Magna drawing heat over account wagering

Using races as leverage, owner of Laurel, Pimlico has some bettors furious

Horse Racing

February 04, 2004|By Tom Keyser | Tom Keyser,SUN STAFF

Bettors considered it a great leap forward, and the horse racing industry considered it the next source for growth. But now, the promising world of telephone and Internet wagering has become racing's latest battleground.

At the center of combat is Magna Entertainment Corp., majority owner of Pimlico and Laurel Park. Based in Canada, Magna owns 12 other tracks and a 24-hour television network devoted to racing and a betting service for account wagering.

It's called account wagering because bettors establish an account with a company and then bet on races by drawing down the account via the telephone and Internet.

In the past six weeks, Magna has pulled its tracks' races from most competing account-wagering systems and prohibited them from accepting bets on races from Magna tracks.

Bettors have been forced to sign up with Magna's Xpress- Bet, its wagering system, and HorseRacing TV, its TV network, if they want to continue betting and watching races in their living rooms from Laurel and tracks such as Gulfstream Park in Florida and Santa Anita Park in California.

The result has been an outcry and a movement to boycott betting on races from Magna tracks. A gambler in California who started a Web site, www.boycottmagna.com, has attracted more than 500 signatures on a boycott roster, and the angry bettors seem to be making an impact.

Betting from off-track sources has decreased more than 10 percent at Gulfstream and Santa Anita, the premier winter meets that attract the best horses and usually the most bettors. Because of betting declines, Santa Anita on Saturday slashed purses, the money paid to the owners of top-finishing horses.

At Laurel, the impact is unclear. Overall betting is down slightly for the year, but that could be the result of bad weather. At the same time, betting with some of XpressBet's competitors has soared.

Caught in the middle of this battle for bettors are the bettors themselves. Since account wagering began on a limited basis in the 1970s and started reaching beyond the hard-core gambler in the late 1990s, no single system has offered all tracks.

Bettors could watch and wager on Churchill Downs, home of the Kentucky Derby, on certain systems, but they would have to change systems to view and bet on races from Pimlico, home of the Preakness. Now, the maze-like world of account wagering has become more perplexing.

"We frustrate our fans," said Alan Foreman, a Baltimore lawyer active in various racing organizations. "As an industry we're suffering as a result of this battle."

Bettors must set up accounts with multiple companies if they want to see and wager on races at various tracks. For some systems, they need a satellite dish. For others, they need to live in a county whose cable company offers a horse-racing channel.

For still others, all they need is a computer and Internet access. This is complicated by the fact that laws governing account wagering differ from state to state.

"It's pretty nightmarish if you're a bettor," said Chris Scherf, executive vice president of Thoroughbred Racing Associations, a trade group of 43 North American tracks. "It's a little bit like, if it's Tuesday, it must be Belgium."

Scherf and others said actions like Magna's were inevitable in the highly competitive, fast-growing business of account wagering. An estimated two dozen companies in the United States and numerous others in the Caribbean legally accept bets on horse races.

Competition is intense for what is the fastest-growing segment of horse-race betting. Of the $15.2 billion wagered last year on racing in North America, 10 percent to 15 percent was bet through account-wagering systems, said Greg Avioli, deputy commissioner of the National Thoroughbred Racing Association, the sport's so-called league office.

While overall betting on racing is stagnant, account wagering is growing about 20 percent per year, he said.

Ron Luniewski, president of XpressBet, declined to discuss the size of its customer base or its growth. All he would say was: "Business is very good."

In regard to Magna's aggressive tactics, he replied, "We didn't start this." He was referring to the exclusive agreements that Television Games Network has with racetracks.

Although Magna's moves struck nearly every account-wagering firm, they were aimed at TVG, the Los Angeles-based television channel and betting system. It broadcasts races from 60 thoroughbred and harness tracks around the country, including Pimlico and Laurel Park, and reaches 17 million households in all 50 states.

Because of state laws and other regulations, it accepts bets from residents in only 12 states, Maryland being one.

TVG is available in 300,000 homes in Maryland by cable - Comcast in eight counties and Baltimore - or satellite dish. Customers watch races on TV, usually six to eight per hour, and, if they have a TVG betting account, place bets by telephone or computer.

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