Texas Fires First Shot Over ADW Revenue

Lone Star horsemen say account wagering revenue needs to be split equally.

Account wagering companies that take bets on races from Lone Star Park must agree to a new formula that gives an equal share of pari-mutuel revenue to the racetrack, horsemen, and the wagering provider.

The formula is part of a contract devised by the Thoroughbred Horsemen’s Group, a coalition of almost 20 horsemen’s groups around the country. The Texas Horsemen’s Partnership, which negotiates contracts with Lone Star, is a member.

The Texas Horsemen’s Partnership in an April 10 release said its board of directors voted unanimously to require any advance deposit wagering company that seeks to accept bets on races at Lone Star to enter into a licensing agreement with the THG. Formed in December and comprised of 18 horsemen’s organizations with contracts at 52 racetracks in North America, the THG advocates a reformation of the revenue model for account wagering.

Lone Star is owned by Magna Entertainment Corp., which operates the XpressBet account wagering system. TrackNet Media Group, a partnership between MEC and Churchill Downs Inc., which owns TwinSpires.com, has not yet agreed to the THG deal for Lone Star.

The Lone Star meet began April 10. XpressBet was unable to offer wagering on the track's races, and offered an explanation on its Web site: "XpressBet had planned to bring you racing from Lone Star Park (April 10) for the opening card, but contractual difficulties have prevented us from doing so. At this writing, Lone Star will not be available, but there’s still time for things to change. And, of course, we hope they do."

Lone Star probably won’t be the only track impacted by the THG contract. Meets at CDI-owned Calder Race Course and Churchill Downs begin in late April, and groups that represent horsemen at the those tracks are THG members.

“We’re very concerned that the current revenue model for account wagering is dysfunctional, and that the revenue stream is not adequately divided in order to fund racing,” Tommy Azopardi, executive director of the Texas Horsemen’s Partnership, said in a statement.

Azopardi said when patrons at Lone Star bet on live racing, seven cents per dollar is returned to purses, but when patrons bet through an account wagering company, purses get only two cents per dollar, a 71% reduction in purse revenue. Since account wagering represents the most robust growth sector in racing, fewer dollars every year are going back to bolster racing, which is the main product sustaining racetracks, horsemen, and the account wagering providers, he said.

“This is an alarming trend,” Azopardi said. “The Texas horsemen are not going to participate in that anymore. We’re standing on principles and we joined the THG because we want to try to fix this broken revenue model.”

“We are focused on increasing the revenue for racing,” said Carl Moore, president of the Texas Horsemen’s Partnership board. “There is no way the horsemen can support account wagering without being sure that live racing—which is the backbone for racetracks, wagering providers, and horsemen—is adequately supported with resulting revenue.”

The THG estimates that 25% of account wagering revenue is allocated to purses, compared with 40%-50% from on-track and inter-track wagering. Racetracks and purses together receive only about half of the revenue generated by account wagering, according to THG studies, compared with more than 90% of the revenue produced by on-track and inter-track wagering.

“Wagering at our racetracks on both live and simulcast races continues to decline across the nation, while wagering over the Internet on the same races continues to increase,” THG president Bob Reeves said. “We must be very careful as these wagering patterns shift to protect the revenue contributed to our racetracks and purses.”