. It was formed in late 2010 after the dissolution of TrackNet Media Group.

Daruty said South America "has a long history of betting on our product," unlike Asia, which faces significant regulatory issues, and Europe, which prefers its racing to that conducted in the United States.

Unfortunately, Daruty said, most of the wagering in South America has been through pirated signals. "We are not seeing the benefit of that," he said. "We're trying to change that relationship."

Daruty said revenue received from South American countries has increased from nothing in 2007 to a projected $20 million in 2011. Venezuela, Panama, and Columbia have shown the most potential as growth markets.

The CHRB also approved a one-year suspension of rules allowing authorized use of the beta-2 agonist clenbuterol at Los Alamitos. Approved for use as a bronchodilator, authorities believe it is being used in Quarter Horse racing as a replacement for muscle building after anabolic steroids were banned.

The suspension of clenbuterol in Quarter Horse races becomes effective Oct. 14. The move was supported by the American Quarter Horse Racing Association, the Los Alamitos Racing Association, and the Pacific Coast Quarter Horse Racing Association.

Dr. Rick Arthur, the CHRB equine medical director, reported there have been eight violations for clenbuterol excesses at Los Alamitos since February.