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The race through space: Oaklawn Park gallops to new, bigger market with satellite simulcasting.

THE VERY MENTION OF 1989 is agony for friends of Oaklawn Park.

It was the year the imponderable was pondered: The venerable thoroughbred racetrack in Hot Springs had fallen in the stretch, and a mercy killing seemed imminent. Attendance was low, purses shrunken, and the quality of racing diminished.

The warm promise of the summer ahead was clouded by the threat of failure.

But then, that was before Oaklawn officials discovered merged-pool simulcasting.

The track has come furlongs since then. This racing season, the wagering on outgoing simulcast races could hit $50 million, track officials say.

Oaklawn is back in the race.

Simulcasting came quietly to Hot Springs in the summer of 1990 an unproven, unrefined gimmick instinctively distrusted by track owner and racing purist Charles Cella.

"I am not as optimistic about it as are some people," Cella said in an interview months before that first summer simulcast season.

But simulcasting had supporters in Eric Jackson, Oaklawn general manager, and Chick Lang Jr., administrative director. Cella put aside his apprehension to give it a fighting chance.

There was very little chance things could get worse.

The year 1989 was a cruel one for everyone in the thoroughbred racing business, exacerbating a long-term slide in the sport's popularity.

Track attendance dropped nationally from an average of 8,907 in 1965 to 6,834 in 1989.

Simulcasting was a foreign-sounding term that meant beaming actual, live footage of horse racing from one track to another via satellite. Its use had been strictly limited.

The Triple Crown racetracks had shared footage of the Kentucky Derby, Preakness Stakes and Belmont Stakes in 1981, but the casinos and betting parlors of Las Vegas, Nev., were the only other steady customers.

For its part, Oaklawn had been using a satellite uplink to beam selected races to the Vegas books.

But nobody cared.

A New Experience

"Simulcasting was so new, there was almost no demand," Jackson says.

It was a miserable failure.

For one thing, the racing odds at Vegas did not correspond with the tote board at Oaklawn.

Because of a small delay in the satellite signal, Oaklawn odds could not be accurately transmitted along with the video picture. The result was two separate wagering pools.

To illustrate just how messy it became, imagine that a Vegas player became smitten with a horse going off at 10-1 odds. Knowing he could earn 10 times the amount wagered, he might play out his hunch with a $500 bet to win.

But to his horror, the player's mere $500 would severely impact the small Vegas pool, suddenly leaving him with mediocre 3-1 odds on his once-attractive selection. In effect, the gambler gambled against himself.

These thoughts were rumbling around Jackson's head one day while he was meeting with Little Rock lawyer Herschel Friday, who represents Oaklawn.

Suddenly, they hit upon an idea.

"It was a eureka experience," Jackson recalls.

What if you could electronically link the betting pools between the track in one state and the gamblers in another? Whenever the bettors put down $2, it would almost instantaneously be registered on the track's tote board and the integrity of the odds would be preserved.

It was totally unprecedented.

But why not?

With a season of less than 70 days, Oaklawn was experiencing some serious downtime, right in the middle of summer when Hot Springs tourism is at its best.

"Everybody had anxieties early on," Jackson says. "We had great apprehension before the 1990 simulcasting season.

"Eight of 10 new businesses fail each year in this country. This, as far as we were concerned, was a new business."

Jackson cooked up a groundbreaking interstate simulcasting deal with Arlington International Racecourse in suburban Chicago to receive the track's entire racing card for the summer.

With help from AT&T and the engineers of AMTOTE, a Maryland concern, a ground-line data highway was set up to solve the technical problem.

No one had any answers for the legal questions, however. Would the feed be legal in Illinois?

Well, there were no rules on the books that addressed satellite racing, so the principals forged ahead, escrowing the handle as a legal war chest that would never be used.

Going for Broke

Initial expectations were modest.

Oaklawn officials hoped for a daily handle of $250,000 through the 36-day summer simulcast season. What they got was more than $300,000 daily -- $10.91 million for the summer.

"After that summer, a lot of tracks around the country paid attention to what happened here," Jackson says. "It opened up an entirely new product."

The contract with Arlington, drafted by Herschel Friday, began popping up nearly word-for-word in agreements between many other tracks across the land.

In the winter of 1991, it was time to reveal the other side of the coin.

Oaklawn sold commingled pool simulcasts of its racing card to the Louisiana tracks the Fair Grounds, Jefferson Downs and Louisiana Downs, along with Ak-Sar-Ben in Omaha, Neb. Oaklawn scored with a $19 million handle.

Also that season, the Hot Springs track became one of the first to commingle pools with Las Vegas sports and race books.

A total of $6.3 million was wagered in 1991 on the Oaklawn Handicap alone. A week later, $2.6 million was wagered on the Arkansas Derby.

The track keeps about 5 percent of all wagers made at all remote racing outlets, Jackson says, and uses a similar arrangement for wagers made at Oaklawn for races simulcast from elsewhere.

By this time, Oaklawn was having so much fun with the concept that it shot the works and went to a twin signal in the summer of 1991. It took a full card for the entire 62-day season from Louisiana Downs and also picked up the full program from storied Saratoga in upstate New York on August weekends.

Bingo.

Attendance almost doubled over the previous summer and the newcomers bet more on the average, racking up a handle of $25.2 million.

The ball kept rolling during the live season of 1992, as Oaklawn's feed raked in a $26 million handle.

By this time, the track was sending its signal to Las Vegas, Louisiana, Nebraska, Prairie Meadows in Iowa, Trinity Meadows Raceway in Texas and Monmouth Park in New Jersey.

The Arkansas Derby was shown at 20 outlets that year, attracting $1.92 million in wagers.

The Year of the Horse

But Oaklawn simulcasting truly exploded last summer. In an 82-day summer season held on Fridays, Saturdays and Sundays, the track saw more than 164,000 patrons wager $35.7 million.

During August, Oaklawn had experimented with a triple simulcast feed, at times bringing in races from Louisiana Downs, Arlington and Monmouth.

On some days, the track also carried full racing cards from Churchill Downs in Louisville, Ky., and Keeneland in Lexington, Ky.

On May 2, Kentucky Derby Day, a combined 21 races from Churchill Downs and Louisiana Downs cajoled 5,135 players to wager $1,223,821, breaking Oaklawn records for simulcast handle and attendance.

"At the moment, simulcasting is subsidizing live racing," Jackson says.

And he's not kidding.

Last year's phenomenal summer success churned out more than $2 million to sweeten the purses for this year's upcoming live season, and produced revenues of more than $900,000 for the state.

Improved racing quality is the first and most obvious result.

"There is no other reason for |record-breaking thoroughbred trainer~ Wayne Lukas to bring a racing stable to Oaklawn except for the purses he can win," says Jackson.

The 1993 live racing season that begins Jan. 22 promises to be one of the best in Oaklawn's history.

When the gates open, the fans will quickly learn the impact of simulcasting on Oaklawn.

The increased purses are attracting more quality horses, and many players are excited about the fact that Lil E. Tee, the 1992 Kentucky Derby winner owned by Arkansan W. Cal Partee, will be on the grounds for the entire meet.

Lil E. Tee will be the first winner of a Triple Crown event to be based at Oaklawn for his 4-year-old campaign.

Amid the excitement, Oaklawn will be simulcasting full cards to fully a dozen American tracks, located in Connecticut, New Jersey, Maryland, Delaware, Alabama, Louisiana, Texas, Kansas, Iowa, Nebraska, Minnesota and Colorado.

Counting off-track betting parlors, the Oaklawn feed will go to more than 100 outlets. Oaklawn is just beginning to sell its individual stakes races, and it appears they will be shown at the New York tracks this season.

Oaklawn's aggressive moves in the simulcasting market are being followed and parried almost daily.

All of the major tracks are out there trying to sell their cards, Jackson says.

"More people are out there selling races than there are buying races," he says. "It's very competitive."

As more tracks latch onto the trend, industry analysts wonder where it will all lead.

Interactive Racing

"Simulcasting has been embraced by the industry as the best hope for the future," says Chris Scherf, executive vice president of the Thoroughbred Racing Association.

"What form it will take, no one knows."

Scherf says it is conceivable that bettors soon could receive simulcast feeds through interactive television in their homes.

TRACKING THE MONEY
SUMMER SIMULCASTING SEASON
 1990 1991 1992
ATTENDANCE 20,445 135,174 164,123
HANDLE $10,909,262 $25,200,878 $35,742,100
 (36 DAYS, (62 DAYS, (82 DAYS,
 1 HOST TRACK) 2 HOST TRACKS) 5 HOST TRACKS)
IN-SEASON SIMULCASTING HANDLE
 '91 '92
 $19 MILLION $26 MILLION
1989 AND 1992 COMPARED, LIVE SEASON
 1989 1992
ATTENDANCE 1,010,697 1,155,277
HANDLE $119,611,381 $128,643,388


The industry is being heavily courted, he says, by all of the electronic media services hoping their service will become the technology standard for the delivery of horse races.

"No matter what happens, the future market advantage appears to belong to merged-pool early birds like Oaklawn," Scherf says. "They are in an enviable position."

Simulcasting was not the sole savior of Oaklawn.

The real hero in this story may be Act 12, the Arkansas law signed by Gov. Bill Clinton on opening day of the 1989 season, which reduced the state taxes on wagering from about 5.5 percent to 2.5 percent.

It channeled the released money into a purse and construction fund, and permitted the track to explore simulcasting.

Cella has said he was preparing to close Oaklawn if the act had not passed.

"We have, in my opinion, reinvented Oaklawn Park," Jackson says. "The Oaklawn that existed before 1989 no longer exists."

With simulcasting, Oaklawn has found a golden egg-laying goose that doesn't jeopardize the traditions and integrity of the establishment.

Jackson says legislators and other well-meaning but unenlightened Arkansans often had suggested lengthening the live season to increase annual attendance and boost revenues for the state.

But that would have been the path of doom for Oaklawn, Jackson says. It is the seasonal feeling, he believes, that creates the migratory urge among bettors to seek the neatly landscaped acres of Oaklawn.

This lesson has been painfully swallowed in New York, where there is always a racetrack open except on Tuesdays, Christmas, Easter and Palm Sunday.

The year-round routine has diminished attendance and wagering at the tracks, thanks to a state Legislature bent on extracting every possible dollar from pari-mutuel wagering.

For many, Oaklawn is a pleasant diversion from reality. But Oaklawn itself is a very real part of the Arkansas and Hot Springs economics.

Major Employer

On a big Saturday in the heart of the live racing season, Oaklawn has about 1,200 employees in action, with up to 600 operating pari-mutuel windows.

At a time like this, it takes a wagering handle of $1.25 million-$1.5 million merely to break even, Jackson says.

Even during summer simulcasting, as many as 300 workers are employed by the track. They are among the many Arkansans who are glad to see Oaklawn get up off the ground and race around the turn.

On a personal level, Oaklawn's success is probably especially gratifying to Jackson, because the little side business at home wasn't working out so well.

Jackson's wife and Cella had been in "business" for several years to raise bulldogs. But the breeding pair, dubbed Turnpike and Miss Hugables, have not been interested.

So they remain as pets -- useless but lovable, in Jackson's words. And their sculptured likenesses hide among the organized clutter of Jackson's Oaklawn office, possibly serving as a metaphor for his tenacious business mind.

Also tucked away in the ordered clutter of his paneled office is a mysterious certificate proclaiming Jackson as a member of (double take) the Mathematical Association of America.

What more proof do you need?

Jackson has done the math, and at Oaklawn, everything adds up.
COPYRIGHT 1993 Journal Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

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Author:Haman, John
Publication:Arkansas Business
Date:Jan 18, 1993
Words:2130
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