01/15/2004 12:00AM

Magna cuts prices for 3 rebate shops


NEW YORK - Magna Entertainment Corp., the beleaguered racing giant whose policies have come under fire recently from horseplayers, has negotiated new deals with at least three rebate shops in the hopes of reviving flagging business at its marquee tracks, racing officials said Thursday.

The agreements will effectively lower the rates that the rebate shops pay for the signals from two Magna tracks, Santa Anita and Gulfstream, according to officials of the Thoroughbred Owners of California, which approved the Santa Anita deal. The new rates were expected to take effect Thursday.

Offtrack handle at the two tracks has plummeted since Santa Anita opened on Dec. 26 and Gulfstream opened on Jan. 3, with business down at least 14 percent at each track. Although Magna officials have not confirmed that the company raised rates this year to rebate shops, other racing officials, including rebate-shop operators, have blamed price increases in large part for the decreases in handle.

Rebate shops refund a large part of the difference between what they pay for signals and the takeout to their biggest customers. Any price increase reduces the amount of money that can be returned to customers.

According to John Van de Kamp, the president of the TOC, the three rebate shops that renegotiated agreements were Racing and Gaming Services, which is based in St. Kitts and is probably the single largest rebate shop to offer U.S. racing; the Tonkwa Native American tribe in Oklahoma; and Holiday Beach in Curacao. Van de Kamp said that handle through RGS had been down "significantly" since Santa Anita opened.

"We think there are incentives now in these agreements that will bring the players back to this meet," said Van de Kamp, who declined to discuss the rates that were being charged. It was not clear whether Magna would renegotiate with other rebate shops.

Andy Kure, the simulcasting coordinator for Magna, did not return a phone call Thursday.

Magna, the largest racing company in the United States, has been under criticism from some horseplayers and racing officials because of new policies that were designed to increase its revenues while giving Magna more control over its simulcast signals. Aside from raising its rates to rebate shops, Magna pulled its signals from nearly every U.S. account-wagering company, including Attheraces.com, which exports U.S. signals to Britain for commingling into U.S. pools.

Magna has its own account-wagering platform, XpressBet, which has struggled to gain market share. Since pulling the signals, Magna has urged horseplayers to open XpressBet accounts.

Separately, Magna announced late Wednesday that it would offer a weekly $500,000-guaranteed pick five beginning Jan. 31. The new bet, which will have a takeout of 22 percent, will link five races in one hour from Magna tracks across the country and will be offered every Saturday through May 29, Magna officials said.

Tim Capps, the executive vice president of the Maryland Jockey Club, which is majority-owned by Magna, said Thursday that the announcement of the pick five was not timed to address the handle declines or recent criticism of Magna. Discussions about the new bet stretch back to last summer, Capps said.

"The reality is that this concept evolved as a way to develop a marketing initiative that all Magna tracks could work with," Capps said. "Hopefully it will be something that will energize people, and having Gulfstream and Santa Anita in the mix will certainly help."

A new bet with a high guarantee would appear to be tailor-made for customers of rebate shops. Many rebate players are professional horseplayers who focus on large pools that are difficult to hit.

Resentment over Magna's decision to pull its signals led a group of horseplayers to organize a boycott of the company's signals. A roster of players who have pledged to honor a boycott, maintained at the website www.boycottmagna.com, had grown grown from 59 players on Monday to 256 as of Thursday morning.

One of the signers, Ted Mudge, is a former Magna executive. Mudge is now a consultant for Bloodstock Research Information Services, which has a subsidiary, Brisbet.com, that is a member of an account-wagering operation called AmericaTab. AmericaTab was one of the account-wagering operations cut off from Magna, and since then, handle at the company's sites has increased 50 percent, according to AmericaTab officials.

Asked why he signed the roster, Mudge replied, "I think Magna is doing the wrong thing."

"I think you get people to bet by making the very best site you can make, by competing with the sites that offer your signal, not by poking them with a stick," Mudge said. "I expressed that while I worked with them, and I believe in it."

Many account-wagering operations other than AmericaTab and racetracks outside of Magna have experienced sizable gains since the beginning of the year. Average daily handle at Beulah Park in Ohio over the first four days of its 2004 meet was up 96.2 percent, setting a record. In Kentucky, handle at Turfway Park has been up 21 percent since the start of the year.

Among account-wagering operators, handle at Youbet.com, which has an agreement with Magna to carry its California tracks but not Gulfstream, is up about 20 percent, according to officials for the company. Handle at Television Games Network, which carries Laurel Park but no other Magna tracks, is up 50 percent since the beginning of the year, according to company officials. The TVG and Youbet officials said they could not supply exact numbers because of restrictions on publicly traded companies.

Account-wagering operators have said that Magna officials have not indicated that they plan to rescind the new restrictions. But Capps said Thursday that he believed that Magna officials are negotiating with the account-wagering operators, specifically on making the new Magna pick five available to their customers.

"I can't tell you clearly right now who will be able to carry it," Capps said. "But there have been negotiations and discussions."