Online betting taking business away from tracks

[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.

[The Actuary]

The tracks have been trying to get the family of five to be patrons as long as I can remember-all the while-the bread and butter of the business-the guys who know a little, think they know alot are all betting something else.

[openbox]

competition is good and will always be good for everyone.

[Triplecrown]

the tracks and the states have been extracting money from the horseplayer for so long at such an exorbitant % that they have failed to realize and adjust to the changing marketplace in the following ways... 1) there is tremendous competition for today's gambling dollar. 2) the demographics of the racetrack's clintele is aging, dying off, and not being replaced by enough younger degenerates to keep its market share. 3) the high takeout (and the overall trend to raising the takeout) is counterproductive in the long run to keeping or encouraging the players to stay in action. this is unlikely to change as the states have used racetracks as a cash cow for revenues forever without doing enough to support the tracks or more importantly to support the bettor. the tracks response to these problems is to ask for slot machines thus turning racetracks into racinos. the bulk of this industry is in a downard trend with only simulcasting and slot machines being the lifeblood that keeps many tracks in business. this trend is unlikely to change soon as the states are unlikely to reduce their takeout % and the tracks really don't seem to be able to market their product in a way that encourages long term growth. the tracks and the states feel that competition is their problem. the sad truth is that competition isn't the darth vader in this scenario, the tracks and the states are their own worst enemy.

[victorygallop]

I still give the tracks a majority of my action.

Its getting harder to justify with all the sweet deals floating around.

[Triplecrown]

it's good to support the tracks, the horsemen and the state, however it's about time for them to remember the players who over the years have helped them. or soon they won't have many players left.

[Total Square]

i was speaking with a friend yesterday and his thought was that for the tracks themselves to survive and flourish, they also had to offer the player a better deal...

his thought was to offer reduced on track hold to encourage people to come out to the tracks and play there as opposed to sitting in front of theor pc's