04/09/2002 11:00PM

Fairs begin talks over deposit wagering


PLEASANTON, Calif. - The California Authority of Racing Fairs, the state's only live racing entity that is not yet aligned with an advance deposit wagering company, has begun talks with the three licensed carriers: Television Games Network, XpressBet, and Youbet.com, several officials said.

Representatives of each wagering company answered questions from fair simulcast operators on Monday and Tuesday at the Alameda County Fair, during the authority's annual simulcast conference. Although contract talks were not part of the conference agenda, officials acknowledged privately that such negotiations were getting under way. Officials from the wagering companies were in attendance to build goodwill for the upcoming talks and to allay any fears about the possible cannibalization of mutuel handle and attendance.

Carrying fair racing could be particularly important to XpressBet, a Magna Entertainment company, because a section of the California law allowing advance deposit wagering requires a company to have a live-meet affiliation in the state.

XpressBet carries all the Magna-owned tracks: Santa Anita in Southern California and Golden Gate Fields and Bay Meadows in northern California. It recently added an agreement with Capitol Racing in Sacramento for its harness program. But XpressBet will have no live-meet affiliation in July and August. Both the Thoroughbred meeting at Bay Meadows and the harness meeting in Sacramento end in June.

A strict interpretation of the clause could force XpressBet to shut down for July and much of August until the Bay Meadows fall meeting begins on the last weekend of August.

Magna spokesman Andrew Gaughan said that he disagreed with the strict interpretation but that XpressBet was interested in becoming a partner with CARF because Magna viewed fair racing as a valuable product for Magna's racing network, which will launch July 1.

The Fairs, which negotiate collectively through the CARF board, could be in a good position to make an advantageous deal with XpressBet or the other two carriers, said Mike Knapp, a member of the CARF board who manages the Del Mar Surfside simulcast site, which is run under the CARF umbrella.

"We want to see what is best for the customers we have," Knapp said, adding that some type of bridge between all three systems might be the best.

While money will obviously play a role in any decision, CARF executive director Chris Korby said his organization viewed its future relationship with any wagering company as a "joint marketing effort."

He said he saw two different types of agreements being reached, one for live racing and the other focusing on a realationship for the remainder of the year that could include on-line wagering possibilities at Fair sites.

"We would like to see ourselves becoming brick-and-mortar extensions to the on-line world," he said.

Legislation to allow deposit wagering included the requirement that 2 percent of Internet and phone wagering handle be sent to simulcast facilities, which are run through CARF. That percentage might be increased in negotiations for exclusive rights to fair racing.

CARF might consider aligning with TVG in order to be on the system that carries Hollywood Park, Del Mar, and Los Alamitos, as well as other major tracks across the nation, to get more exposure during the summer.

XpressBet allows customers to sign up at member tracks, and customers can also make deposits and withdrawals on their accounts at the tracks. TVG plans a similar operation when Hollywood Park opens. The 21 statewide simulcast sites operated by CARF, plus a 22nd that operates on special racing days in Paso Robles, would provide additional sites for similar operations.

In the first two months of advance deposit wagering, roughly $11 million was wagered through advance deposit wagering accounts, 3.5 percent of the overall handle at state tracks.