Off To The Races

A day at the races needn’t include your best hat, a pair of binoculars and a trip to the nearest horse track anymore. The implementation of streaming media has made it possible for horse racing aficionados and bettors alike, to watch their equine picks scurrying around racetracks across the country from the comfort of their PC.

Through horse racing, the online gambling industry has begun to experiment with streaming media. In August, Playboy.com launched streaming capabilities, while the Gaming Factory and technology provider Orad plan to launch such services in the coming months. In addition, www.youbet.com, the leader in the space, has provided streams of races since 1998.

While the streaming of horse racing and other betting events is quite embryonic for most gambling sites, youbet.com has proven the value of streaming horse races. The site streams races from more than 80 racetracks around the country and on an average Saturday or Sunday, youbet.com offers 16 hours of live racing from 38 to 42 racetracks, said Ron Luniewski, executive vice president and chief operating officer of youbet.com in Woodland Hills, Calif. The site offers each track's stream in 28.8 Kbps, 56Kbps and over 100Kbps. "The key product differentiator we have is streaming," he said.

Youbet.com, which facilitated $125 million in wagering in 2000, counts 17,000 subscribers and estimates that more than 80 percent of them access the streamed races.

Betting on horse racing is legal in 42 states and those same rules apply to Internet wagering on horse races, provided the bets are placed from one of those 42 states.

Horse racing is the most logical fit for the online gambling world’s entrée into streaming media since most horse tracks around the country are tied into a closed circuit television network, allowing bettors to view races at other tracks. That network forms the backbone of the streaming infrastructure.

Implementing streaming services costs well into the millions for youbet.com, said Luniewski. To stream the races, a site ties into the network via satellite and then ingests the signal into an MPEG encoder, which transforms the content into audio and video file formats.

Entertainment for Men and Women Alike

Playboy.com is also a leader in the use of streaming media with online wagering. Playboyracingusa.com launched this past August and takes racing bets at 50 racetracks in the U.S. Of those, Playboy’s partner, Penn National Gaming, which owns racetracks and casinos, selects six racetracks a day to stream races from and streams five at 128 Kbps and one at 300 Kbps.

"There is a large correlation between being able to actually view the race and place bets on it," said Paul Kallis, executive vice president and managing director, Playboy Internet Gaming.

There are more than 100 racetracks in the U.S. for thoroughbred racing, according to the National Thoroughbred Racing Association in New York. There are 45 large commercial tracks for harness horse racing in the U.S., according to the United States Trotting Association.

Streaming horse racing was something of a no-brainer for Playboy.com since it brings its powerful brand to the table while Penn provides the streaming infrastructure. Penn already receives the simulcast feeds of other races at the tracks it owns. "Fundamentally, the bettor likes to bet. What the Internet provides is a very easy way to do that," Kallis said.

The Gaming Factory, which offers casino games and sports betting on its sites (www.mr.sportsbook.com and www.playersgalaxy.com), had planned to launch its gambling services in November with streaming media capabilities for horse races to follow at the end of the year, said Shannon Diem, vice president of marketing for the Gaming Factory, based in San Jose, Costa Rica with offices in Palm Beach, Fla.

Diem estimates the final cost for installing a system that will stream races from about half of the tracks around the world that have a closed circuit network will range from $1 million to $3 million. The infrastructure to offer a full complement of streaming services should be in place within 12 months, said Diem.

The Gaming Factory hopes to recoup its investment by sublicensing the gaming software it uses and from the potentially greater market share that streaming services will permit. "We think by adding value and enriched media we feel we can go above and beyond what any sportsbooks offer in attracting an audience. For entertainment value, I think it’s something that will be a standard," he said.

$5 Billion Industry by 2003

Internet expenditures for online gaming in 2000 were about $2.2 billion and should reach $3.5 billion this year, according to a report issued by Christiansen Capital Advisors LLC in Limerick, Maine and the River City Group in St. Charles, Mo, both of which follow the gambling industry. According to a Bear Stearns report, the industry could generate an estimated $5 billion in revenues by 2003.

Technology and software provider Orad is hoping to capture a piece of that pie with its SporTrack software, which has been tested with the Hong Kong Jockey Club. Rather than streaming the actual races, SporTrack streams a live graphical representation of the horses in real time, which can be viewed using a 28.8Kbps or 56Kbps modem, said Noah Meiri, president of Orad. The company is delaying the rollout because of the current economic downturn, but expects to introduce the service sometime next year.

Still, not everyone is convinced that streaming horse racing online will be a big draw. People who go to racetracks aren’t usually early adopters of technology, said T.S. Kelly, principal media analyst with NetRatings in New York. "It’s not really the right audience for streaming. I question whether the horse racing enthusiast is tech-savvy," he said.

The industry would like to attract a new audience, said Sue Schneider, CEO of River City Group. "The racing fan base is dying out. They are looking at this as a way to broaden fan base and attract a younger clientele. Whether it can save the industry is unclear at this point," said Schneider.

It’s true that horse racing has been on the decline since the late ‘60s, acknowledges Luniewski. He believes a new market exists for potential users — one that can be found in the likes of younger, tech-savvy players who may be interested in fantasy sports, like fantasy baseball and football. Youbet.com has marketed its services in the past on such fantasy sports sites.

While horse racing may be the most likely venue for introducing streaming media into online gambling, one Web site has found success by streaming casino games. www.Drho.com offers live Internet broadcasts of casino games from a casino studio in the Caribbean to allow players to play live games against live dealers.