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 February 1, 1998

Horse racing network bets on interactive TV

BROOMFIELD — A fledgling telecommunications company here is staking its bet on the back of a horse, one executive says.

Television Games Network plans to have an interactive 24-hour horse racing channel on the air on Nov. 1. Viewers with a special receiver made by the company can pay $5.95 per month to bet on live horse racing from home — with the click of a remote control button, according to Tom Aronson, vice president of business affairs at Television Games Network.

“We are the only ones in the country with really what we’re talking about here is new media,” Aronson said. “We are the only ones planning to put up an international network. If you see the group of race tracks committed to this project, this is essentially like locking up the Yankees, the Dodgers and the Colorado Rockies into a major package. We have absolute premium content.”

Other companies are at least two years behind TVG in terms of capital and business alliances, according to a company statement. Officials from cable industry giant TCI Colorado, based in Englewood, did not return calls for comment about the young upstart.

TCI Colorado has been in the news recently for announcing alliances with Sun Microsystems and other computer companies expected to create some sort of marriage between the cable industry and Internet use.

Television Games Network already has tested its concept in Louisville, Ky., with great success, Aronson said. A 1995 test of 1,200 households in Louisville, home to the famous Churchill Downs race track, found viewers making about 200 “transactions” per month using their remote control devices, Aronson said. A “transaction” was counted any time a viewer interacted with the racing program by remote control.

The average customer in the test was spending about $250 to $350 per month, he said.

“Louisville is a unique market. It’s a patriotic duty to make a bet in Louisville,” Aronson said, laughing. “We don’t expect the rest of the country to look or behave like Louisville, Ky. But even if the rest of the country only behaves 25 percent of Louisville, we’re going to have a very good business.”

Investors appear to agree with Aronson’s assessment. Ventures in Communications, based in the Chicago area, has funded the project to the tune of $20 million to date and has committed a total of $30 million to the project, said Jeff Hohl, vice president of the investment company. Other investors include Founders Circle (horse racetracks), G&M Interactive (gaming and wagering), United Video Satellite Group (cable and satellite), National Pacific Fund (multimedia programming technology) and Jonathan Goodson (entertainment).

“We see this as a very interesting and high-growth sector of the market that has the opportunity to produce attractive returns to investors,” Hohl said. “It’s got very compelling service that has a clear demand from consumers, a proven market demand; the company has solid management and proven technology.”

Bettors in eight states where telephone betting is legal (Colorado is not one of them) will be able to subscribe to the network by the month to watch jockeys sweat as the horses round the final turn. Viewers in other states will be able to tune in, depending on what cable company or satellite system they use, but will not be allowed to bet.

Television Games Network was founded in a Tulsa, Okla., business incubator as ODS Systems in 1993. President Mark Brenner previously was chief operating officer of United Video Satellite Group’s interactive television division, which created some of the first interactive television products in sports and weather guides.

The company moved to Interlocken business park in Broomfield in 1997 to be close to the burgeoning telecommunications industry here and to take advantage of the area’s reputation for highly qualified workers. About 50 people currently work in the Broomfield office, a number that’s expected to jump to 150 in the coming months, Aronson said.

“As the company started to flex some national muscles, it was clear it needed to be closer to a center of business and technology, and this area fit the bill beautifully,” Aronson said. “We will have relationships with a lot of cable companies nationally, cable and satellite, and they’re right in our back yard.”

The system works similar to other “interactive” TV systems. For example, when a TV viewer with a satellite dish orders a movie, the actual product is carried over a telephone line, Aronson said.

With the betting system created by TVG, the wager also is carried by telephone. Test subscribers in Louisville received a set-top box that works like a cable converter, and a “smart card” with a personal identification number. The “smart card” had to be inserted into the box to make a transaction. Only credit card holders were allowed to use the system. In places where TVG was not able to install a set-top box, viewers placed wagers by telephone, Aronson said.

Internet transactions, which have been hyped for the last couple of years by the computer and telecommunications industries, are not seen as secure enough to meet states’ regulatory requirements on betting, Aronson said.

“Our issue is, wagering is a state-regulated business, and you can’t just hope that the money goes where it belongs, you have to make sure it goes where it belongs,” Aronson said. “I don’t know of any state wagering agency that would approve wagering over the Internet right now.”

T VG promises real-time track odds, weather conditions, scratches, equipment and jockey changes, handicapping data and results within 15 seconds of the “live” posting. States where the wagering is legal include Connecticut, Maryland, Nevada, New York, Ohio, Pennsylvania, Kentucky and Oregon.

BROOMFIELD — A fledgling telecommunications company here is staking its bet on the back of a horse, one executive says.

Television Games Network plans to have an interactive 24-hour horse racing channel on the air on Nov. 1. Viewers with a special receiver made by the company can pay $5.95 per month to bet on live horse racing from home — with the click of a remote control button, according to Tom Aronson, vice president of business affairs at Television Games Network.

“We are the only ones in the country with…

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