California Account Wagering Update: Hollywood Park Agreement Still in Works

More than $14.5 million has been wagered through California's advanced deposit wagering system in the first two months of operation, accounting for about 3.5 percent of the total handle on horse racing in the state. But while the new form of betting had an initial burst of activity, officials said they were concerned about the leveling off of wagering and the number of new account holders over the past four weeks.

In their first full report to the California Horse Racing Board, representatives from ADW operators XpressBet, Television Games Network and Youbet indicated they are satisfied with the progress of their ventures in the state. They plan to concentrate on marketing efforts to attract new account holders now that they have settled in.

"Our business plan is on track," said MEC Vice President Edward Hannah, whose XpressBet was initially hounded by hundreds of complaints due to the volume of new account holders. "We see tremendous possibilities."

Part of Magna Entertainment Corporation, XpressBet handled $9.2 million of the $13.1 million wagered through ADW as of March 17, the most recent figures broken down by the CHRB. That handle is mostly thanks to wagering on Magna-owned Santa Anita and Golden Gate Fields. TVG handled $3.3 million placed mostly on out-of-state races and Los Alamitos quarter horse contests, and Youbet did $530,000 since beginning its operations in late February. Neither TVG or Youbet are taking bets on the Magna-owned tracks.

TVG and Youbet both anticipate big jumps in their account- wagering activity once Hollywood Park reopens April 24, with the Kentucky Derby on May 4. However, Hollywood Park and the Thoroughbred Owners of California must first come to an agreement that would allow TVG and Youbet to accept ADW bets in the state, CHRB chairman Alan Landsburg reminded.

"We have the seeds of an agreement," said John Van de Kamp, president of the TOC, who has been negotiating with Hollywood Park President Rick Baedecker. Hollywood Park has an exclusive television agreement with TVG.

In his TOC analysis of account wagering, Van de Kamp reported that nearly $11 million of the ADW total was wagered by California residents. He said a total of only $132,000 during that 49-day period (Jan. 25 to March 17) was wagered on Santa Anita from out-of-state customers.

Van de Kamp noted that 80 percent of the total amount was bet on Thoroughbred races. Of that, 71 percent was bet on the south (Santa Anita), while 29 percent was placed on races in the north (Golden Gate), which he said is consistent with general wagering patterns.

According to CHRB staff analyst John Reagan, ADW has accounted for $600,000 additional in purses and $600,000 in commissions. About $570,000 went to the three hub operators.

Jack Liebau, director of California racing for Magna, said that the tracks have seen an increase of 5 percent in purses thanks in part to ADW. He noted that while attendance has been down slightly this winter, handle has enjoyed a slight increase.

"We at Magna are concerned about these issues," said Hannah. "We own these tracks. We will work closely with the CHRB."
Hannah said that of 7,802 account holders Xpressbet has signed up, 7,092 are California residents. Forty-eight percent of the handle so far has been wagered on Santa Anita, 13 percent on Golden Gate and 39 percent on harness and out-of-state racing.

He claimed that wait times for customers has been reduced by hiring additional agents, and the web site's speed -- a source of many complaints -- has "substantially improved" since early March after Xpressbet reconfigured its hardware. A new television program, "Santa Anita Now," which will appear on selected Saturday afternoons, has debuted on a Southern California TV station, with a reach of 5 million homes, Hannah reported. He also said Magna is focusing on other marketing efforts, mainly advertising.

"We recognize that this is part of a long road," Hannah said.

John Hindman, vice president of communications for TVG, said that his company will launch its programming over Adelphia cable in greater Los Angeles on April 1, with the potential to reach 100,000 digital customers initially. With more than 2,000 California ADW customers, TVG currently reaches 8 million households nationwide through the satellite Dish TV Network. TVG has also started a new website, Hindman reported. He said the initial response from customers has been favorable.