Hurdles Remain for California Account Wagering

The clock ticks for the arrival of account wagering in California, and it may keep ticking well into the new year.

California Horse Racing Board chairman Alan Landsburg said the earliest the state's racing fans can expect to be able to open accounts and begin telephone or Internet wagering is mid-February 2002. Depending on how well the regulatory review process goes, he said wagering might not occur until some time in May.

Landsburg earlier said Jan. 24, 2002, was the earliest the regulations could be in place.

"There are four major steps," Landsburg said. "First, the Office of Administrative Law must give us the go-ahead on all of the regulations (the CHRB) adopted. Second, license applications (for potential account-wagering providers) have to be made. Third, there must be public debate on whether to approve the applications, and fourth, the board must approve the applicants.

"If the OAL kicks back any of the 14 regulations we sent to them for revisions, and that is very possible, it would be another 60 days" before the CHRB could process license applications, he said.

Even if the state agency were to quickly approve the regulations, chances are the CHRB wouldn't be ready to grant licenses in time for its Jan. 24 meeting. Landsburg noted the licensing applications are difficult to verify, and the review of potential licensees by CHRB staff will be time-consuming.

On top of that, a CHRB spokesman said that as of Dec. 19, only one application -- from Youbet.com -- had been received. If not ready to go in late January, the board would next meet Feb. 21, though a special meeting could be convened prior to that date.

Landsburg said charges of foot-dragging by the CHRB are "unfounded."

"This has to be a record," Lansburg said. "In late August, we had a law signed by the governor, but no regulations for how the law was to be implemented. We developed those regulations in less than a month. Consider how much work the staff had to do, sifting through pages of information and discussion, to come up with all of that in such a short amount of time.

"Then, we had 45 days for public comment and 15 for posting of the proposed regulations. That was 60 days we could not avoid. This has not been a slow process."

Landsburg, along with CHRB executive director Roy Wood Jr. and fellow commissioner Roger Licht, met with Magna Entertainment Corp. chairman Frank Stronach Dec. 18. Stronach, whose company owns Santa Anita Park, Golden Gate Fields, and Bay Meadows in California, also met with Thoroughbred Owners of California president John Van de Kamp on a quick swing through Southern California.

Both Landsburg and Van de Kamp said it is unlikely Magna and The TV Games Network would be able to work out their differences to allow for a single carrier of televised racing.

TVG has exclusive rights to televised racing and in-home wagering from Hollywood Park, Del Mar, and Oak Tree at Santa Anita Park, as well as most of the major tracks around the country. It delivers its signal via satellite through the Dish Network, which has about 650,000 subscribers in the state. As part of its California marketing effort, TVG has promised a huge increase in its distribution through its parent company, Gemstar-TV Guide International, and its ties with several major cable operators.

Magna has no television distribution system, though Stronach has indicated some interest in developing one. For now, according to Magna president Jim McAlpine, bettors will be required to open an account with Magna to wager on its tracks. They will be able to follow races via streaming video from a company Web site.

By establishing its own betting hub, probably at Bay Meadows, Magna would avoid having to pay TVG or another middle man, Van de Kamp said, and would keep up to 6.5% of every bet it takes in.

"The issue is over sharing content," said Van de Kamp, who indicated he has some problems with TVG's exclusivity contracts. But "TOC is not a party to those (TVG) contracts," he said.

Van de Kamp called the situation between Magna and TVG "pretty fluid," but said there were no indications from Stronach that he would change his position in the near term.

"The encouraging part is that (Magna) is looking for broader distribution," he said. "I came away feeling that they are moving in the right direction."

Van de Kamp said his organization has received dozens of e-mails and telephone messages in support of an open letter from the TOC that appeared in Daily Racing Form Dec. 15. The letter called for several account wagering priorities, including the broadest possible distribution of the state's live race signal and account wagering through all existing advanced video technologies; the highest possible quality of image transmission; fan-friendly access to California racing on a year-round basis without the need to open multiple wagering accounts; and an equitable treatment of all segments of the racing industry in distribution of take-outs and profits.

"It's a relatively reasonable approach," Van de Kamp said. "We have a great opportunity here, the biggest market in the country with 30 million in the state. We need to go beyond the existing fan base. That is where our real future is."

Landsburg agreed. He noted that while attendance at the tracks has declined in recent years, handle has remained fairly constant.

"Accessible television can lead to the kind of marketing that brings people to the track," he said. "In a sense, this is like it was when (horse racing) was the only game in town, before the lottery and all the casinos. It's like it was back in the 1930s. We're the only ones who can do this. We should take full advantage.

"I worry about cannibalization (the same fan base betting from home rather than going to the track). What if after a year or two for account wagering to settle in, we find the same things that are going on today? If that's all that happens, why go on?"