The California Horse Racing Board took a first look at the knotted issue of changing the way account-deposit wagering is conducted in the state by requiring racetrack associations -- as a condition to operate -- to negotiate agreements for handling wagers with all legal operators.
Meeting at the Barretts' horse sale facility Thursday on the Los Angeles County Fair's Pomona site, Commissioner Alan Landsburg suggested that the current arrangement is restricting ADW's potential to reach a larger market. He said the number of account holders in the state has leveled off in the past six months, even while ADW handle continues to grow.
The proposal, which will be examined by the CHRB's pari-mutuel committee next month for a possible recommendation to the full board, would put an end to the so-called "exclusivity agreements" that exist between most of the track associations and licensed providers. The current arrangement requires those who want the ability to wager on California races from home year-round to hold at least two accounts and often guess at which of three providers is offering a particular track from elsewhere in the country.
"The very restrictive nature of the exclusive agreements (between tracks and providers) we have in place do not provide an opportunity to other potential ADW providers," Landsburg said. "Since we approved the three licensed providers that we have, we have not had a single application to do business in California."
TVG, along with its sister carrier, Youbet.com, has exclusive agreements with Del Mar, Hollywood Park, Fairplex, Oak Tree at Santa Anita and Los Alamitos. The Magna Entertainment-owned or operated tracks -- Santa Anita Park, Bay Meadows and Gold Gate Fields -- contract for account wagering with its subsidiary, Xpressbet. Only the California Authority of Racing Fairs and Capitol Racing's harness meet have agreements with all three providers.
Because TVG is readily available via satellite television and increasingly through cable while Magna's racing channel -- Horse Racing TV -- is not, many horsemen would like to see the situation changed to provide a better distribution system of California racing.
Owner Ed Friendly, a former television executive, is one of those.
"It behooves the CHRB to do everything in its power to get the broadest possible distribution of its races," Friendly said. "HRTV doesn't want their signal on TVG because they don't want TVG to succeed. The board may have made a mistake by allowing the three (Magna) tracks in California to restrict their signal. We should make (watching and wagering) as easy as possible. That's in the best interest of racing in this state."
John Van de Kamp, president of the Thoroughbred Owners of California, agreed that the "best possible broadcast of our signal is best for the industry."
But he said the board also needs to consider any costs to the industry due to potential litigation.
"All right, so you tell Hollywood Park they have to offer their signal to HRTV," he added. "How much do you charge? What's it worth? The question here is how much do you want to get involved in this?"
Representatives of each of the three ADW companies were present at the meeting, but none spoke. Afterward, Ron Luniewski, president of Xpressbet, Inc., said Magna has not yet formulated a stance, but will have a position in time for next month's committee meeting.
"Frank Stronach (Magna chairman and CEO) has always been in favor of fair competition," he said.
TVG has long maintained that exclusivity is the foundation of its business, a point representatives of several of its contractually committed tracks noted.
"Xpressbet, Youbet, TVG, they have all invested heavily in these contracts," said Craig Fravel, vice president at Del Mar. He disputed an opinion by Derry A. Knight, deputy state attorney general, who said the CHRB would be acting within its power to change ADW regulations, and predicted protracted legal action if the board chose to change the rules.
"Our ADW was up 40% (at the just-concluded summer meet) and our on-track handle was up 8%," Fravel said. "(ADW) probably hasn't been the home run everyone thought it would be, but we're doing a lot better than we were five years ago. I encourage you to leave it the way it is."
Rick Baedeker, Hollywood Park's president, and Sherwood Chillingworth, vice president for Oak Tree, also backed the status quo.
"Since Hollywood Park ended, TVG has added DirecTV, a cable station in Orange County and one in Northern Cailfornia," Baedeker said. "TVG is in seven million homes in California in a year-and-a-half... That's distribution and there's every indication it will grow."
Chillingworth said predictions are for a 72% increase in ADW this season at Oak Tree, which hosts the Breeders' Cup on Oct. 25.