TrackNet Poised to Cut Off Nevada

TrackNet Media Group is poised to cut off its signals to more than 80 Nevada casinos.

TrackNet Media Group is poised to cut off its signals to more than 80 Nevada casinos Jan. 7 unless a new agreement is met for what the content company feels are more equitable fees.

If no deal is reached, Nevada casino bettors would not have access to simulcast wagering from TrackNet-affiliated tracks owned by Churchill Downs Inc. and Magna Entertainment Corp., which are partners in the joint venture. Currently, the TrackNet wagering lineup includes Golden Gate Fields, Gulfstream Park, and Santa Anita Park, which are owned by MEC, and Fair Grounds, which is owned by CDI.

“If we resolve it, great,” said TrackNet president and chief executive officer Scott Daruty. “But if it’s not resolved by Jan. 7, then all the TrackNet signals are going to be cut off from Nevada.”

Daruty said he and fellow TrackNet official Patrick Troutman started discussions in February 2008 with the Nevada Pari-Mutuel Association, a consortium that negotiates contracts for the 80-plus casinos handling pari-mutuel horse racing in Nevada. But despite several meetings and follow-up communications via e-mail and telephone, he said TrackNet didn’t receive a counter-proposal until just a few days prior to the Santa Anita opening Dec. 26.

“It was woefully inadequate,” said Daruty of the counter-proposal, which he claims was delivered only on the threat of immediately cutting off the Santa Anita signal. “We are miles and miles apart. This was the whole reason for starting in February. The whole point was not waiting until the last minute -- and now here we are at the last minute, and we are miles apart.”

Daruty, who was quick to say Nevada was still an important customer, claims that the state’s casinos for many years have enjoyed “volume discounts” dating back to when simulcasting was in its infancy, and off-track wagering networks were not “mature.”

But now he claims that while Nevada once represented 10% to 15% of handle generated through tracks now housed under the TrackNet umbrella, that figure is down to about 4%.

“And the revenue we received was less than 3%,” he said. “If they are paying a track 3%, and there is 20% takeout, 3% goes back to the track in the form of a host fee, while the other 17% goes to the casino.

“To me, we could give them a 33% rate increase tomorrow just to get them to the point where they are consistent with what others are paying. Remember, most of our handle comes from other racetracks in other states that in themselves support live racing, paying purses, etc.; the casinos don’t have such overhead on their end.”

Attempts to contact Patty Jones, executive director of the Nevada Pari-Mutuel Association, weren’t immediately successful.

Daruty said that other issues were on the table besides rate increases. Included is a demand for a detailed breakdown of wagering at the various casino-related outlets.

“At the end of the day, we get a lump sum figure that says ‘x’ number of dollars was bet in Nevada,” he said. “We don’t know if that means it was bet at one casino and nowhere else, or evenly divided between others. From an integrity standpoint, that’s not right.

“From our perspective, one of the reasons TrackNet was formed was to get better control of the signals, and ensure the integrity of the pools,” he continued. “If there was any suspicious behavior from any other guest site, we know exactly where the bets are coming from, and exactly how much was bet."

Daruty said Nevada officials have told him they would rather book bets than pay higher fees. But Daruty countered that they would have to do it without broadcast signals from HRTV, which CDI and MEC jointly own, or without the benefit of key racing data supplied by the tracks.

Asked for an extension of time, Daruty said he granted the Jan. 7 deadline “out of concern for our customers and their customers.” But he feels Nevada is a more important battleground than recent wars fought over revenue shares of advance deposit wagering outlets.

“We have been fighting as an industry over account wagering for the last, what, 10 months?” he said. “But the ADWs are paying back a lot more to the industry than the casinos are, so we were fighting, what I think, was the wrong fight.

“If we are not going to solve this problem, then we might as well forget making any progress as an industry,” he continued. “How many times have you heard someone say at conferences or seminars that the simulcast model is broken? The place where it is most broken is when we sell to Nevada. If we don’t fix that, then who are we kidding that we are going to make any progress.”