More bad news for Magna

April 29, 2008 7:00 PM
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by Ray Poirier | More bad news for Magna Entertainment Corp. (MECA): the Oregon Racing Commission has reversed itself again and has branded "Instant Racing" machines as illegal.

The "Instant Racing" machines permit fans to wager on previously run races, although the actual results have been shrouded technologically so that they cannot be known in advance. Also, the wagers are processed through a standard totalizator terminal just like those on live races.

To Magna Entertainment executives, the machines appeared to be a natural for a location such as Portland Meadows racetrack, which for years has had trouble attracting enough fans to remain fiscally viable.

Originally, Oregon Racing Commission members looked kindly on the wagering devices. In 2003, upon receiving advice from the state’s attorney general, the ORC authorized the installation of the "Instant Racing" machines at the state’s racetracks.

Three years later, Magna Entertainment applied for approval of the machines at Portland Meadows. The request was approved. That’s when Magna Entertainment went forward with the necessary renovations at the track and with the purchase of the machines.

But on Sept. 20, 2007, the ORC announced it had received further advice from the attorney general saying the machines were illegal and reversed its previous decision, thus leaving MECA holding the bag for its financial outlay at Portland Meadows.

After a rehearing, held at Magna’s request, the ORC made final its decision to ban the "Instant Racing" machines.

The company is now considering all of its legal options,

The financial burden comes at a time when the company has been unable to turn a profit and has seen its stock price fall to the $0.32 per share level.