10/30/2008 11:00PM

Account-wagering blackout spreads


Horseplayers who have grown accustomed to widespread signal blackouts on account-wagering platforms over the past year always had one class of signal that could be counted on: the races from the tracks in Southern California.

Now that has abruptly changed. On Wednesday, the dispute over account wagering finally reached California, and according to the Thoroughbred Owners of California - the group that rescinded its approval for Hollywood Park to send its signal to all four national account-wagering companies just prior to Hollywood opening - it was only a matter of time.

The TOC has been hinting for months that it was ready to jump into an ongoing dispute pitting horsemen against racetracks over the splits of revenue for account wagering. But contractual obligations with account-wagering companies and the TOC's participation in a yearlong experiment designed to increase the distribution of racing signals prevented it from entering the fray.

At the close of the Oak Tree at Santa Anita meeting on Sunday, the existing contracts expired. As a result, the TOC joined with a number of local horsemen's groups in refusing to approve the distribution of simulcast signals to any major account-wagering platform without a new agreement with a national company that it supports, the Thoroughbred Horsemen's Group.

"We're not singling Hollywood out because we don't like management," said Drew Couto, the president of the TOC and the vice president of THG. "We're doing this because we can now. [Account-wagering companies] have gotten ridiculously low rates for a decade. That is not going to go on. We are not going to allow that to go on."

The dispute shows no signs of being resolved any time soon. Account-wagering companies have said they are perplexed by the TOC's position, and the TOC has shown no sign of backing down from its demand.

The past year has been one of the most frustrating times for horse racing fans in recent memory. Account wagering has become the single most important development in the sport since the advent of full-card simulcasting 20 years ago, yet most account-wagering companies are being prevented from offering the country's most desirable signals. In addition to Hollywood, the blackouts include Churchill Downs and Calder Race Course, at a time when very few "A" track simulcast signals are available.

The dearth of available signals may be what the TOC and THG are banking on to force account-wagering companies to the negotiating table. Without Hollywood, the four major account-wagering companies (TVG, Twinspires, XpressBet, and Youbet) are pushing their customers to small-track signals such as Hawthorne, Finger Lakes, and Charles Town (although Aqueduct in New York is still widely available).

"The California horsemen are trying to use their content to leverage a national deal," said Scott Daruty, the chief executive of TrackNet, a simulcast-marketing partnership between Churchill Downs and Magna Entertainment.

The national deal that the TOC and other horsemen's groups are seeking through the THG would give horsemen a one-third share of any wager made though an account-wagering platform. Though the current shares differ widely, most deals give horsemen about one-fifth of the revenue. Like other horsemen's groups, the TOC has said it will not release the signals until the account-wagering companies strike a long-term deal with the THG, which is supported by 20 local horsemen's groups.

Jack Liebau, the president of the company that operates Hollywood Park and a director of Youbet.com, complained this week that the horsemen's position of seeking one-third of the revenue from bets made through account-wagering (or advance-deposit wagering) companies was inconsistent with what the groups were willing to accept from other betting sites, such as offshore rebaters.

"The rebaters are paying at most 7 percent, and horsemen get half of that, or 3.5 percent," Liebau said. "I have a very hard time understanding why the rebaters should get a lower price than the ADW companies. I don't understand the equity argument they are making at all, when you have such a difference across the board on how signals are being priced."

Another source of inconsistency is the fact that the Hollywood signal is being offered on account-wagering platforms operated by New York racetracks and offtrack betting companies. Couto said those deals provided two-thirds of the revenue to either horsemen or tracks that hold live racing - through a mix of host fees, source-market payments, and statutory requirements - so the TOC and THG did not have a problem with providing the signal to the operators.

The TOC and the THG have offered the account-wagering companies a deal that would allow the increases to horsemen to phase in over a period of time, according to officials for the organizations, but the account-wagering companies have not responded to those proposals.

John Hindman, the vice president and general counsel of TVG, the dominant account-wagering provider in the U.S., said that a previous deal with the TOC for the Hollywood Park signal provided two-thirds of the revenue to California horsemen and racetracks, a higher figure than the TOC was seeking for the Hollywood signal through the THG deal. Couto disputed that figure, however, and said that TVG - a publicly traded company - has refused to allow the TOC to look at financial statements supporting the company's contention.

"All I can say is that those are the numbers we provided to the California Horse Racing Board, and we stand by those numbers," Hindman said. "We wouldn't lie."