Washington State Close to Authorizing ADW system

2 March 2004

Washington state legislatures could pass a bill before the end of their current session that would give the green light to an advance-deposit wagering system in the state.

The Washington Senate passed SB 6481 on a vote of 38-10 last month. The bill would amend pari-mutuel wagering laws in Washington and allow for residents to bet on horses by accessing accounts via the telephone or the Internet.

The traditional horseracing industry was split over the bill, but more and more individuals supported it as it made its way through the Senate.

Northwest Racing Associates, operators of one of the state's most well known track, Emerald Downs, said it supports the bill because many state residents are betting online with other advance deposit wagering systems that operate outside of the law.

The Northwest Racing Associates believes a decline in simulcast wagering at Emerald Downs last year can be traced in part to more fans wagering by telephone and computer from their homes without penalty.

If a track like Emerald Downs, and others in the state, were allowed to legally set up an advance deposit wagering system, they could regain some of that lost revenue and maybe even increase handle with betting at tracks outside of Washington.

The Senator that sponsored the bill, Mike Hewitt, said it is easier for Washington to regulate a system of its own rather than to try to keep consumers from wagering with other out-of-state services.

"This is already happening," he said. "All we’re trying to do is get our portion back."

The bill would also increase simulcasting at Emerald Downs and allow two more off-track wagering facilities in King County.

Emerald Downs would also have the authority to negotiate a telephone and online wagering agreement that would force out-of-state providers to give the Washington racing industry a percentage of the money they handle from Washington residents.

The bill is currently in the House of Representatives in Washington and is expected to see action this month. The legislative session ends in late March.

Ron Crockett, the president of Emerald Downs, isn't speculating on how much more revenue could be generated within the state if the bill is passed, mainly because of the uncertainty of the negotiated deal or how many Washington residents will take to advance deposit wagering.

Using past figures through Emerald Down though, Crockett estimates that nearly $13 million was wagered by state punters through other advance deposit wagering systems outside of the state, even though the activity was illegal.

Crockett said he knew of 18 different companies that offered ADW systems to U.S.-based bettors and only one of them, TVG, declined to accept wagers form Washington residents.

TVG executive John Hindman was also leery about speculating what kind of additional revenue could be pumped into the state if the system goes through, but indicated that a similar system established in California more than two years ago has been nothing but positives for the state's coffers.

"There are numerous examples of what it can mean," Hindman said. "I can give you one, and it's colored a bit by the size of the state. But here in California, we just finished our second year of account wagering, and the total revenue that the racetracks and horsemen received from account wagering in Year 2 was about $30 million."

TVG, which televises races on cable and over satellite networks in addition to accepting advance-deposit wagers, returns about half of the takeout -- typically about 20 cents per dollar wagered -- to the state of the account holder, Hindman said.

"Here in California, if somebody is wagering on a race in New York, the majority of the revenue that comes from that wager goes back to California," he said. "We call it the source-market fee. That's an important aspect. It really helps the industry."

Susie Sourwine, Emerald Downs' director of marketing, said account-wagering money the track would receive would be used to enhance the track's live-race purses and help defray track-operating costs.

Hewitt said he expects the bill to pass through the House with similar ease as it did in the Senate. Sen. Marilyn Rasmussen, an ex-officio member of the state racing commission and one of the bill's co-sponsors said there has been some opposition to the basic principles of the bill, but she doesn't anticipate it being enough to keep the bill from passing.

"There are people who say they aren't going to vote for it because it's horse racing or it's gambling," she said. "But as long as we're talking about the horse-racing industry, I think we're OK."

Another element of the bill that could influence how and where horseplayers do their wagering pertains to simulcasting of full cards from out of state at Emerald Downs' satellite outlets.

Customers who wanted to wager on races from tracks such as Santa Anita can do so only at Emerald Downs. With the passage of the bill, multiple full cards would become available at the satellites.

Emerald Downs withheld out-of-state full cards from satellite outlets in the past because it wanted to encourage on-site attendance.

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