by Tom LaMarra, Ryan Conley, and Mark Popham
British-based Betfair Group, which announced Jan. 27 it had completed its acquisition of TV Games Network from Macrovision for $50 million in cash consideration, is hopeful its new holding helps it make inroads in the United States market, which it has courted for years.
TVG is among the most widely-distributed horse racing networks in the world, and a leading provider of advance deposit wagering services. Betfair calls itself the premier e-gaming betting community, with horse racing as its core product.
The TVG purchase by Betfair was touch-and-go until only a couple of days before the official announcement, officials said. Another party—believed to be Churchill Downs Inc.—nearly prevailed in its efforts to buy TVG, according to insiders.
What Betfair plans to do with TVG remains to be seen, but sources said the California-based network’s management team would remain in place. TVG has long relied on exclusive content and live telecasts of races to drive handle, and that isn’t expected to change in the near future.
Racetracks and horse owners are following the developments closely given the recent focus on revenue from ADW.
“The acquisition of TVG by Betfair removes one uncertainty, but gives rise to another,” Thoroughbred Owners and Breeders Association president Dan Metzger said. “Now that Betfair has won the bidding war for TVG, we are sure to see a competitive and healthy marketplace for ADW consumers, but will we see an equitable price paid to both horse owners and racetracks?
“We hope that Betfair recognizes that their future success with TVG depends upon reaching a mutual understanding with the entities that supply the product.”
Betfair has in recent years developed a relationship with the National Horsemen’s Benevolent and Protective Association, and its representatives have had talks with Breeders’ Cup and the National Thoroughbred Racing Association. The company has said it doesn’t take bets from U.S. residents, which technically aren’t allowed to open Betfair accounts. In addition, visitors to America with Betfair accounts are unable to access their accounts online from the U.S.
“We anticipate that Betfair will deliver to the U.S. market what it has delivered to other regions of the world: a cutting-edge, technologically-advanced wagering platform, coupled with a high degree of integrity and a prudent regulatory approach,” NTRA president and chief executive officer Alex Waldrop said.
North American racing officials have been intrigued by Betfair’s regulatory system but skeptical about how much revenue it would return to horsemen.
The official line at Betfair, which has more than 1,300 employees, is that TVG represents a sound business proposition in its own right with plenty of opportunities to grow the business, particularly through technological and promotional expertise.
Mark Davies, managing director of corporate affairs for Betfair, said the company has “no plans at the moment” to set up a betting exchange in the U.S. Such exchanges allow for proposition wagers; North American racing officials have frowned upon systems that allow players to bet on horses to lose rather than win, but the public has embraced the concept overseas.
“We haven’t gone into every territory with it—look at Italy, for example, where we offer a traditional European sportsbook only—and we would prefer to talk to people about how it works so that they can understand it before we do anything else,” Davies said of exchange betting. “We know there’s a lot of misinformation about the product, and we are happy to run with what we have just bought for the moment, and bed down into the U.S. market as the new owners of TVG.”
In response to other questions from The Blood-Horse, Davies said he doesn’t know the basis for rumored challenges to the TVG acquisition by other companies such as CDI and Magna Entertainment Corp. He said Betfair would seek the same Oregon hub license held by TVG, and he acknowledged there could be hurdles to overcome.
Oregon Racing Commission executive director Randy Evers said any changes to an operating plan, application, or ownership require commission approval before licenses are granted in May each year. The commission typically does a background check on officers and directors of a company, Evers said.
Betfair successfully linked up with pari-mutuel operations in Great Britain, Ireland, and Australia in 2008, and its customers bet directly into the official pools in those countries. More such deals are likely in 2009.