CHRB applies pressure in wagering dispute

Updated: November 19, 2008, 9:31 PM ET
By Matt Hegarty | Daily Racing Form

The California Horse Racing Board on Tuesday raised the stakes for account-wagering companies by threatening to let their licenses expire at the end of the year if the companies do not reach deals by then to allow bettors nationwide to wager on California races.

The CHRB's threat - which would prohibit the companies from taking any wagers in California after the licenses expire on Dec. 31 - is the latest development in a year-long dispute between the account-wagering companies and local horsemen's groups. The dispute has resulted in widespread blackouts of signals on the platforms operated by the four national account-wagering companies: Television Games Network, Twinspires.com, XpressBet, and Youbet.com.

The signal from Hollywood Park has been blacked out on the four platforms outside of California since the track's meet started three weeks ago. The state's horsemen's organization, Thoroughbred Owners of California, has blocked the signal from being distributed, citing its concern over the amount of money returned to purses from betting through the platforms.

Richard Shapiro, chairman of the CHRB, said Wednesday that the board would allow the licenses to expire if horsemen and account-wagering companies did not come to an agreement allowing bettors to wager on California races. He said that the CHRB was "fed up with the constant problems" that have surrounded account wagering in the state.

"I'm not finger-pointing," Shapiro said. "I'm not blaming one company or one group. But we are not going to allow this to happen anymore. This needs to be resolved. Why in the hell should we go through the licensing process when the [companies and horsemen] themselves can't figure out a way to maximize the benefit of account wagering?"

Representatives of three groups were scheduled to meet Wednesday afternoon: the TOC; a national horsemen's simulcast-rights company called Thoroughbred Horsemen's Group; and TrackNet, a simulcast-marketing partnership owned by Magna Entertainment Corp. and Churchill Downs Inc. The talks were part of ongoing negotiations to reach a deal that would allow the account-wagering platforms operated by Churchill and Magna to offer wagering on a broad number of signals. Those negotiations started nearly two weeks ago, and officials for both sides have said that a deal is not imminent.

"We're all doing our best," said Scott Daruty, president of TrackNet. "I think there are concessions being made on both sides. But I don't think we're close to a deal yet."

Magna owns XpressBet, whereas Churchill owns Twinspires.com, a company formed last year and later merged with two other account-wagering companies that Churchill purchased.

Jack Liebau, president of the company that owns Hollywood Park and also the chairman of Youbet.com, was to sit in on the Wednesday meeting, but TOC officials stressed that any deal with TrackNet is not being pursued to address the Hollywood situation specifically.

"In trying to reach a resolution, the TOC has a say on what rates would be acceptable to us for all the California tracks," said Drew Couto, president of the TOC. "This [deal] won't just solve Hollywood Park, it will solve California for at least one year."

Left out of the negotiations so far have been Youbet.com and Television Games Network, the dominant account-wagering company in the United States. Horsemen's groups are clearly using their leverage to block signals controlled by TrackNet's co-owners to negotiate the best terms possible on a deal for purse revenues in the hope that Youbet.com and TVG will face prolonged blackouts if they do not accept an identical or similar deal.