Unrealized Potential: Interactive Pari-Mutuel Betting

Those analyzing the interactive pari-mutuel wagering industry could make a strong argument that the sector is a microcosm of other interactive gaming marketplaces.

That point was driven home last month at the Interactive Gaming Summit and Expo in Toronto. A panel of leading pari-mutual experts addressed delegates at the show, and the general consensus on the state of the horse racing industry was that it is very similar to what is going on in the Internet gambling industry as a whole.

The success of companies who rely heavily on horse racing depends mainly on their location. Just like there are legal gray areas for online casino operators in the United States, racing sites have found marginal success in North America as the market and competition for the entertainment dollar is fierce.

While horse racing doesn't have the societal penetration in the United States and Canada that it does in Europe and Asia, many companies see the market as having untapped potential. And if the success that has been experienced in Europe can be transformed in the U.S. market, it could mean big business for betting firms everywhere.

One of the leading betting companies in France, PariMutuel Urbain, is a perfect example of the huge market that could exist for racing. In 2001 it had a turnover of 6.17 billion euros. The company, which is among the top 50 firms in France, deploys a dynamic sales strategy that makes use of the very latest in information technologies.

The PMU has been organizing, promoting, selling and processing bets on horse races since it was founded in 1930. Every day, the company registers bets, calculates the returns and pays out winnings to punters. Its activity is constantly increasing, and today 1.2 billion wagers are processed per year on some 5,200 races. With the widest range of bets in the world, the PMU attracts more than six million punters in France every year.

In the spring of 2000, the PMU launched satellite betting on the digital television channel Equidia. Equidia is Europe’s first -- and still the only -- theme channel entirely dedicated to the horse. This digital and interactive TV channel is available on cable and satellite and offers a wide variety of programs: documentaries, magazines, reports, shows, news, films, television series, cartoons and, it goes without saying, live horseracing. PMU was the first company in the world to take bets via interactive TV.

Since it was created in 1999, Equidia has been making it possible for punters to follow every exciting second live. No less than 5,000 French and international races are broadcast annually. Hundreds of thousands of spectators and punters can now enjoy the thrill of horseracing as though they were there, either in their own homes or at more than 4,500 PMU sales points.

By the end of 2001, more than 70,000 accounts had already been opened via Equidia, producing a turnover of 105 million euros in 2001.

Specially designed set-top decoders allow punters to bet using credit cards or by direct debit. Winnings are transferred directly to a bank account.

While PMU has experienced success that is off the charts for many companies, its contemporaries in other parts of the world aren't so lucky.

Woodbine Entertainment Group is one of Canada's leading horseracing syndicates. The company, formally the Ontario Jockey Club, has struggled to reach its full potential, but company officials feel that the Internet and other interactive distribution channels will help Woodbine, and the entire racing industry, realize its full potential.

With the complete modernization of the company's two racetracks, dramatically expanded product distribution and enhanced quality of the company's horse racing coupled with the province's introduction of slot machines as a second and extremely popular form of wagering, the company has emerged as a leader in Canada's entertainment industry.

The 1996 Breeders' Cup was awarded to Woodbine, Canada's most prominent track. This marked the first time the Breeders' Cup extravaganza was hosted outside the United States.

Woodbine Entertainment Group uses tools such as the Internet to help racing fans everywhere learn more about the operation and follow racing.

In 2000 the company generated business in excess of $1.2 billion. Wagering on the company's horse racing through live, off-track and in-home services along with the approximately 6 million customers who visit the slot machine facilities at Woodbine and Mohawk annually make Woodbine a force to be reckoned with in the entertainment industry.

Nick Eaves of Woodbine feels that while things continue to grow for his company, the full potential won't be realized until the racing industry as a whole works to bridge the gap between modern technology and the thrill of the racetrack.

Another wagering company that is making inroads in bridging that gap is eBet Limited. eBet is an Australian company with operations and commercial arrangements in Australia, New Zealand, Singapore, Canada and the United States. The eBet Group comprises two primary business units: eBet Gaming Systems and the Online Division.

The Gaming Systems Division develops and markets a range of networked solutions for gaming machines including player loyalty and tracking systems, cashless gaming solutions and machine management software.

eBet Online develops, markets and operates online gaming technologies and works only with government-sanctioned and licensed gaming operators located in regulated jurisdictions internationally.

eBet Online's sports betting, race betting and lottery products are available via the Internet. Through these Web sites, punters can wager on sports and races from New Zealand TAB, lottery products from Australia's Tattersall's, U.S. races from Penn National Gaming Inc. and soon sports betting from City Index, eBet's recently acquired sports betting company.

eBet's strategy is to continue to build its online content through agency agreements such as those with NZ TAB and Tattersall's, and where appropriate, by acting as principal through obtaining relevant licenses such as with City Index.

The company sees a desire for horse bettors to expand their wagering dollar to other areas of interest and it is confident that these partnerships and business agreements will further its market share in the Australian betting circle.

Under a technology and services licensing agreement, eBet's U.S. subsidiary, eBet Racing Inc. has developed an innovative, interactive "closed-loop" system for Penn offering betting on leading racetracks across the United States. The service completed successful live beta testing during 2000 and launched in a limited commercial mode in September.

In addition to access via the Internet, eBet USA customers will be able to enjoy eBet's Web-TV, Palm V and Palm VII product innovations.

Although the pari-mutual industry isn't thriving on a global basis, the panelists agreed that when new technology and distribution channels are realized, and when the industry's members work with each other instead of against each other, its full potential can be realized.

Successful pari-mutual companies like PMU in France are proof that if the product is delivered in the right fashion, and to as many prospective punters as possible, then racing could have a long and healthy life in the interactive gaming sector.