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Thursday, Mar 28, 2024

Other Firms’ Dispute Bad For Youbet

Other Firms’ Dispute Bad For Youbet By CARLOS MARTINEZ Staff Reporter A struggle between two rival horse racing giants over who will televise California races could make or break upstart online betting firm Youbet.com. Woodland Hills-based Youbet.com is banking on its partner, Television Games Network, which is in a dispute with Magna Entertainment Inc. Magna at one time agreed to allow TVG to televise horse races at the California tracks it owns Santa Anita Park, Golden Gate Fields and Bay Meadows but then backed out of the deal after deciding to try to start its own TV network. Magna, a unit of Canada’s Magna International, owns nine racetracks in California, Michigan, Ohio, Oklahoma, Oregon and Pennsylvania. Los Angeles-based TVG, a unit of Gemstar-TV Guide International Inc., now broadcasts horse racing from 40 tracks in the U.S.”It’s sad that they can’t work things out,” said Ron Luniewski, Youbet’s co-CEO, whose company fortunes have been closely tied to TVG ever since TVG agreed to purchase up to 19 percent of Youbet stock last year. Youbet also carries Magna’s TV feeds to gamblers who place their online bets with it. Today, analysts say Magna’s plans to form its own TV network to televise horse races at its racetracks would be an obstacle to TVG’s plans to become the premier horse racing network in the country. “(TVG) has other racetracks around the country that don’t want to sell the rights to their races, so this isn’t new,” said John Roberts, a media analyst for Roberts Group in New Jersey, “but it makes you wonder if TVG will last.” Roberts said Magna has successful operations at most of the tracks it owns and can easily bankroll a broad TV network for horse racing if it decides to. While TVG officials would not comment, Luniewski said his firm would be adversely impacted if TVG pulls the plug on its operations. Having access to live video horse racing around the country is Youbet’s bread and butter. But Luniewski said that with less content about half of its video feeds come from TVG the fewer the number of online bettors. “In this business, content is king. You have to have it or you lose,” he said. Although the fight between TVG and Magna could get nastier Roberts said Youbet could be forced to choose which feeds to carry so far, Luniewski said, Youbet has remained untouched by the controversy. “But I do feel like I’m caught in the middle of two 500-pound gorillas,” he said. Despite company projections of improved performance, Youbet finished its quarter ended Sept. 30 with a $3.7 million loss on $1.1 million in revenue, compared to a $4 million loss on $1.4 million in revenue a year earlier. Last May, Youbet signed a deal with TVG, which is closely aligned with Churchill Downs Inc., to carry its live broadcasts. The deal gave Youbet’s stock price a temporary boost, only to see it drift back to the $1 range where it now remains. Youbet makes about 5 cents on each dollar wagered, with a subscriber base of about 20,000 people who also pay $30 a month to get live video feeds of horse races, handicapping information and online wagering information. Luniewski, however, said he’s unsure how or when TVG and Magna will settle their differences, but his company is trying to remain neutral. “We have wonderful working relationships with both companies and I would rather not speculate on what will happen, but I know it’s going to have some impact on us,” Luniewski said. The battle between the two companies has spilled on line since both companies show their races on streaming video on the Youbet Web site, but from opposing online betting hubs one in Oregon, the other in Pennsylvania. “Magna doesn’t want us to run TVG feeds in Pennsylvania and TVG doesn’t want us to run Magna’s feeds in Oregon,” Luniewski said. A broader issue with more serious financial implications, however, is the future of telephone betting in California. Legislation allowed the new form of gambling to begin Jan. 1, but the starting date has been postponed until next month in hopes TVG and Magna can resolve their dispute. The phone betting legislation had intended that one entity handle all phone betting in the state, meaning TVG and Magna would have to resolve their differences somehow. John Van De Kamp, president of the Thoroughbred Owners of California, said phone betting will be a reality in the state soon, and likely with more players than initially anticipated. However, he said, if phone bettors need separate accounts for Magna tracks and those with TVG-aligned Churchill Downs tracks, it will likely get off to a slow start. Meanwhile, the infrastructure and equipment Youbet installed in the cavernous Woodland Hills headquarters it moved into last year in anticipation of legalized phone wagering in California sits idle.

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