08/14/2001 11:00PM

Account-betting battle looms


New Year's Day will signal the beginning of a new era for horse racing in California, when phone and Internet betting will become legal. Exactly what that era will look like, however, is anyone's guess.

More money is wagered on California's horse races than on any other state's races, and a handful of account-wagering operators are already licking their lips in anticipation. The fight that ensues to grab market share may determine the shape of account wagering in horseracing for decades to come.

But the law that legalized phone betting was deliberately vague, and the account-wagering companies are all waiting for the California Horse Racing Board to draft the specific rules that will govern phone betting and determine the scope of account wagering.

Normally, it takes the board six months to a year to draft and approve rules, according to John Reagan, the board's parimutuel manager. But the board will accelerate the process to have rules on the books by Jan. 1. "We know how important this is to a lot of people in this state," Reagan said on Wednesday.

For two start-up account-wagering operators, Television Games Network and Youbet.com, the legalization of telephone and Internet betting in California should be a blessing. Both TVG, a horseracing broadcaster that takes bets over the phone and Internet, and Youbet, which takes bets through an Internet-based system, have been losing millions of dollars every business quarter since opening their operations.

With California on the horizon, these companies may be able to convince their backers that their business models can eventually succeed. But it is highly unlikely that they will be the only players on the block. The law that was signed by Gov. Gray Davis on Monday potentially allows an unlimited number of companies to accept account wagers, and that could mean a bitter fight for market share.

"I can tell you one thing," said Jack Liebau, the vice president of California operations for Magna Entertainment, which owns Santa Anita Park, Golden Gate Fields, and Bay Meadows in California. "Nobody's going to have an exclusive in this state."

That could cause some confusion for bettors in California.

As it stands now, Hollywood Park, Oak Tree at Santa Anita, and Del Mar all provide their signals exclusively to TVG. Magna, however, is not a TVG partner, meaning a horseplayer who wanted to place phone bets on all tracks in California would have to maintain two accounts.

"The desirable outcome is to have one-stop shopping for the California customer," said Rick Baedeker, the president of Hollywood Park. "But right now that remains to be seen."

Reagan said on Wednesday that both sides have already begun lobbying. "There are some people out there who say that we will have to license anyone who wants one, and there are another dozen looking at other states and saying California could make one provider an exclusive," Reagan said. "But that will all be part of the rule-making process, things like what do you have to do to be a hub. I would bet that we'll likely land somewhere in the middle."

Reagan said the rules will address many of the questions that California racing officials are currently asking, such as how many races account-wagering operators can offer each day and whether they will be able to offer betting on racing signals that are not necessarily being shown at California racetracks.

"We [the CHRB] are certainly aware of the lack of specificity in the law," Reagan said. "It doesn't give us a whole lot of direction. So we have a lot of ability to determine how we want to do this."

Liebau would not be specific about Magna's plans, but, barring any new developments, the company could simply apply for its own account-wagering license in California. Magna already owns the Call-A-Bet operation in Pennsylvania.

"We are looking at a number of different options, but we haven't reached anything definitive yet," Liebau said.