On Track - March

Youbet.com Soap Opera Continues

Less than a week after resigning his position as CEO of Youbet.com, Ron Luniewski today was hired to oversee the interactive business of Magna Entertainment.

Luniewski, who was named co-CEO of Youbet.com last year after the resignation of Robert Fell, was forced to resign, as Youbet.com found itself short on cash and had little options left. The company's board of directors decided to take a $750,000 loan from co-founder David Marshall. As part of the load, though, Marshall had to be named CEO and three other directors had to step down.

Luniewski has quickly found a home, however, with Magna--one of the account wagering industry's leading players.

In his new role, Luniewski will be responsible for the operation of XpressBet, Magna's Internet and telephone wagering service. According to published reports he'll start with Magna in mid April.

The latest restricting for Youbet.com marks the newest chapter in the continuing saga of a company that has struggled to make a profit despite being one of the early innovators of interactive technology. The company is also the only provider that delivers content from races carried by both Magna and TVG, the two main distributors of racing content under California's new account wagering system.

California Account Wagering Customers Battle With Credit Cards

The Los Angles Times reports that the headaches caused by increased restrictions imposed by financial institutions on Internet gambling transactions is affecting the racing sector.

A reporter with the paper tried to test the state's account wagering service, which facilitates betting via the telephone and the Internet. The reporter started an account with XpressBet on the Internet, but was unable to move money into the account via credit card. When he tried to do the same thing over the phone, the transaction was approved.

David Webster, a spokesman for First Card Visa, said that since last fall his company has had a policy that prohibits Internet users from taking available credit and sending funds into a gambling account.

Asked why The Times reporter was able to do business with his credit card over the phone with XpressBet, Webster replied: "Our fraud people tell me that statistically it's not as risky [to allow a cash transfer] over the phone as it is by Internet. It's less likely that someone using the phone will be making a call to the Bahamas."

The article also told of similar troubles with other credit cards and other state-licensed systems.

The problem is nothing new for online casinos and sports books, which have been dealing with credit card issues for the last year.

Magna Going Forward with Stock Option

Magna Entertainment has announced that it's proceeding with the stock offering it announced Oct. 26 of last year but deferred "in view of market conditions."

The company now intends to proceed with a public offering of 20 million shares of its Class A Subordinate Voting Stock in the U.S. and Canada. The company says the net proceeds will be used for general corporate purchases, including repayment of borrowings, working capital, capital expenditures and the potential acquisition or construction and development of additional racetracks and related entertainment operations, training centers, OTB facilities and account wagering operations.

Waterhouse in Hot Water Again

Australian bookmaker Robbie Waterhouse is in trouble once again.

Seven months after regaining his bookmaking license, Waterhouse is facing the possibility of being banned for life from racing.

NSW Thoroughbred Racing Board stewards today issued 16 charges against Waterhouse--13 of which relating to bets he recorded at inflated prices in the name of Peter McCoy at Canterbury on Feb. 6.

He was also charged with two counts of giving misleading evidence and with conduct prejudicial to the image of racing. If found guilty when the inquiry resumes on April 2, Waterhouse could be banned from racecourses for life.

Waterhouse returned to bookmaking late last year after a 17-year exile forced by his role in the Fine Cotton affair in 1984.

Waterhouse and his father, Bill Waterhouse, were warned off by the Australian Jockey Club, along with several other people (including McCoy), after being found guilty of prior knowledge of the Fine Cotton affair in 1984.

Country galloper Fine Cotton was replaced by open-class sprinter Bold Personality in a race at Eagle Farm on Aug. 18, 1984 and backed Australia-wide, firming from 33-1 to 7-2.

The horse won but the substitution was detected before any money was paid out due to the amateurish attempt to disguise Bold Personality with hair dye and bleach.

Poll Shows Possible Bright Spot for Racing

A poll conducted by TNS Research and ESPN indicates the number of people in the United States with an interest in horse racing increased in 2001 for the second consecutive year.

With a 5.4 percent increase, horse racing was one of only four sports that experienced growth in its fan base from 2000 to 2001 among people ages 12 and up, ESPN Sports Poll officials said. NASCAR led the way with a 10.9 percent jump.

The percentage of those surveyed who say they're interested in horse racing rose from 30.4 percent in 1999 to 31.5 percent in 2000 and to 33.3 percent in 2001. The poll also showed that, among horse racing fans, awareness of the National Thoroughbred Racing Association rose from 29.4 percent to 56.5 percent in 2001 and awareness of the association's slogan, "Go Baby Go," increased from 16.5 percent to 20.3 percent.

Dover Spins-off Gaming Interests

Dover Downs Entertainment's board of directors has approved the spinning off of its gaming interests.

The gaming business, including Dover Downs, will be transferred to Dover Downs Gaming & Entertainment, a newly formed Delaware corporation, with 100 percent of the shares of that company's common stock and Class A common stock being distributed, on a pro rata basis, to Dover Downs Entertainment's stockholders.

Dover Downs Entertainment will change its name to Dover Motorsports, Inc. and will continue trading on the New York Stock Exchange under its existing symbol of DVD.

The new gaming group has been authorized to list its shares of common stock on the New York Stock Exchange under the symbol DDE and will be publicly traded for the first time on or about the effective distribution date of March 31.

ATM Cards Could Come to Account Wagering

Looking to fill a demand with bettors, two technology firms have teamed up to offer smart cards and other technological advances.

When the system is up and running, the reception of racing statistics and signals will be ubiquitous in cars, offices, homes, and other locations.

The system will be implemented through a partnership between Performance Technology and eConnect. The two companies will produce a PlayersCash smart card that will allow electronic cash transfers to be sent through the Internet to either open or replenish an OTB track betting account. eConnect said the combination of the new smart card and a PIN will act as a comprehensive authentication device for defining the age and location of the player, and lends itself to the implementation of other home gaming services.

Woodbine Not Worried About Cannibalization

While California horsemen fret over the risk of customer cannibalization at the hand of account wagering, Woodbine Entertainment officials say they have found just the opposite to be true: Televised racing drives wagering.

Nick Eaves and Andrew MacDonald of Woodbine Entertainment told the Harness Racing Congress Feb. 21 about their company's success by "employing any and all distribution strategies."

The final day of the congress was devoted to technology and the marketing of horse racing in the decade to come. New media experts from several companies painted a very bright future, although success, they say, depends on whether horse racing can harness technological advances.

Topping the list of new technologies is interactive television, which enables bettors to watch and wager simultaneously from home. But "e-wagering" is a concept many horsemen are still struggling to grasp.

Eaves cited figures that show account wagering in the Canadian provinces has jumped from $10 million in 1997 to more than $72 million in 2001. At the same time, on-track wagering went from $720 million to more than $900 million.

Delta Downs Has Big First Month With Slots

Louisiana's first "racino" at Delta Downs generated nearly $8 million in revenue in just 16 days of operation in February, and attracted more than 134,000 patrons, according to state police figures released March 20 at a Louisiana Gaming Control Board meeting. In February alone, $1.42 million was generated for purses at the Vinton track.

The 24-hour slot-machine parlor at Delta Downs opened Feb. 13. A daily average of 8,000 people passed through the doors, and the average win was $59 per patron for 1,500 machines.

Suprisingly, the four riverboat casinos in nearby Lake Charles were not severely impacted. A check of February gross revenue figures on the state's riverboat casinos shows the four boats took in a combined $30.7 million--up 12 percent from January. Overall attendance last month at all four boats was 568,069.

Meanwhile, Fair Grounds race course, which cannot have slot machines under state law, is working to get that changed. The track, located in New Orleans, reportedly will attempt to do so during a special legislative session that begins the week of March 25 in Baton Rouge.

Kentucky Slot Bill Moves Forward

A Kentucky legislative committee approved a bill that would legalize slot-type machines at state race tracks after attaching six amendments to the legislation on Monday. The bill is now headed to the floor of the House, where it could be taken up as early as Thursday.

The bill's chances still appear dim, racing industry officials said Tuesday. Backers of the legislation have said that they won't push for a full vote unless it has enough support to pass.

The amendments approved on Monday would put regulation of the gambling machines in the hands of the Kentucky Lottery Corp. instead of a separate gambling commission; earmark the state's profits to six entities, including teachers' salaries, school construction and prescription drugs for low-income seniors; and create a program to help problem gamblers. The amendments would also prohibit tracks from selling slot machines, outlaw the use of credit or debit cards and require regulators to comply with open meetings laws.