06/11/2007 11:00PM

Churchill expands betting network


LEXINGTON, Ky. - Churchill Downs Inc. has purchased three popular account-wagering platforms and two related racing and bloodstock data businesses in an $80 million transaction that will instantly consolidate the online wagering market.

The purchase will add AmericaTab, Bloodstock Research Information Services, and the Thoroughbred Sports Network to Churchill's portfolio of four racetracks and other racing businesses. The companies operate the account-wagering platforms Winticket.com, Brisbet.com, and Tsnbet.com. In addition, both Bloodstock Research Information Services and Thoroughbred Sports Network operate data businesses that provide handicapping reports and breeding statistics to paying customers.

Bob Evans, the president of Churchill, said in a conference call on Tuesday that no customers of the existing account-wagering platforms would be transferred to any other service, including Churchill's own account-wagering operation, Twinspires.com. Churchill launched Twinspires.com in May, just days before the Kentucky Derby.

According to Evans, all four platforms will continue to operate just as they had in the past, with no significant changes, despite the consolidated management.

The purchase by Churchill will leave four major operators in the account-wagering market, which is the only growing segment of parimutuel wagering. In addition to Churchill's operations, the market includes Television Games Network, Youbet.com, and Xpressbet, which is owned by Magna Entertainment Corp.

But on a broader scale, the market is currently segmented by content, with TVG and Youbet.com offering a different set of racetracks than Churchill, Magna, and the sites Churchill purchased on Tuesday. Earlier this year, Churchill and Magna created a partnership, TrackNet Media, to buy and sell the rights to simulcast signals, and that partnership has failed to reach an agreement to provide Churchill and Magna's content to either TVG or Youbet, and vice versa.

TrackNet did, however, reach an agreement with AmericaTab companies, which includes the three platforms Churchill has bought. That agreement required the platforms to drop content controlled by TVG, which had its most immediate impact last weekend, when customers of AmericaTab sites, XpressBet, and Twinspires.com were not allowed to wager on the Belmont Stakes at Belmont Park.

Evans said that Churchill's four platforms control about 18 percent of the account-wagering market, and that Churchill has estimated that handle in 2008 through the platforms will be $175 million. Evans would not provide a number for the platforms' current customer totals, other than to say the figure was in the "tens of thousands."

Churchill will pay for the acquisitions with $50 million in debt from its line of credit and $30 million in cash. The price of the AmericaTab acquisition could rise by up to $7omillion based on the future performance of the business, Evans said.

Churchill officials would not break out the exact value of each of the companies in the transaction.

AmericaTab was owned by a partnership that included Beulah Park and River Downs in Ohio, along with several other small partners that operate affiliated sites in the network. Beulah owned slightly less than two-thirds of the company, with River Downs owning slightly less than one-third. The remaining 3 percent stake in the company was divided between two other racetracks and the Broadbent family, which owns Bloodstock Research Information Services and Thoroughbred Sports Network.

Charles Ruma, the owner of Beulah Park, said that AmericaTab currently has 50,000 accounts, but that only one-third of those are considered "active," or held by customers who have made a wager in the past six months.

"We got a very fair price for our efforts," Ruma said. "I'm 65, I've owned this racetrack for a number of years, and I started thinking that maybe it's time to take something off the table."

Bloodstock Research and Thoroughbred Sports, both based in Lexington, use data obtained from Equibase. Churchill is a part-owner of Equibase through its relationship with a racetrack trade group, the Thoroughbred Racing Associations, which owns Equibase in partnership with The Jockey Club.