TVG's Statement on Advance Deposit Wagering in California

Applications from four companies seeking to offer Advance Deposit Wagering, or account wagering, in California will be considered by the California Horse Racing Board Thursday, Jan. 24. The regulations were approved by the state last Friday, allowing the CHRB to proceed with consideration of the applications from Autotote Enterprises Inc., Magna Entertainment Corporation, ODS Technologies (TVG), and At the invitation of The Blood-Horse, each of the four license applicants was asked to provide a brief statement concerning their proposal for account wagering in California. Here is the response from ODS Technologies' TVG operation:

By Mark Wilson
President and Chief Executive Officer, TVG

In recent years, California racing has faced intense competition from the growing array of entertainment and gaming opportunities in the state and nearby states. Simulcasting revenues have helped the California racing industry in the battle against this competition. Advance Deposit Wagering (account wagering) is the next step.

The goal of Advance Deposit Wagering is to generate growth in overall handle and purses by stimulating additional wagering from current fans and bringing new fans to horseracing. This can only be achieved through an ADW strategy that maximizes television exposure. First, customers want to see what they're betting on. Second, without TV distribution and quality programming to generate awareness and interest, we're not going to generate new customers.

TVG is uniquely qualified and positively positioned to grow the sport through television, marketing and state-of-the-art wagering platforms. We have firm and detailed plans in place for each of these areas:

Quality Television Production:
At great expense, TVG began producing 12 hours of daily live programming from our Santa Monica studios in the summer of 1999. Developed and produced in conjunction with FOX, the programming is professional and designed to attract new interest in the sport.

Broad Television Distribution:
TVG is currently available in 8 million homes in the U.S. on cable and satellite. Via the Dish Network, TVG is currently in 700,000 California households. We also have agreements with AT&T and Adelphia, cable systems that serve a substantial number of households in California. As a result, we are poised to deploy on cable in additional homes in Los Angeles County in the next several months and, hopefully, into millions more homes after that.

Interactive Wagering Platforms:
TVG has invested heavily to develop and implement three interactive wagering platforms that conveniently enable wagering by touch-tone telephone, personal computers or other online devices and by digital television remote control. Our digital television remote control wagering system sets racing apart and uniquely positions us to capitalize on the growth of iTV as one of the first truly interactive applications. TVG has made, and continues to make, a substantial investment in technological innovations to improve delivery of its services to the racing public.

Innovative Marketing Programs:
TVG has the unique ability to reach broad audiences in California to market and promote the sport of horseracing through the assets of our parent company, Gemstar-TV Guide International, Inc. TV Guide Magazine has over a million readers in California and is available at over 12,500 retail outlets in the state and, together, TV Guide Channel and TV Guide Interactive are available in over 5 million California television households.

We agree with industry leaders that ADW will not be successful if it simply reaches racing's existing fan base. To be blunt, if it was just a matter of fighting over the existing handle pool, we would not be in this business.

But, if properly deployed (especially in a market like California that does not have a mature off-track betting system), ADW can hit multiple targets. First, the "light" and "lapsed" fans who only attend the races a few times a year or like the races but haven't attended in the last couple of years will bet more frequently and, as a result of this increased participation, attend the racetrack more often. Second, "social" fans who attend the races on occasion but find the wagering experience intimidating will be able to learn about the sport and its complexities in the private classroom of their own homes. Finally, sports fans and gamblers who currently wager, but do not play the races, may be motivated to do so with daily access to racing on television.

Racing missed a golden opportunity thirty years ago when the industry decided not to put its races on television. One thing we learned over the years holds true today -- the way to get people to the track is to bring the track to them. No one will do a better job at that for California racing than TVG. Our investment in television is based on our belief that the potential market for horse racing is much larger than reflected in current attendance and handle figures. We believe that our widely distributed quality programming can reach a broad audience of people who do not currently follow the sport, and turn them into new consumers to the benefit of our company, our racetrack partners and horsemen.