Phone, Internet Wagers OKd

The California Horse Racing Board on Thursday approved licenses for two companies to begin taking bets by phone and over the Internet, surprising many industry leaders who had been skeptical that phone betting would be in place this soon.

The seven-member board, meeting before a standing-room only crowd in Monrovia, ratified the action of Gov. Gray Davis, who signed the bill into law last summer, making the system legal Jan.1.

Officials from Magna Entertainment Corp., which owns Santa Anita, said that they would begin opening accounts for bettors on Saturday, and Mark Wilson, president of the Television Games Network (TVG), said that customers opening accounts today would be able to bet the quarter horses from Los Alamitos Race Course tonight.

One other application was temporarily turned down and a fourth application was withdrawn.

The license for Frank Stronach’s Magna company, which will be known as XpressBet, is for two years, whereas the TVG license runs through the end of this year. Magna doesn’t have a plan in place to televise the races into the homes, while TVG’s coverage of races is already seen in about 700,000 homes in California, something that gave board members pause. They want to study the extent of cannibalization--the erosion of on-track attendance--before they extend the TVG license.

For many, phone betting is seen as the last gasp for racing, a sport that hit upon the hardest of hard times in the 1990s and has continued to battle uphill against casino gambling, offshore bookmakers, other sports and an aging fan base.

“This could be the start of a new era in California racing,” Wilson said. “What is racing, 13th or 14th in popularity among all sports? Maybe this will bring the game back to the status it had years ago.”

Alan Landsburg, chairman of the racing board, would like to think that phone betting, combined with expanded coverage of the sport on television, will broaden the fan base. New York City’s phone-betting network, introduced in 1970, was a red-ink proposition until 1995, when telecasts of races into the home helped turn off-track betting into a billion-dollar business.

But Landsburg, a horse owner and successful TV producer-director, is not dreaming blindly.

“Some are calling [phone betting] an absolute necessity for our survival,” he said. “Racing has a history of having white knights ride into these meetings. I think we should move cautiously, because I’ve seen too many tarnished white knights. ... Maybe we’re planting a very small seed that will grow into something.”

Having said that, Landsburg joined fellow commissioner William Bianco in voting against the Magna license application, preferring to delay approval until its application contained more specifics about developing new fans. But Landsburg and Bianco were outvoted by board members Roger Licht, Sheryl Granzella, Marie Moretti, John Sperry and John Harris, who were less concerned that Magna’s TV coverage of California races is still theoretical.

“We’re going to be as aggressive as possible in moving forward with our program,” said Jim McAlpine, president of Magna Entertainment. “The fact that we’ve spent $300 million on our California tracks in the last three years says that we’re committed to racing. This is not about recycling the fans we have, it’s about growing the business.”

The trainers’ group and influential owner-breeders such as Marty Wygod and Gary Biszantz also opposed Magna’s license approval, but the application of TVG, which is a subsidiary of the monolithic Gemstar-TV Guide International Inc., sailed through via a 7-0 vote.

“Television is the way to popularize racing, not the Internet,” Biszantz said.

For almost a year, Magna and TVG talked about joining forces, but then negotiations broke off late last year, because, McAlpine said, TVG insisted on an exclusivity clause. As a result, phone betting will begin in California with horseplayers required to maintain separate accounts, depending on which track they want to play. The Stronach tracks--Santa Anita, Golden Gate Fields and Bay Meadows--will not be carried by TVG, and the races from Hollywood Park, which is owned by Churchill Downs Inc., a Stronach rival, will not be available to Magna account-holders.

“Multiple licenses will still serve California well,” said Jack Liebau, president of Magna’s three California tracks. “Competition should be good for everybody.”

One group that appears pleased to co-exist with Magna and TVG is the Thoroughbred Owners of California (TOC). It was imperative that Magna and TVG have signed contracts with TOC--to insure how much of the betting handle would be funneled into purse money--before the racing board could consider their applications. John Van de Kamp, president of the TOC, said that the owners’ share of phone betting will increase dramatically in several areas.

McAlpine said that starting Saturday, bettors with phone accounts would be able to play races from 40 tracks, including the Magna-owned Santa Anita, Golden Gate and Gulfstream Park in South Florida.

TVG, while waiting for the Hollywood Park season to start in April, will step up its coverage of Los Alamitos. The network, which used to shut off its coverage of the Orange County track at 9:30 p.m., will now carry full cards, and it also plans to install a permanent studio for its hosts at the track.