Pari-mutuel deal could cost millons

Feb 17, 2009 5:10 PM
Staff & Wire Reports |

Racing’s back, but the cost?

Even though Nevada race books last week negotiated a settlement that restored pari-mutuel betting on five blacked-out race tracks, the new deal could cost them millions of dollars a year in higher fees.

Although terms of the settlement weren’t disclosed, a source close to the negotiations said the new contract between the Nevada Pari-Mutuel Association (NPMA) and TrackNet, which represents Churchill Downs Inc. and Magna Entertainment, calls for a half percent increase in the amount of the handle allocated to the race tracks.

The previous contract called for a fee payment of about 3 percent of the pari-mutuel handle. A one-half percent increase would up the ante by about 12 percent. TrackNet reportedly was seeking a 66 percent increase.

Last year, the state’s race books generated about $80.5 million in revenues, most of which came from their share of pari-mutuel wagering. That amount would drop by nearly $10 million under the new contract.

That’s not good news for race books, which have seen revenues slowly decline over the past several years. Since 2005, annual race book revenues have slid by an average of 6.4 percent per year.

Nonetheless, race book operators were happy to get back into the pari-mutuel betting business last week after a 16-day blackout of key race tracks.

John Avello, race and sports director at Wynn Las Vegas, said the new agreement was a "good thing," in that it allowed race book customers "to get back into their normal routines."

The "normal routine" includes betting on five tracks that were blacked out: Santa Anita, Golden Gate, Gulfstream Park, Oaklawn and Laurel.

Several race books took bets on their own, but couldn’t participate in exotic pools such as the Pick Six.

The new contract with TrackNet is a two-year deal, under which Nevada race books will pay for the TrackNet signal on a tiered basis. That means premium tracks, such as Santa Anita, Churchill Downs and Gulfstream, will cost more than other tracks such as Oaklawn, Golden Gate Fields, Laurel, Arlington and Lone Star Park.

Another issue of the negotiations that wasn’t fully resolved was online race betting in Nevada. TrackNet reportedly was concerned that Nevada would institute online race betting, which would compete with TrackNet’s Internet betting services, Twinspires.com and XpressBet.com.

There has been discussion at Nevada’s Gaming Control Board about legalizing in-state, online race wagering, but nothing has been formally proposed.

If Nevada proceeds with such a plan, it would have to be resolved with TrackNet’s online services, which currently aren’t available in Nevada.

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