Signal Pricing, Offshore Outlets Studied by California

As racing interests in California continue to study pari-mutuel wagering as it relates to out-of-state hubs and offshore operations, prices paid for signals are more and more becoming the focal point.

During an Oct. 22 meeting of the California Horse Racing Board's Pari-Mutuel Committee at Santa Anita Park, Drew Couto, a consultant for the Thoroughbred Owners of California, said representatives of the organization had completed site visits and made recommendations to the TOC board. Couto said it was too soon to discuss the details publicly.

"It led to some actions by our board in dealing with some pricing issues and flawed business models," Couto said. "We're focusing on pricing mechanisms."

Couto, a former president of the Thoroughbred Owners and Breeders Association, said the problem goes beyond California. Indeed, another horsemen's organization, the National Horsemen's Benevolent and Protective Association, believes signals are being pirated, and horsemen's groups and racetracks aren't getting a fair return of revenue from some wagering outlets.

"The solution will have to be addressed on a national level without violating anti-trust laws," Couto said. "That's why we're being cautious."

Other parties have discussed the pricing issue as well. There is a belief that a tiered pricing schedule should be endorsed so wagering outlets that offer live racing pay less for signals, and outlets that don't have live racing or contribute nothing to the industry pay more for them.

Racing commissioner Roger Licht, a member of the Pari-Mutuel Committee, reported that Magna Entertainment Corp. has been evaluating the situation with offshore carriers and plans to have a "strategy" in place by the time its Santa Anita meet opens in late December.

The committee discussed other issues in advance of the full CHRB meeting scheduled for Oct. 23 in Arcadia: tote cancellation-delay policies and whether racetracks through the licensing process should be forced to provide their signals to all account-wagering providers.

Commissioner Alan Landsburg, who chairs the Pari-Mutuel Committee, said the crux of the account-wagering issue is whether the requirement would open the state to more providers, and thus bring in additional handle. Opinions at the meeting were mixed, and no recommendation was to be made to the CHRB Oct. 23.

In California, offers all signals in the state but doesn't have television carriage. TV Games Network and XpressBet have television carriage but don't carry all California signals. XpressBet is owned by MEC, which owns Santa Anita Park, Bay Meadows, and Golden Gate Fields. Signals from those tracks aren't available on TVG, except the Oak Tree meet at Santa Anita. Meanwhile, XpressBet doesn't carry Del Mar or Hollywood Park, which have exclusive deals with TVG.

Del Mar vice president Craig Fravel said account wagering handle was up 44% at this year's summer meet, which was carried exclusively by TVG in terms of television coverage. Fravel said the current system works, and that the market should dictate competition.

Said Jack Liebau, who oversees California operations for MEC: "At this point in time, we should just see what happens and let competitive forces decide. I think it would be premature (to enact a licensing requirement). It wouldn't result in anymore distribution than there is now."

Though television coverage of Southern California racing has multiplied given TVG and FOX Sports the last two years, Landsburg said Northern California racing is lagging behind. He said the "lack of TVG distribution for one-third of California racing is somewhat troubling."

Some officials indicated the debate may be more about television distribution that wagering carriages.

"This is a critical issue," Hollywood Park president Rick Baedeker said. "I think everybody appreciates the inconvenience of not seeing pictures for every race every day. It comes down to distribution. We look at our investment in TVG as an investment in distribution. It's clear to me having worked at TVG for a short time that this is a pain-staking process and one that can only be accomplished with product."

David Pascal, who represents Southern California horseplayers, questioned regulators involving themselves in the business decisions of companies. He also said a "true horseplayer" would find a way to get a bet down even if they have to sign up with more than one wagering provider to do it.

Concerning the cancellation-delay policy, CHRB and mutuels union officials support the current four-second delay. (Tellers have the opportunity to cancel tickets four seconds after a race goes off.) Officials acknowledged many jurisdictions have adopted a zero-minutes policy, but Licht said the four-second delay is necessary to protect tellers.

Licht said there was an incident at the current Oak Tree meet in which a bettor admitted to making a sizeable bet and then canceling it to impact the odds on a race simulcast from Keeneland. Liebau said the bettor has been told he wouldn't be welcome if he did it again, but he also said it was only the second time he was aware of such a thing in more than 10 years.

Fravel indicated it's extremely difficult to cancel tickets of $15,000, for example, because the entire amount can't be canceled at once.