10/23/2008 11:00PM

Revenue-split talks go down to the wire


Horsemen and Churchill Downs had not reached a deal by Friday afternoon that would make the track's signal available on account-wagering platforms for the 26-day fall meet opening on Sunday, officials for each side said.

The stalemate is a continuation of a dispute that marred the spring meet at Churchill Downs and the meets at several of the tracks owned by Churchill's parent company, Churchill Downs Inc. Earlier this year, many U.S. horsemen's groups began demanding a higher share of the revenue from account wagering, and they have withheld their approval to send signals to account-wagering companies when the negotiations have not been successful.

Officials representing horsemen and Churchill Downs said that negotiations were ongoing on Friday and that there was hope that a deal would be reached soon, though Churchill said late on Friday that is was unlikely a deal would be in place by Sunday. Negotiations on simulcast rates and approvals typically heat up in the two days before a racetrack opening its meet.

Kevin Flanery, a spokesman for Churchill, said that if negotiations were successful then the signal would be available on twinspires.com, the platform owned by Churchill Downs, and XpressBet, a platform owned and operated by Churchill's simulcast partner, Magna Entertainment.

In the past, Churchill has not been able to reach a signal deal with the two most dominant account-wagering companies, Youbet.com and TVG, and Flanery said on Friday that it was premature to comment on the possibility of the signals being available on those two platforms without a deal.

"If we are successful, we would begin negotiations with all major national account-wagering providers," Flanery said.

Horsemen withheld their approval for Churchill to send its signal to account-wagering sites for the entire spring meet, upsetting horseplayers and leading to a significant decline in betting on Churchill's races.

The dispute centers on the revenue retained on bets made through account wagering. Through an organization formed last year called the Thoroughbred Horsemen's Group, many horsemen's organizations have been calling for a one-third split of that money, with another third going to the account-wagering operator and the last third going to the host track. Currently, horsemen at most tracks get about 20 percent of the money generated by account wagers, though that percentage can vary widely.

The Kentucky Horsemen's Benevolent and Protective Association assigned its signal rights to the Thoroughbred Horsemen's Group, but Churchill has refused to negotiate with the group, according to Bob Reeves, the president of the horsemen's group. Earlier this year, Churchill filed a lawsuit against the group alleging that the group was in violation of the Sherman Anti-Trust Act by amalgamating the rights to multiple groups. The Thoroughbred Horsemen's Group has disputed that allegation in a counterclaim.

Since 2006, Churchill Downs has been seeking to increase its presence in the account-wagering market. It has bought three account-wagering companies, created a simulcast-marketing partnership with its largest rival, Magna, and formed its own platform, twinspires.com. But since then, twinspires.com has been shut out of carrying the signals from most of the tracks owned by its parent.

Churchill Downs Inc. does not release handle figures for race meets for its four tracks, but in financial statements accompanying its second quarter filing with the Securities and Exchange Commission, the company said that total handle at Churchill Downs this year through June 2008 was $532.4 million, a decline of 10 percent compared with handle through the first six months of 2007. The figures are the latest available from the company. Churchill ended its spring meet on July 6.

Churchill cited the loss of account-wagering revenue for its decision to cut purses during the spring meet 20 percent. For the fall meet, stakes purses have been cut by $1 million in anticipation of revenues falling short because of the account-wagering dispute.