United Video Satellite Group Inc. feels like it has won the
UVSG's victory in arbitration means that it has won
the right to start selling a cable service that will allow subscribers to watch and wager
on horse racing from their living rooms.
The Tele-Communications Inc.-controlled company wrestled
control of the interactive horse-race-wagering network from ODS Technologies of Boulder,
Colo., which began the network several years ago, and which had brought in UVSG as a
UVSG won control after a three-judge panel gave up trying
to convince the two sides to settle their differences over who owned the right to
ODS' interactive technology -- the heart of the company.
UVSG, which held a 10 percent stake in what became its
rival, won the right to buy out ODS in a buy-sell bidding process for about $30 million
plus debt, according to sources familiar with the matter.
As of now, only eight states have the telephone-betting
statutes in place that will allow such a service, but backers insisted that the company
could make money even if it is limited to those states. Even in some of those states,
however, regulators must approve new rules before the service can launch.
"This has been conservatively built, with the business
plan allowing [the service] to become profitable if it is able to be fully deployed just
in those eight states," said Tom Aronson, vice president of business affairs for ODS.
The racing industry has begun a concerted lobbying effort
to expand the legality of telephone betting beyond New York, Pennsylvania, Connecticut,
Maryland, Kentucky, Ohio, Oregon and Nevada.
Peter Boylan, chief operating officer of UVSG, who
spearheaded the company's efforts, declined to say how cable operators could profit
from the service. It could work on the home shopping model, with operators getting a piece
of the betting action, or UVSG could compensate them for launching the channel.
"We will put together a compelling proposal for cable
operators," Boylan said.
The company will choose a CEO within 90 days, and it hopes
to launch the service later this year or in early 1999, Boylan said.
Eventually, UVSG wants to place the service on the
OpenCable platform via digital set-tops like General Instrument Corp.'s forthcoming
DCT-5000. To save memory, the racing service would be tightly integrated with set-top
Before operators install those advanced set-tops,
subscribers would be able to place bets through telephone accounts that they set up
through off-track-betting companies or racetracks.
Or UVSG could install "sidecars" on the set-tops
that would allow "impulse" wagering through remote controls, as InterMedia
Partners now offers in Louisville, Ky. A trial of the ODS system there convinced TCI that
in-home wagering could be a lucrative business.
The tracks are hopeful that in-home wagering will attract
new fans to what has become a stagnant business.
The arbitration panel's decision was a bitter blow to
two of ODS' major investors: Vencom Ventures & Communications, a Chicago
venture-capital firm; and ODS Investments, the original group of investors, led by Mark
Brenner, who started the company and who brought in UVSG.