Saturday, April 28, 2012

Montana Horse Racing Continued Trouble (Part 1 of 2)

As discussed in a January 2012 post, horse racing in Montana is in very dire straits.  Due to mismanagement by the Board of Horse Racing, the Board ran up an operating deficit somewhere in the $500,000 to $600,000 range, depending on the current state of the financial audit.  Simulcast operations have been shut down since the end of last year.  Multiple board members have been replaced, and both the Board's Executive Secretary and legal counsel have been released.  Those are positive moves, but are these moves too late?  Possibly.

There are those that are still attempting to revive things and repair the damage.  A former simulcast outlet is attempting to restart operations, but is having trouble due to previous unpaid bills.  Tracks that are owed money by the Board of Horse Racing aren't willing to send signals to the new simulcast operation until they are paid, and in some cases are demanding upfront deposits to ensure they maintain a positive account balance with regard to Montana.

A story in the Missoulian describes the situation.  The current board chairman is quoted that he was informed that Churchill Downs "don't trust Montana at at all" as they declined to allow signals to Montana for the Kentucky Derby.  Similar rejections were mentioned in the article with regard to carrying the Belmont Stakes.

The Triple Crown races are some of the biggest betting days for racing each year, so missing out on those will have a material impact on any full-year measure of handle, assuming simulcast operations in Montana ever restart.  A more recent story in the Montana Watchdog confirms the loss of the Kentucky Derby this year to any revived Montana simulcast.  This does not mean that Montanans can't wager on the Derby, as they can use previously licensed Advance Deposit Wagering (ADW) outlets and wager online.  There just won't be the ability for off track betting (OTB) sites to have wagering.

The existence of the ADW option is a problem for simulcast, even if they could restart operations.  Why would a person travel to an OTB to place a wager if they can have an equal or greater amount of tracks/races to choose from with an ADW and wager online from home?  The OTB has to provide an experience that is superior or an experience that can only be had at the OTB.  Limiting the experience to horse and dog racing wagers isn't going to do the trick.  I find it unlikely that even if simulcast is revived, that the wagering handle will amount to very much.  Examining the minutes of previous board meetings, simulcast was losing customers to ADW competition.

To help the Board of Horse Racing retire its debt and to provide funds for its operation as well as support live racing meets in the state, they're going to need much more money than is being provided by its only remaining revenue streams - ADW and the Lottery-run fantasy sports game.  The revenues from those sources may not even be enough to meet their annual debt repayment plan.  Where is the Board going to get the money needed to pay the deposits now required to allow simulcast to restart operations and cover their initial startup costs?  We're not even thinking about where the money is going to come from to support live race meets.  Too much debt, paltry current revenue and a simulcast operation that won't provide a superior alternative to existing ADWs is a bad combination.

With regard to the Lottery-run fantasy game, there is a danger.  That danger was highlighted by the Audit Division of the Montana Legislature.  Their finding was that the fantasy sports game as currently run was outside of statute, thereby illegal.  Given that finding, it could be possible that bettors that lost money playing that game could sue to get their money back.  If so, then the revenues counted on to pay back debts may be in jeopardy.  The post on that audit can be found here.

I don't see Montana horse racing digging out of this mess if current efforts continue.  Is there another potential path forward?  That possibility will be discussed in Part 2 of this post, which can be viewed here.


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5 comments:

Anonymous said...

Do you have a play money site up and running that defines your sports pari mutual patent in a working machinery sense? Where can I play money bet my fantasy sports on a pari mutual platform? Is yours in development or bata test?

Where is it?

Assuming that "There are two issues - the game authorized under HB 616 is covered by patent ..."

Since the State of Montana is in violation of your patent are you suing for infringement?

Any litigation funders out there?

KWBKK

YouGaming Inc said...

We won't answer all of these questions publicly due to the sensitive nature.

That being said, a skill game website is in development and should be available soon. When available, it will be announced on this blog, among other methods.

Thanks for the interest!

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