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Kevin Smith

One Weekend in the Books

28 January 2002

Just days after California's racing board gave the final approval for account wagering, the state's two licensees have got their services up and running.

On Thursday, the California Horse Racing Board (CHRB) approved Magna Entertainment and Television Games Network as the first two operators allowed to implement advance deposit wagering systems in the state.

Both companies quickly had their systems operating by the weekend. Magna's system,, was so busy that a pop-up message was in place by the end of the weekend warning bettors of possible delays.

"Due to extremely high demand, we are experiencing longer than expected wait times," the message read. "Please allow up to 48 hours to process your application."

Neither company returned calls from IGN today, so it's unclear how much betting activity occurred over the weekend.

The two companies are hoping to cash in on account wagering, but are taking different paths. With Magna is turning more to the Internet for its increased action in California. The company also said it intends to revive the Racing Network, which it bought last year after it ceased operations.

Conversely, TVG is putting most of its eggs in the TV basket, hoping that its daily racing coverage, which is seen in nearly 700,000 homes in California, will be the catalyst in bringing additional handle on the races.

The fact that either company came out of the CHRB's Thursday meeting with approval of their licenses and the OK to roll out the systems caught many in the industry by surprise.

But the board was able to work quickly after proposed regulations were approved just days before its five-hour meeting before a standing-room only room in Monrovia, Calif. It was able to meet a best-possible-case scenario and get licensed operators up and running by the end of January, something CHRB Chairman Alan Landsburg said could happen, but only if all parties involved were able to meet specific deadlines.

Among those deadlines was both sides reaching agreements with the state's horsemen, as mandated by federal law. Magna was able to sign a deal with the Thoroughbred Owners of California on the distribution of phone-betting revenue the morning of the CHRB meeting.

Magna, which owns Santa Anita, started offering its service on Saturday. Mark Wilson, president of (TVG), told the Los Angeles Times on Friday that new account holders would be able to bet on the quarter horses from Los Alamitos Race Course by that evening.

The two licenses vary in that Magna's permit has a two-year life while TVG's will expire at the end of this year. The board made this distinction to determine how much cannibalization (the erosion of on-track activity in favor of off-track betting) occurs as a result of the increased TV exposure. If it is determined after one year that on-track attendance is unaffected by the move, TVG's license will be extended for another year.

In a press release regarding the awarding of the two licenses, Landsburg said the agreements are all about getting new exposure for the state's tracks. He also criticized Magna for what he felt was a failure to reach the same depths of audience that TVG will be able to with its relationship to Direct Network.

"I don't see adequate preparations to get a commercially viable public signal out," he said.

Horseracing nationwide has struggled over the last 30 years to compete in an ever-growing sports sector that's dominated by leagues with sometimes billion-dollar TV deals. Factor in stiffer competition from casino gambling and offshore bookmakers and its easy to see why states are finding it hard to keep up.

Like many, Wilson is hoping that the advent of account wagering in California will breathe new life in the sport.

"This could be the start of a new era in California racing," Wilson told the Times. "What is racing, 13th or 14th in popularity among all sports? Maybe this will bring the game back to the status it had years ago."

Landsburg isn't ready, though, to project account wagering as a savior of the sport in California; he said at the meeting that he's seen too many products and new ideas that promised to turn the sport around.

"Some are calling it an absolute necessity for our survival," he said. "Racing has a history of having white knights ride into these meetings. I think we should move cautiously, because I've seen too many tarnished white knights. .... Maybe we're planting a very small seed that will grow into something."

Having said that, Landsburg joined fellow commissioner William Bianco in voting against the Magna license application, preferring to delay approval until its application contained more specifics about developing new fans. But Landsburg and Bianco were outvoted by board members Roger Licht, Sheryl Granzella, Marie Moretti,

Jim McAlpine, president of Magna Entertainment, said his company plans an aggressive approach toward growing its business in the Golden State.

"We're going to be as aggressive as possible in moving forward with our program," he said. "The fact that we've spent $300 million on our California tracks in the last three years says that we're committed to racing. This is not about recycling the fans we have; it's about growing the business."

Landsburg and Bianco weren't the only ones opposed to Magna. Various trainers' groups and well known owner-breeders, such as Marty Wygod and Gary Biszantz, felt the Internet doesn't have the appeal for horse wagering that TV does.

"Television is the way to popularize racing, not the Internet," Biszantz said.

The TVG license sailed through on a 7-0 vote.

The issuing of separate licenses comes after nearly a year's worth of unsuccessful merger talks between TVG and Magna. McAlpine said TVG insisted on an exclusivity clause. As a result, phone betting will begin in California with bettors required to maintain separate accounts, depending on which track they want to play. The Magna tracks--Santa Anita, Golden Gate Fields and Bay Meadows--will not be carried by TVG, and the races from Hollywood Park, which is owned by Churchill Downs Inc., a Magna rival, will not be available to XpressBet account holders.

Some in the industry are worried that splintered accounts through the state's most popular tracks will deter some bettors from wagering, but Jack Liebau, president of Magna's three California tracks, doesn't see it that way.

"Multiple licenses will still serve California well," he said "Competition should be good for everybody."

The issuing of two other licenses was discussed at the meeting as well. A proposal for a license to was tabled until the February meeting, while an application from Autotote was withdrawn. will be able to move forward with the licensing procedure in February after it posts a $500,000 security bond and reaches agreements on dispersing of the turnover with the horsemen associations.

One Weekend in the Books is republished from
Kevin Smith
Kevin Smith