CHRB chairman Richard Shapiro, who labeled ADW standoff "just an intolerable situation at this point."

CHRB chairman Richard Shapiro, who labeled ADW standoff "just an intolerable situation at this point."

Tim Sharp

CHRB Pushes for Action in ADW Standoff

Board declines to renew licenses while seeking solution to rate stalemate with TOC.

In a high-stakes "game of chicken," the California Horse Racing Board pushed account wagering a little closer to the edge Nov. 18 when it declined to renew the licenses of the state's four Internet and telephone bet companies.

The ADW providers — TVG, XpressBet, Youbet and Twinspires — are licensed to operate through the end of the year. Richard Shapiro, the CHRB's chairman, made it clear during the board's Nov. 18 meeting at the University of California-Davis that it was not the board's intent to refuse them the right to do business in the state in the future.

But Shapiro and other commissioners insisted there must be a solution reached to end a host fee dispute with the state's horsemen that has blocked out-of-state ADW wagering on California races from the providers' platforms since the Hollywood Park fall meet began Oct. 29. The CHRB has scheduled a meeting Dec. 15.

Commissioner Jesse Choper referred to the standoff between the ADW companies and California horsemen as a "game of chicken." He added, "Nobody is benefiting from this delay," including the bettors, who are taking their business to other tracks.

Jack Liebau, president of Hollywood Park, said the dispute is costing state horsemen, who are represented by the Thoroughbred Owners of California, $17,000 a day in purses. With the track's fall turf festival coming up after Thanksgiving, he said it's "imperative" that the interstate wagering deals are worked out by the weekend of Nov. 22-23.

A meeting is set Nov. 19 between the TOC and TrackNet Media Group, which represents Churchill Downs Inc. and Magna Entertainment Corp.

Liebau, Shapiro and others expressed hope that they may finalize a deal. But the largest company, TVG, which does half of its nationwide business in California, hasn't been invited, a spokesman for TVG told the board.

Were the horsemen to strike a deal that didn't include TVG, it would mean the network holding the exclusive broadcasting rights to Hollywood Park would still not be able to accept wagers on the races from its out-of-state customers.

"We're negotiating with the ADWs that we have a chance to make a deal with," said Drew Couto, president of the TOC, following the meeting. "All we've heard all along from TVG is that they won't negotiate because they are in the process of being sold and they can't change anything until then. But we can't hold everything else up because this one company is up for sale."

Couto said that Youbet has also signaled its interest in completing a deal.

Shapiro, who made the suggestion to defer the ADW license renewals, called it "just an intolerable situation at this point."

He added, "Our tracks are hurting, our horsemen are hurting and account wagering is clearly not working the way it was intended. Until ADW can straighten itself out, I don't know what we can do."

TVG's general counsel John Hindman told the board that it should keep the licensing matter separate from the rate dispute. He also surprised observers when he said TVG was not involved in the ongoing talks.

"We haven't been invited to any meeting," Hindman said. "I didn't know anything about any meeting until I came into this room. I still don't think we've been invited to any meeting."

Scott Daruty, representing TrackNet, told the board that the tri-party agreement — between the tracks, ADWs and horsemen — was too difficult to pull together with so many competing interests.

He said limiting the parties and staking an initial agreement would "build a critical mass and help us move forward from there."

John Harris, the CHRB's vice chairman, said the issue needs to be submitted for arbitration if the current negotiations fail.