Pols Reluctant to Tackle Pricing

Legislators appear reluctant to get involved in pari-mutuel pricing issues.

The question of whether state legislators should become more involved in pari-mutuel pricing and distribution continues to be asked, and at this point, there doesn’t appear to be an answer--at least a definitive one.

“Yes and no,” Florida Sen. Steven Geller said when asked the question about legislative intervention. “Right now, legislators need to be more involved, because in most states (pari-mutuel laws) were created by legislation.

“It is my experience that a lot of legislators look to the pari-mutuel industry for contributions and help but don’t really understand (the industry). It’s complicated, and it’s not an easy thing. I would urge more legislative involvement, but I agree with the speakers--we can’t be micromanaging.”

Geller spoke in reference to a Jan. 5 roundtable discussion at the National Council of Legislators from Gaming States winter conference in Scottsdale, Ariz. The focus of the discussion was the pari-mutuel pricing model, which by most industry accounts is flawed and in need of revision.

At issue is revenue to racetracks and horsemen, distribution, and exclusivity in the account wagering marketplace.

“Why should legislators not proceed with legislation to eliminate exclusivity so content can be as widely distributed as possible?” said Ed Martin, president of the Association of Racing Commissioners International. “Government doesn’t want to interfere, but when business evolution is harming the public interest, why shouldn’t government get involved?”

Scott Daruty, president of TrackNet Media Group, an entity formed by Churchill Downs Inc. and Magna Entertainment Corp. to buy and sell Thoroughbred signals, said “tremendous strides” have been made in the last year to the point where only about 20% of Thoroughbred content in the United States is considered “exclusive” to certain wagering providers.

Daruty said he’s not in favor of legislative involvement in pricing. He used as an example a New Jersey statute that mandates race books at Atlantic City casinos pay no more than 3% for signals, well below the host fee some tracks and horsemen’s groups believe such a non-live wagering outlet should pay.

“I think it’s not good public policy,” Daruty said. “It takes away the ability of the market to adjust. At some point, we’re going to tell them we’re not going to sell them our signals anymore. Let the market dictate where pricing goes and where the product goes.”

One question legislators do need to ask, Geller said, is whether account wagering is actually legal in various states. Attorneys general have different interpretations of the law, and in at least one state--Florida--pari-mutuel wagering is legal but account wagering is not because there is no specific statute authorizing it.

Still, account wagering companies accept bets from Florida residents.

“A lot of people push the envelope until they get a letter from the attorney general,” Geller said.