Youbet Shut Out From Gulfstream

Youbet Shut Out From Gulfstream
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A contentious standoff over Gulfstream Park’s racing signal has brought a chilling end to any warm fuzzies felt from the recent broad distribution deals emerging out of California, New Jersey, and New York.

The Florida Horsemen’s Benevolent and Protective Association recently reached an agreement with TrackNet Media Group on the Gulfstream signal, but the horsemen are feeling a bit empty that Youbet.com was left on the outside looking in when the South Florida track's winter meet kicked off Jan. 3.

Florida HBPA executive director Kent Stirling said the deal with TrackNet was reached following what he called a “Mexican standoff” period between the two parties, each of which has a say if and how the signal will be delivered.

Stirling said the sticking point in negotiations resulted from the Florida HBPA’s desire to reach an agreement on the Gulfstream signal with Youbet.com, which he said accounted for about $16.5 million in handle on last year’s meet — tops among advance deposit wagering entities. But Stirling said no deal could be reached to satisfy TrackNet Media, which is the content consortium of Churchill Downs Inc. and Gulfstream owner Magna Entertainment Corp.

Youbet.com had loosely agreed to a model proposed by the new Thoroughbred Horsemen’s Group — of which the Florida HBPA is a member — which in simplest terms asks for wagers handled by ADW companies to be split three ways among horsemen, the tracks, and the corresponding ADW.

“Youbet basically said they will pay the one-third fee, or close to it,” Stirling said. “TrackNet told us they couldn’t do that, and said they wouldn’t send the signal to Youbet. So we said we won’t send the signal to you. It got pretty ugly.

"Our right is that we can consent for a signal to go or not go. But when we consent it to go, the track’s right is to not send it if they don’t want to, and that’s what TrackNet was doing. That’s what the Interstate Horseracing Act says. Everyone was within their rights.”

Stirling said the potential loss of Youbet.com handle needed to be addressed by TrackNet Media, and after what was deemed an unsatisfactory offer, the situation was delivered to the Florida HBPA board of directors.

“We called our board and they said, 'Fine, if they won’t move from that, there won’t be a signal,' ” Stirling said. “We told TrackNet, that if we had to, we were just going to pull all the signals, and they wouldn’t have their own signal, which would be highly embarrassing to them.”

But an agreement was eventually reached with TrackNet Media, a deal Stirling said could give Florida horsemen an opportunity to be in better shape than during last year’s Gulfstream meet.

“We got them to go higher, enough for us to make us fairly comfortable so that we wouldn’t have to take a hit from last year, and have a chance to go higher,” he said, declining to discuss financial terms of the agreement.

The other side

Scott Daruty, the president of TrackNet Media, said the content company was as unhappy as the horsemen that broader distribution wasn’t achieved.

“They were not excited about the arrangement, nor is TrackNet excited about the arrangement,” he said. “We want all signals open to all. What we would be willing to do, and we have said it every time, is that we would be happy to provide TVG and Youbet to have all TrackNet content, as long as we have rights to all exclusive content.”

TVG, which has been at odds with TrackNet Media over signals, was never formally part of the Gulfstream negotiations. And TVG general manager David Nathanson said he thinks that fact is interesting, considering that TrackNet Media has long preached a more open market for signals.

“We would hope TrackNet would practice what they preach,” Nathanson said. “I have not personally received any overtures from them as it relates to Gulfstream. If they are really interested in non-exclusivity, they know my line is open to them. TVG continues to explore new ways to satisfy our customers, our partners, and the industry’s needs, as indicated by our recent agreements with the New Jersey Sports and Exposition Authority and the New York Racing Association.”

Through a variety of agreements, both TrackNet Media and TVG currently have access to signals in California, New Jersey, and New York.

Daruty claimed previous discussions with TVG have been fruitless.

“With TVG, up until this point, all of our discussions focus on them not wanting to give up exclusive content,” he said. “We have offered a number of times to exchange content with TVG, and they haven’t responded.”

Youbet.com executive Lonny Powell confirmed the company had negotiations with the Florida HBPA on the Gulfstream signal, but declined to comment further. But sources close to the situation said that while Youbet.com pretty much complied with what it was asked to do, it was still shut out in the end.

“I give credit to Youbet for trying, and I give credit for TrackNet for resolving it,” Stirling said of the negotiations with the Florida HBPA. “I’m sure Youbet’s not real happy about it. But we had a gun to our head. We didn’t have any choice.”

A model detour

The Thoroughbred Horsemen's Group was incorporated in early December for the purpose of pursuing a new account wagering model that returns more revenue to purses. The THG now has 12 members, most of them affiliates of the National HBPA.

The National HBPA has advocated an environment in which there is no signal exclusivity in the marketplace. But the deal between TrackNet Media and the Florida HBPA appears to conflict with that.

Bob Reeves, a member of the Ohio HBPA board of directors and president of the THG, said Jan. 4 all the group has done thus far is incorporate and have an organizational meeting. He did not comment specifically on the Florida developments.

"We have not launched an ADW strategy or anything else yet," Reeves said.

Reeves said the goal of the new horsemen's coalition is broad distribution of signals and a "fair contribution" to purses. He said the current account wagering system as it pertains to horsemen's revenue is too complicated.

"There has to be a simple financial model everybody understands," Reeves said. "People can't figure out if they are getting properly compensated or not. There is a lot of mistrust out there."

(The Blood-Horse news editor Tom LaMarra contributed to this article.)

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