On Track - January 2005

Youbet.com announced last week that it has withdrawn its bid to acquire American Wagering Inc. Youbet announced late in 2004 that it would buy the outstanding and issued shares of the bankrupt company for $12 million. The proposal was contained in a competing reorganization plan and accompanying disclosure statement filed with the United States Bankruptcy Court in Reno, Nevada. The court approved Youbet's settlement agreement with American Wagering, but Youbet opted to withdraw its offer and will pay a one-time charge of $275,000 for expenses incurred in connection with its acquisition efforts. Despite receiving approval from the federal courts, Youbet pulled out because it was clear, according to Youbet CEO Charles Champion, that AWI shareholders wouldn't be satisfied with any Youbet offer. "While we remain fully committed to expanding into ancillary areas of the gaming and wagering industries, we will only pursue these growth opportunities in a prudent manner that benefits Youbet shareholders with the creation of long-term value," Champion said. "Despite the withdrawal of our offer, our focus on leveraging our existing capabilities and infrastructure, particularly in the Nevada market, remains a priority for Youbet."

Scientific Games Ink Deal with TRAXCO

Scientific Games has announced the completion of an agreement with TRAXCO Inc. through which Scientific Games' subsidiary, Autotote Enterprises Inc., will add race book services to its turnkey off-track betting services--a system already used by TRAXO. The five-year agreement is valued at $3 million. TRAXCO recently completed an exclusive franchise agreement with the St. Croix Racing Commission to open a race book and operate the existing track in St. Croix. Autotote will supply OTB services to TRAXCO at the Divi Carina Bay Casino operated by Treasure Bay V.I. Corp and the simulcast center at the Randall "Doc" James Racetrack in Christiansted. Plans call for the development of additional satellite OTB locations in St. Croix. The first race book at the Divi Carina Bay Casino & Resort is scheduled to launch in the first quarter of 2005.

BHB Panel to Look at Funding Issues

The British Horseracing Board has commissioned a four-person panel to explore new means of funding racing. The board is asking the panel to "propose an enforceable and sustainable mechanism" for betting operators to contribute to funding. The BHB planned to replace the current levy system by selling its data rights to the betting industry, but the European Court of Justice ruled in November 2004 that betting companies already have rights to the data. The review group will be chaired by Lord Donoughue and has the full support of the government, the Association of British Bookmakers and the Levy Board.

New Jersey Racing Officials Hope for OTB

Off-track betting in New Jersey isn't that far off, two horseracing officials told a state legislative committee this month. The parent company of Philadelphia Park hopes to open five of its six planned southern New Jersey betting parlors by the end of the year, according to CEO Harold Handel. New Jersey Sports and Exposition Authority VP Dennis Dowd, meanwhile, said the authority hopes to open three of its nine off-track wagering facilities in the northern part of the state during the same time period. The two execs appeared before the Assembly's Tourism and Gaming Committee to update lawmakers on the progress a plan to bring off-track betting to New Jersey. Authorized by voters in the late '90s, the plan is meant to boost the languishing horseracing industry and its affiliated businesses. Betting officials estimate that the off-track betting--combined with new Internet and telephone wagering services--will produce up to $500 million in revenue in New Jersey annually, $25 million of which would be given to the racing industry. New Jersey has no state tax on racing revenues.

Stronach Heir Develops Video Horse Terminal

Andy Stronach the son of racehorse and track owner Frank Stronach, is a step closer to rolling out a line of wagering machines that some say could change the way people wager at race tracks and OTBs. The machines started undergoing testing this month at the Turf Club off-track betting parlor in Fargo, North Dakota. They look like video slot machines, but instead of three bars spinning vertically, the screens show horse icons representing real horses at real tracks all over the world. The devices are connected via the Internet to a database that calculates the best odds and picks the horses for the players. Payments are conducted via cards purchased on site and inserted into the machine. Winnings and losses are recorded onto the cards, which can then be used to redeem cash. Televisions are mounted above the terminals so bettors can watch the races live.

2004 Irish Racing Results

Racing officials in Ireland are delighted with early racing figures for 2004 released this month. A substantial growth in Tote betting, more success for the major festivals, increased sponsorship and significant growth in racehorse ownership highlight statistics showing that the industry is healthy heading into the new year. Attendance figures at the festival meetings were again impressive, with the Galway September Festival drawing 12,500 people and the Tramore August Festival increasing its attendance by 28 percent. Overall attendances fell just short of 2003's record figure of 1.4 million, however, and on-course bookmaker betting declined by 4.6 percent from €183 million to €174.7 million. On-course betting declined by 1.8 percent from 2003 to 2004, while bookmakers experienced a decrease of 4.6 percent. Conversely, off-course shops and the Tote showed increases of 18 percent and 7 percent respectively.

Craven Joins Tote

The U.K. Tote has appointed David Craven to the new position of group commercial director; he is tasked with opening up fresh business and a commercial opportunity as the company moves into privatization. Craven is the first senior appointment made by the Tote since Trevor Beaumont, to whom Craven will report directly, joined from UKbetting as chief executive last autumn. Craven, who began his work with the Tote last week, also comes from Ukbetting, having worked for the online operation as director of business. He additionally served as managing director of Coral Eurobet.

Bookie Loses Case Against Levy Board

A British district judge this week threw out a case brought against the Levy Board by former oncourse bookmaker John Morrill, who claimed that changes to the pitch rules damaged his business. Judge Mitchell, sitting at Bow County Court in London, also ordered Morrill to pay the board's court costs of £37,087 and refused him leave to appeal. If Morrill, who operated his family business mainly on the southern racecourses, wishes to take his case further, he must apply to a circuit judge within 14 days. Morrill brought the claim against the Levy Board and National Joint Pitch Council for a breach of statutory duty, arguing that he lost out unfairly when a massive revamp of the racecourse betting ring was undertaken in October 1998.

SGC Launches GETV Network

Scientific Games Corporation and Greco & Emmi Creative announced the launch of GETV Network, a comprehensive television network with thousands of screens at existing on-track and off-track locations presently up-linked by Scientific Games Racing. GETV coverage spans the United States, Canada and the Caribbean and reaches more than 500,000 racing enthusiasts a day.