Birmingham dog track serves as hub for offshore gambling

Tuesday, March 7, 2000 | 9:31 a.m.

Racing and Gaming Services Ltd., based in the tiny nation of Saint Christopher and Nevis, contracts with the Birmingham Race Course to provide its computer operations. Its Internet site describes the company as "one of the premier online betting sites available," The Birmingham News reported in its Sunday edition.

The Birmingham Racing Commission approved the Birmingham dog track operating as a hub, or processing center, for other betting operations, including RGS. But commission executive secretary Claude Williams said the commission doesn't keep watch over the money because it is not being bet from Birmingham and is not subject to state and local wagering taxes.

"It doesn't affect us one way or the other," he said.

Rick Heartsill, a spokesman for the Birmingham track, said the relationship with RGS is very common in the racing industry.

"In recent years, live racing has become a financial loser for the industry and it is only because of simulcasting and data processing that many race courses remain open. Because of our technology in place, in the future we would like to increase our data processing work for other tracks which will create or protect many jobs that otherwise might be lost in Birmingham and elsewhere."

It's unclear what the Birmingham track earns from its hub business because it doesn't have to report those figures publicly.

The Birmingham track is bringing in the hub revenue at the same time it and the three other dog tracks in Alabama are pushing legislation that would let them add video gambling, provided voters in the areas with the tracks approve the games in a public vote.

Industry officials said a hub typically acts as an electronic conduit between the bettor and the track where the race takes place. The client uses a phone or the Internet to place a bet with the service. Then the bet is transferred electronically through the hub to the track where the race is occurring.

If the client wins, his winnings are transferred from the track back through the hub to his account. If he loses, the money is divided among the winners and the track.

Bryan Krantz, president and general manager of the Fair Grounds horse track in New Orleans, said his track first noticed a surge of bets coming through the Birmingham Race Course from RGS in late 1998. In the first 23 days of the 1989-99 racing season, Birmingham handled more than $2.2 million worth of bets on Fair Ground races. That was a jump of more than $1.4 million from the same period a year earlier, Krantz said.

Bill Nader, director of broadcast communications for the New York Racing Association, said his three horse tracks had $27 million in wagers that came through Birmingham in 1999, including wagers from RGS.

He said tracks such as Birmingham that act as hubs for other tracks and for offshore Internet gambling normally collect a fee for processing wagers. He said about 65 tracks serve as hubs for races conducted at his three tracks, which include Aqueduct and Belmont Park.

Birmingham also serves as a hub for the Tucson Greyhound Park in Arizona. Steve Pedigo, director of simulcasting at Tucson, said the track pays a sliding percentage based on the wagers Birmingham handles for the Arizona track.