Horse betting hub could spark mutiny

Control of Internet, phone wagers at issue

May 08, 1999|By Jon Morgan | Jon Morgan,SUN STAFF

In the most serious challenge to horse racing's fledgling "league office," a group of mid-Atlantic tracks is threatening a mutiny over the issue of who should control the future of telephone and Internet wagering.

A group of 10 tracks in the region, including Pimlico Race Course and Laurel Park, faxed a letter on Thursday to the National Thoroughbred Racing Association complaining about the NTRA's plans to establish its own industry-wide wagering hub.

"The details have been reviewed only by representatives of five or six large tracks, and this venture now is being forced down the throat of the rest of the industry," the track owners wrote to Tim Smith, commissioner of the NTRA.

The board of the NTRA, a trade association that celebrated its first birthday last month, voted in March to set up its own wagering center through which fans could bet -- by phone, personal computer or cable-TV box -- on races being run throughout the country.

This has angered some tracks in the region, especially Philadelphia Park, which operates a major telephone betting system and is trying to launch a satellite-based racing program.

But the centralized betting center is key to NTRA's arrangement with TVG, a new company that is setting up the nation's first horse racing cable channel. The channel is scheduled to debut in July with a variety of informational programs and live race telecasts.

The idea is that fans watching the races will set up accounts with the NTRA wagering center and bet on races they see on TVG. A percentage of each wager would go directly to TVG, providing it a share of what analysts believe will be a very lucrative expansion of racing. The NTRA would also keep a portion of the bets, as would tracks where the races are run, and tracks in the state where a bet originates to compensate for the potential loss of business to the new service.

The NTRA has formally affiliated itself with TVG because it sees the new television venture as a way to bring the sport to millions of new fans while raising money for the group's coffers, Smith said.

Now funded largely by temporary membership dues and contributions from racing organizations, the NTRA must eventually generate its own revenue.

Smith said he is impressed by TVG's corporate backing -- cable giant Liberty Media Corp. and News Corp., a telecommunications firm whose holdings include the Fox television network -- and the $200 million to $300 million investment they are discussing. NTRA may also turn over operation of the wagering hub to TVG.

But the mid-Atlantic tracks, in their letter last week, call the establishment of a wagering hub on behalf of TVG "ill-advised and inappropriate and a threat to the viability of the racing industry in our states." Signing the letter, in addition to the Maryland tracks and Philadelphia Park, were Atlantic City, Colonial Downs, Delaware Park, Garden State Park, Meadowlands, Monmouth Park and Penn National.

Hal Handel, chief executive officer of Philadelphia Park, said he hopes to meet with Smith next week and settle the matter. Absent a resolution, the track could drop out of the NTRA, he said.

He said he is concerned that his telephone betting customers won't be able to bet on races run at tracks signing exclusive contracts with TVG. His company is also launching a competing service, The Racing Network, which will broadcast races to fans with specialized satellite dishes.

TVG president Mark Wilson said, "The bottom line in all this is there are some folks out there, especially in the mid-Atlantic, that do not want TVG to be a competitor."

Officials with Pimlico and Laurel did not respond to requests to comment. But the tracks are charter members of TVG's roster of participating racetracks and in the past two weeks formalized their exclusive agreement with TVG, Wilson said.

The Maryland tracks have also struck a deal to allow their races to be web cast on personal computers through Youbet.com. That arrangement will have to cease when TVG begins broadcasting in the state, Wilson said. TVG hopes to offer free web casts of races by the end of the year.

TVG will allow tracks to sign on as non-exclusive "affiliates," meaning their races could still appear on the channel as well as other outlets, but they would get less TVG air time and a reduced share of the wagers. Smith said he thinks some tracks in the mid-Atlantic may opt for that route, and still stay within the NTRA family.

He hopes to meet with the concerned track owners next week. "Overall, I'm confident that the vast majority of the NTRA membership will remain intact," he said.

Alan Foreman, a Maryland attorney and NTRA founder, supports the TVG plan but said the group may reconsider the racing hub. He believes the dispute will strengthen the organization in the long run and be remembered as a defining moment for Smith.

"He feels very strongly about this and is willing to risk his tenure to move forward," said Foreman.

Pub Date: 5/08/99

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