Article
Reloading the starting gate
An attempt to bring kiosks and ATMs together at horse racing tracks has ended, but some of the parties see a future for this convergence.
February 17, 2002
If there is a segment of the sports and gaming industries where the convergence of kiosks and ATM machines make sense, then it is horse racing. Bettors have an incessant need for betting and handicapping information, making information kiosks relevant. And they cannot make their wagers if they are low on funds, so the ATM is a ubiquitous part of practically all American racetracks.
But the first attempt to merge the complimentary functions of the kiosk and the ATM at the racetrack has pulled up lame. On Jan. 8, TrackPower Inc. (OTCBB:TPWR) announced that its management service agreement with Post Time Technologies Inc. has been terminated.
The two companies spent most of 2001 developing a network that would utilize Post Time's race replay kiosks with ATMs supplied and operated by 4Cash ATM Services Canada Inc., another partner of TrackPower's. But the arrangement resulted in just one ATM being deployed, at standardbred track Elmira Raceway in Elmira, Ontario, Canada. A race replay kiosk was not part of the system, though the long-range plan was to develop machines that offered this distinctly dual functionality.
TrackPower, which also terminated its agreement with 4Cash ATM, is going in a new direction. Post Time will continue to focus on its replay and information kiosks, but is still interested in the convergence of ATMs and kiosks. For now, 4Cash ATM will focus on ATMs, but will not rule anything out.
"We still see the ATM-kiosk combination as a viable business model," said Hardave Gill, Post Time president. "We're currently in contact with several potential ATM partners."
TrackPower chairman and chief executive officer John Simmonds remains on the board of 4Cash ATM's parent company, Pivotal Self Service Technologies Inc., but he said the kiosk sector no longer holds an attraction to him.
"We're completely out of the kiosk business," Simmonds said. "We're leaving it. It certainly wasn't working for us."
The settlement
TrackPower ended its arrangement with both companies - though Simmonds remains on the Pivotal board - granting Post Time two million shares of common stock in lieu of a $180,000 termination fee. TrackPower stock was trading at 13 cents midday on Jan. 9 after beginning the week at eight cents.
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Post Time Technologies Inc. plans to continue deploying race-replay kiosks such as those installed at Keeneland Racecourse in Lexington, Ky. |
In the end, an inability to push beyond Elmira imperiled the arrangement, according to Gill. He said the management agreement between Post Time and TrackPower fell short of expectations because the level of business needed to make the arrangement work was never developed. Gill said Post Time was no longer involved with the ATM at Elmira Raceway.
"From our standpoint, we identified a number of business opportunities for new and current clients," he said. "The ATM partner was slow in providing information. We didn't have a lot of confidence in the ATM partner."
Steve Cussons, 4Cash ATM president and chief executive officer, said his company was obligated to provide equipment and services in the agreement, and believes 4Cash ATM never had a chance to show off its wares.
"That's an opinion that simplifies a complicated arrangement and is an unfair way of evaluating it," Cussons said of Gill's comments. "The opportunities weren't formally introduced to allow us to take advantage of this arrangement."
Planning ahead
Post Time's immediate focus is on kiosk initiatives. Working with partners such as kiosk development company Info Touch Technologies Inc., Post Time will continue developing and expanding its line of racing information kiosks. Post Time and Info Touch in December entered into an agreement to develop a new kiosk that will integrate handicapping information and other racing-related services with Post Time's replay system.
"We've just finished a new Web-based replay application that works with Surfnet," Gill noted, referring to Info Touch's clicks and mortar kiosk commerce system.
Post Time currently has replay kiosks deployed at Keeneland Racecourse in Lexington, Ky., Turfway Park in Florence, Ky., Emerald Downs in Auburn, Wash., and Prairie Meadows Racetrack and Casino in Altoona, Iowa. Gill said the company has reached tentative agreements to place other kiosks, but would not disclose which tracks are involved.
Eventually, Gill would like to see his company develop Web-enabled kiosks and a pay-per-view service for racing and other aspects of the racing industry, such as horse sales. He said the end of the Post Time-TrackPower pact gives his company the needed room to pursue those opportunities.
"It really has an impact on us," he said. "At Post Time we can really get on with business. We still see the ATM-kiosk model as a good model."
A new plan
TrackPower began life in the late 1990s as a satellite-based racing and wagering television network. Subscribers could watch racing from tracks across North America and wager on the races by subscribing to a telephone-account service.
But the company faced strong competition from Television Games Network, a TV Guide-Gemstar International Inc. subsidiary heavily backed by the racing industry, and (since shuttered) The Racing Network, operated by the North American division of British betting company Ladbroke's. TrackPower eventually abandoned the satellite network to focus on the ATM-kiosk concept. In mid-June, Gill was named TrackPower president.
But TrackPower, according to its Web site, finished fiscal year 2001 with a net loss of $6,051,864 on revenue of $96,061. The company's estimated financial status - based on the kiosk-ATM model - sees it ramp up to revenue of nearly $16 million and net income of $3,349,000 in 2004.
The company appears ready to change its focus once again, though it is being vague on the details.
"TrackPower has identified an opportunity in a related field and is pursuing an acquisition that will provide the company with revenues and earnings," TrackPower announced in a news release on the end of the Post Time agreement.
The company signed an agreement to purchase the Internet sports statistics site Sportscalc.com Ltd. in October, but has not specifically disclosed what its future direction is.
The finish line
Simmonds said the kiosk/ATM concept simply did not generate the interest the company had hoped for.
"Certainly from our standpoint it wasn't working," said Simmonds, who would not go into specifics. "We couldn't continue funding it when there wasn't any significant activity.
While TrackPower is taking itself out of the kiosk mix, Cussons did not rule out 4Cash ATM taking another shot at expanding beyond ATM functionality at the track.
"Obviously the terms of our agreement weren't conducive to conducting business," he said. "I wish (Post Time) well. Maybe we'll see each other at the same door sometime.
"The bottom line is it didn't grow to the levels we expected it to grow to," Cussons added. "There was a mutual agreement to end it and let each of the companies determine what they wanted to grow their businesses. Are we interested in offering service to racetracks? Sure."
[Editor's note: Info Touch Technologies became Tio Networks in April 2006.]
