01/20/2009 12:00AM

Sides still at odds over California signal fee


The Thoroughbred Owners of California and a simulcast-marketing company remained deadlocked Tuesday in a dispute that has led the owners' group to block the distribution of California racing signals to most simulcast facilities owned by Churchill Downs Inc., according to top officials with the organizations.

The dispute centers on a contract between TrackNet, a company co-owned by Churchill Downs Inc. and Magna Entertainment Corp., and two California racetracks, Santa Anita Park and Golden Gate Fields. The contract lays out the percentage of money that is received by the Churchill-owned Twinspires.com account-wagering site from bets made by its California account-wagering customers.

On Monday, the California owners blocked Santa Anita Park and Golden Gate Fields from sending their signals to out-of-state sites owned by Churchill Downs, with the exception of Calder Race Course in Florida. Drew Couto, the executive director of the owners' group, said that the organization could not block the signal to Calder without also blocking the signal to Gulfstream because of a Florida law that assigns all statewide simulcasting distribution rights to the live racetrack. Gulfstream is currently running live, and Calder is dark.

Couto said that the owners' group took the action because TrackNet had "blindsided" the organization with the contract last Thursday at a meeting of the California Horse Racing Board. Couto contended that TrackNet had assured the owners that the fees going to account-wagering companies in 2009 would be identical to those in the previous year, and that the new contract included an increase in the rate going to Twinspires.com and XpressBet, the account-wagering company owned by Magna. Horsemen and racetracks in California split the money left over after the account-wagering fees are paid.

The owners' group had initially blocked the signals from going to Magna's out-of-state sites as well, but Couto said that the owners' group withdrew its objections after Magna officials agreed to a rate consistent with the 2008 contract.

When asked if the Thoroughbred Owners of California intended to continue to block the signals at Churchill sites as the matter is being resolved, Couto said that "it's possible."

Scott Daruty, the chief executive of TrackNet, said that California law allows account-wagering companies to negotiate contracts with racetracks without the approval of the TOC. Under that law, the owners' group has the right to review the contract and ask for arbitration if it objects to the terms.

The TOC, Daruty said, "have advised TrackNet that they will arbitrate the Twinspires agreement if terms are not reached by the end of the week."

Daruty declined to comment on the percentage shares outlined in the contract.

Couto said that the owners' group is "going to consider all of our options" when asked if the organization intended to seek arbitration.

Santa Anita and Golden Gate are next scheduled to hold live race days on Thursday. TrackNet negotiates simulcasting contracts on behalf of the tracks owned by Churchill and Magna, a list that includes Churchill Downs, Santa Anita, Laurel, Pimlico, Arlington, Fair Grounds, Golden Gate, Gulfstream Park, and Calder.

The relationship between the owners' group and most account-wagering companies has been strained since the owners blocked distribution of Hollywood Park's signal to the companies at the start of the track's meet late last year. The dispute was eventually resolved after a three-week blackout that cost racetracks, horsemen, and the account-wagering companies significant revenue from Hollywood's popular signal.