Frank Stronach's picture of dominating the horseracing market is starting to get clearer with his Magna
Entertainment Corp.'s (MEC) acquisition of U.K.-based Ladbroke Racing Group's Pennsylvania account wagering operations, The Meadows harness track, four off-track betting facilities and an interest in the Racing Network.
The entire deal is valued at $53 million. Half of the purchase price will come from cash with another
one-quarter coming from stocks and the last quarter from a promissory note.
MEC is a growing racetrack company run by Stronach. The centerpiece of the deal, Ladbroke's Call-A-Bet account wagering system, will help MEC further strengthen its position in the burgeoning market.
"The acquisition of the Call-A-Bet account wagering system, together with Ladbroke's other Pennsylvania horse racing operations, is an important step in MEC's strategic plan of building the premier account wagering business in the country," said Stronach in a statement given to IGN.
In addition to buying the current account wagering system, Magna will venture into the harness racing arena. It now owns eight racetracks representing all U.S. time zones. Those eight tracks accounted for 26 percent of all pari-mutuel wagering in the U.S. last year.
In his statement, Stronach said it was smart business to buy an existing account wagering program instead of trying to develop and create an original one.
"By acquiring the existing Call-A-Bet system, which already has a profitable operating history, MEC will significantly advance its electronic media strategy and realize an immediate improvement in its earnings per share," he said.
It isn't publicly known how many accounts the Call-A-Bet system has, but it is the account wagering service partnering with Youbet.com, a struggling on-line wagering company.
The addition of Ladbroke's assets and a portion of the Racing Network provides some insight into Stronach's strategy for Magna and puts him in direct competition with the Television Games Network, a strategic partner of the National Thoroughbred Racing Association.
Stronach is withdrawing his racetracks from the NTRA, citing differences over governance and other issues, including the relationship between the NTRA and TVG. He has invited NTRA officials and others throughout the industry to attend a forum at Gulfstream Park on Jan. 14 to discuss his concerns with the
NTRA.
The deal will become final in the first quarter of 2001, subject to state regulatory approval. Ladbrokes is Hilton Inc.'s gaming division, and the Ladbroke Betting and Gaming division is one of the world's largest
commercial off-track betting and gaming organizations.