It’s a Chance to Remain on Track and at Home

The most important racing news in this city isn’t being made at Churchill Downs. It’s happening in the living rooms of people such as Tony Finley.

When Finley tunes his television to Channel 57, he can see live races and wagering information from all of the tracks that Churchill simulcasts. If he wants to place a bet, he inserts a plastic “smart card” into what looks like a second cable box by the TV; then he switches to Channel 56, where an on-screen menu lets him choose the race, amount and type of wager. He indicates his choices with a remote control device and, instantly, the wager is transmitted to the Kentucky off-track betting system.

“It’s great,” Finley said. “It’s like a big kid’s video game.” Finley always has been a low-key racing fan who goes to the track about once a month. But since this experimental betting device has been in his home, he uses it at least once a week.

Most of the 300 subscribers in the first American trial of interactive wagering have responded enthusiastically and increased their normal levels of betting. The promoters of this system believe it can revolutionize and revive the sagging thoroughbred racing industry. But others worry that the innovation would cannibalize the sport’s business by allowing regular customers to stay at home instead of going to the track.

Mark Brenner, the brains behind the system, started trying to develop applications for interactive technology while he was working for United Video, a far-reaching media company. United Video provides the “Prevue Guide” that appears on most cable systems, and Brenner devised an interactive system that allowed a viewer to choose a program and see a full description of it. But this simply wasn’t interesting enough to spur viewers to learn a new technology.

What he needed, Brenner decided, was the right subject matter. He concluded: “Horse racing has an existing, exciting video content. It has a base of customers who are under-served. This was the perfect application for interactive TV.”

United Video formed a company, On Demand Services (ODS), with Brenner at its head, to develop the new technology. The Tulsa-based ODS also is backed by TCI, the country’s largest cable system, as well as a heavyweight venture-capital group. With Churchill Downs’ cooperation, the company launched a test of interactive betting to 300 Louisville customers in September. The response of those customers has been scrutinized by consultant Tom Aronson of Alexandria, Va., who has been stunned and elated by the results.

For much of his career in the racing business, Aronson has conducted “focus groups” of racetrack customers, asking their opinions of racetracks’ operations. He is accustomed to horseplayers’ constant dissatisfaction and disgruntlement. But among the test group in Louisville, he marveled: “People were falling over themselves to say, “This is great!’ It’s exactly what they want from horse racing.” Betting statistics reflected their enthusiasm. People characterized as infrequent racegoers were using the system 2.3 times per week, and betting an average of $111 per session.

Aronson concluded: “The good news is that the demand is still out there; there’s a large group of disenchanted or disenfranchised bettors. The bad news is that we can’t satisfy this demand at the tracks or at OTBs. I’m convinced that interactive betting is racing’s future.”

Yet the majority of people in the racing industry will remain highly skeptical, because a customer who stays at home to bet won’t be spending money for admissions, parking, programs and concessions at the track. Churchill Downs President Tom Meeker is one of the most progressive executives in the game, and he authorized his track’s role in this experiment. But he believes that tracks must proceed cautiously and develop new gambling products before they venture into the home market. The average viewer, with no familiarity in racing, is certain to be bewildered by odds boards, exacta matrixes and all the complexities of the sport. “We need to think about products for the novices,” Meeker said.

As for simply aiming the tracks’ existing product at existing fans, Meeker said, “You would be cannibalizing our operations and I don’t think that would be good.”

Meeker, however, is running one of the few tracks whose live business remains robust. Attendance at most U.S. tracks has dropped to shocking levels. In the past week, tracks such as Hialeah, Philadelphia Park, Garden State and Golden Gate all recorded crowds of less than 3,000. There’s not much left to cannibalize.

For decades, horse racing has opposed innovations out of fear they would cut into the live gate. The sport resisted off-track betting. It didn’t seek wide television exposure. Moreover, it has failed to attract new gamblers while casinos and lotteries have expanded their markets. Now, for once, racing has a chance to make a bold move. If the next major development of the gambling industry is going to occur in the home, racing has the ideal product--an exciting, visually compelling attraction that no interactive slot machine or keno game can match.