Advance Deposit Wagering Doing Well in California

29 March 2002

Any fears that the introduction of account wagering in California would cut into profits in the horse racing industry were temporarily put to rest on Thursday.

The California Horse Racing Board released figures from its three advance deposit wagering licensees during the first 51 days of operation, and results are positive.

The state's three licensees handled nearly $13 million in bets over the Internet and telephone from January 25 to March 17. That figure represents 3.5 percent of the total handle in California during that period.

While the total percentage of bets generated from the AWD system represents only a small portion of the total bets made in the state, figures show that account wagering isn't tapping into an existing customer base for its bettors.

Figures released by the CHRB show that handle of on-track and off-track betting throughout the state is virtually unchanged from last year. Another fear of those in the industry was that the introduction of account wagering in the Golden State would lead to a decrease in attendance at tracks, since bettors would be more likely to bet in the comfort of their own homes. Attendance at California's tracks is down for the early part of 2002, according to the CHRB, but only by a fraction of a percent.

Of the three ADW licensees in California -- Magna Entertainment, TVG and -- Magna was the clear winner in terms of percentage of bets placed.

The company, which operates the XpressBet platform and is the only licensee to accept wagers on thoroughbred races at Santa Anita Park and Golden Gate Fields, handled more than 70 percent of the total business from ADW.

TVG, which accepts wagers on quarter-horse races at Los Alamitos, handled 25 percent., which began its ADW operation a month after the other two and accepts wagers on Los Alamitos, handled just less than 5 percent. In addition to their local tracks and races, all three licensees are allowed to accept wagers on out-of-state races.

The increased handle from the ADW system through March 17 was a blessing not only for the three licensees. The increased betting action produced more than $600,000 for purses, $50,000 for owners and breeders, $600,000 for racetrack commissions and $570,000 for the three ADW operators.

While the CHRB's figures, released at the board's monthly meeting Thursday, went though March 17, XpressBet officials presented the board with figures showing betting action conducted through March 25. XpressBet Vice President Edward Hannah showed figures that all three licensees generated $15.6 million of handle through the ADW system. He also told the board that while handle rose sharply in the first month of operations on the ADW system, action has leveled off the last few weeks.

CHRB Commissioner William Bianco wasn't discouraged by Hannah's news. He noted that most retail sales are flat in the United States, which he feels is more of a factor in the decline than anything else.

As the ADW system approaches its third full month of operation, it is already showing signs of growth.

In order for a licensee to offer the system, it must have agreements with both the track and the local horsemen. Magna, the owner of Santa Anita, Golden Gate and Bay Meadows, has exclusive rights to provide ADW for races at its three facilities. Magna negotiated an agreement with the Thoroughbred Owners of California.

TVG and YouBet must negotiate and sign agreements with Hollywood Park, Del Mar, Fairplex Park, Oak Tree at Santa Anita and horsemen before they can offer exclusive ADW for those racetracks. The Hollywood Park meet opens April 24.

Both parties are currently negotiating agreements and all sides are confident they will be able to move forward once racing action starts at those tracks.

Chris Korby, executive director of the California Authority of Racing Fairs, told the CHRB that his organization is continuing discussions with all three licensed operators to offer ADW on California fair races.

TVG also has reason to feel optimistic about its future betting handle. The company told the board that Adelphia Cable will begin providing TVG Network programming on Monday to its digital customers in many Southern California cities, including Los Angeles, Beverly Hills and Santa Monica.

The network is also sponsoring a Saturday racing show in the Long Beach area that will reach an estimated 5 million homes in Los Angeles.