[clevfan]

Online betting taking business away from tracks

Even though it is illegal in Minnesota, Internet wagering is affecting Canterbury Park

BY JIM WELLS
Sept 5
Pioneer Press


An Internet site tried to lure bettors away from Lone Star Park in Grand Prairie, Texas, this summer by flying a plane overhead with a banner that read, "Why bet at the track?"

Online betting is a big factor in declining financial and attendance numbers at the Texas racetrack this summer, according to industry reports.

No similar aircraft have been spotted over Canterbury Park, but the racetrack's management believes online gaming is playing a significant role in a steep decline in simulcast wagering.

Across the nation, racetracks are finding that online betting and phone-account wagering are luring away customers. Online companies, with few labor costs, can offer rebates to customers along with the convenience of wagering from a laptop at home.

Online betting and account-phone wagering are illegal in Minnesota, Texas and many other states. But the practice is difficult to police.

"It's truly illegal,'' said Frank Ball, director of Minnesota's division of alcohol and gambling enforcement. "But there's not much we can do about it. A lot of the (online companies) are outside of our jurisdiction."

Canterbury President Randy Sampson said online betting could affect future purse funds and the length of meets if simulcast wagering continues to decline. Simulcast wagering fell by 15 percent last winter and continues to decline this summer, according to Eric Halstrom, Canterbury's executive director of tele-racing operations. It is down about 12 percent through the live season, Halstrom said.

Declining simulcast revenue could cut into next year's purse funds by as much as $350,000 if the money can't be replaced by increases in other revenue sources, Halstrom said.

"My fear is that we'll end up down about 15 percent overall in simulcast handle,'' he said.

What originally seemed to the track's management as an aberration last winter now appears to be a form of competition with which Canterbury can't compete.

"It's having a significant impact,'' Sampson said. "The main issue from our standpoint is that it's the type of competition that doesn't make any sense, when you have a licensed, regulated entity such as ourselves paying taxes and providing benefits to the horse industry. These other operations can take wagers from home and we can't.''

Bettors can't wager on Canterbury races online, but patrons who play other tracks via simulcast at Canterbury could find it more convenient to wager from home computers.

Ball, Dick Krueger, executive director of the Minnesota Racing Commission, and Darcy Hitesman, chairman of the commission, have all sent letters to youbet.com, an online company, stating that it is illegal to take bets from Minnesotans. The company responded in a letter that Minnesota can't stop an activity that's legal at the federal level.

The racing commission has turned the correspondence over to Minnesota Attorney General Mike Hatch.

"The Department of Justice might catch up with some of these companies if they're set up in the U.S.,'' Krueger said. "But the problem with a lot of them is that they are probably in the Cayman Islands or someplace like that, so they go unregulated.''

Youbet.com is incorporated in Delaware but based in Woodland Hills, Calif. In California, online betting is legal with three Internet companies, including youbet.com. Youbet.com officials did not return phone calls seeking comment.

Jeff Maday, player relations manager at Canterbury, said he has seen a slow attrition of simulcast regulars over the past two years.

Although Canterbury has become more aggressive with an "awards program" to its steady customers, Maday said the attrition has continued. Canterbury's award system offers bonus points for every dollar bet, and the points can be accumulated and exchanged for wagering vouchers, free food or beverage items or prime table spots.

"When I don't see someone for a while I'll ask their friends, and I'm hearing more and more that they've decided to stay home and play,'' Maday said.

In California, Internet betting companies are licensed by the state and some of that money makes it back to racing. But no money is being returned in Minnesota.

"That would be crippling to us in California,'' said Bernie Thurman, a vice president general manager at Bay Meadows in San Mateo.

Online wagering has had a lesser impact at Hawthorne Race Course in suburban Chicago, where a larger fan base exists.

"I don't think we're being affected the way Canterbury is,'' said Lorene Heninger, director of simulcasting. "Our numbers have stayed pretty solid. But it is making an impact overall.''

Industry magazines, such as the Thoroughbred Times, have carried stories over the past several months about the impact of online wagering on racing. Racetracks are finding they are at a disadvantage against such competition.

"Those companies can take wagers from people in their homes and we can't,'' Sampson said.

The issues in Shakopee might only be starting. The card club at Canterbury has been a significant source of income for race purses, but the Internet might become a factor there, too.

"Now people are starting to play poker on the Internet,'' Krueger said.