International Market Called Ripe for Penetration

Racetracks, not distribution providers, will develop new markets in the international simulcasting arena, an executive with Churchill Downs Inc. said Tuesday during a panel discussion at the International Simulcast Conference.

Bob Decker, executive vice president and chief financial officer for the Louisville, Ky.-based racetrack company, said content providers will lead the way when the industry figures out how to tap into an $86-billion market. Though he said much of it is conjecture at this point, there will be a number of distribution platforms in use for international interactive wagering.

Churchill Downs is one of North America's top content providers with racetracks in five states.

"Churchill Downs isn't interested in developing distribution platforms," Decker said, "but we want to be able to access which platforms make the most sense."

Simulcasts from foreign countries are available in the United States, but it's currently not big business. Canadian signals draw the most play, while some outlets import racing from Australia, Great Britain, and Hong Kong. Major events from France, for instance, are simulcast on a limited basis.

Decker said the international marketplace could be penetrated when the tools are in place. He and other speakers on the panel said changes in United States law concerning alien withholding provision and trade restrictions must first be obtained. Other potential obstacles such as time zones and a lack of familiarity with the product can be overcome, Decker said.

"The market is so big, we'll find ways to overcome the obstacles," he said. "We believe North American racing is some of the best racing in the world, and that quality will be something looked for in a global initiative. Worldwide racing interests will be looking to get into our market."

Because of time differences, foreign signals will be best accessed in the home, not at simulcasting outlets, Decker said. He said Churchill envisions a 24-hour, seven-day-a week system with content on one channel, or several linked channels, with time slots for participating jurisdictions. Reciprocity, he said, will be a must.

Large pools that could come from international simulcasting could create lottery-type wagers that could draw significant interest, Decker said. And the economic model must include source-market fees "to compensate all participants for business lost through cannibalization," he said.

More than half of the $86 billion in handle is wagered in Japan ($46 billion) and Hong Kong ($10 billion), two countries with trade restrictions. But Decker said he expects those Asian countries to eventually participate in global wagering.

Said Chris Scherf, executive vice president of the Thoroughbred Racing Associations: "We want to be able to bet on anything from anywhere. Logically, then, we shouldn't be confined by borders. International simulcasting is the new horizon. We've exploited our resources on this continent very well to date, and now we have new worlds to conquer."

Jay Hickey, president of the American Horse Council, said legislation to facilitate merged international pools has a chance of passage in the next Congressional session. He also said Internet gambling provisions that protect the pari-mutuel industry are included in an anti-terrorism bill ready for consideration by the House of Representatives.

In other business at the conference held in Louisville, totalizator companies discussed use of wireless technology in the pari-mutuel industry. The country's major tote companies -- AmTote, Autotote, and United Tote -- have the technology in place and expect it will be used widely in the industry.

The International Simulcast Award, sponsored by Scientific Atlanta and Youbet.com, went to Santa Anita Park. The award recognizes the racetrack that has the best feed to simulcast outlets. A record 21 entries were received for the contest.