Things That Make You Go Hmmmm (12)

Another year has passed with surprisingly little industry discussion about the price of a wager. You would think that with pari-mutuel handle on U.S. Thoroughbred racing having dropped about 25% from 2006 to 2012, there would be a comprehensive study on maximizing takeout rates to generate more handle and reward the customer. ... Nothing else seems to have worked, so why not?

One of my favorite recurring discussions on Twitter deals with takeout, particularly the larcenous rates on some exotic wagers at Pennsylvania tracks. ... What's funny about it is this: Most of these tracks average $50,000 or less a day on track on their live product. That means importers taking their signals get the benefit of the high rate. ... If they pay the Pennsylvania track 3% for its signal, the importers keep 27% on a trifecta wager. ... In either case, of course, the non-rebated player loses big time.

On a related note, it is good news handle actually increased–albeit only 0.96%–from 2011 to 2012, the first increase since 2006. But it's also foolish to get excited about a stabilized number when it is almost $4 billion less than it was six years ago.

U.S. purses in 2006 totaled $1.116 billion, while last year the figure was $1.124 billion. The only good news here is prize money hasn't dropped. The bad news is if handle is down almost $4 billion from 2006, the numbers show an increasing reliance on non-handle revenue from slot machines, video lottery terminals, and table games. ... But clearly even that revenue has stagnated. ... Prepare yourself for the worst, folks, though it's not like you haven't been warned for the past 10 years.

Interesting development at The Meadowlands, where average daily handle through the first five nights of racing this year is up 21%, including a Saturday night card that generated $3.5 million in total wagering on harness races. ... The Meadowlands remains the handle leader in harness racing even though it doesn't have a casino and doesn't receive revenue from casinos. ... Somebody is doing something right.

One of the upsets of the year came in December when Maryland racing stakeholders announced a 10-year agreement on Thoroughbred racing dates, stabling, and capital improvements before the final week of month. ... The previous two years there were doubts Laurel Park would open the first of year because of the lack of an agreement between horsemen and the Maryland Jockey Club. ... Third time is the charm, I guess.

Maryland, by the way, is the Mid-Atlantic sleeper. The two MJC tracks don't have casino gambling but, through legislation, receive a cut that has quietly increased purses to about $250,000 a day, with more to come. ... With excellent racing surfaces, good stabling, and a well-thought out schedule, Maryland will be the place to be. ... I'm probably in the minority with that assessment but will stick by it, because the alternatives in the region pale in comparison and are far more about casino gambling than horse racing.

The Aqueduct winter/spring meet stakes schedule for 2013 wasn't released until the fall of 2012, so the grade II Jerome Stakes for 3-year-olds, moved up to the first week in January from the spring, failed to make the list of Kentucky Derby points qualifying races. ... Was hoping the system, announced last year, would have been tweaked by now after deficiencies–see the absence of the grade II Illinois Derby from the list of qualifiers–were pointed out, but that wasn't the case. ... My preference leans toward a points system, but this one needs some work.

Like takeout, data isn't discussed much, either. Just curious how the industry–the racetracks and The Jockey Club–own Thoroughbred past performance data but seem to have little interest in the quality of the products sold to on-track customers who still make up about 80% of total handle. ... Are there people on staff who look at what tracks sell, do tracks just care about saving money, or is there more than meets the eye here? And we won't get into the cost of industry data.

There is some hand-wringing in Kentucky over the governor's statement that he favors a simple-language constitutional amendment on expanded gambling, with the horse industry's involvement and revenue share to be decided via enabling legislation. The governor is a Democrat, and in 2012 the agriculture commissioner, a Republican, said he supports the same thing. ... The casino issue may not be addressed during the short 2013 General Assembly session, but it will come up again at some point. And when it does, the horse racing and breeding industry in Kentucky may have to put up or shut up. ... Do racetracks just want to own casinos for their own bottom line, or do they want revenue that would be returned to the industry for its stability and hopefully growth?

18 Comments

Leave a Comment:

Old Old Cat

I agree with your assessment of Maryland racing.  When I bred my mare a few years ago, I went to Pennsylvania because it seemed stable.  Maryland was constantly fighting with politicians, racetrack owners, and the horsemen.  My trainer said she was not going to train because of the uncertain future, we didn't know if Maryland would be racing in 2012 or beyond.  For people who depended on the track for their daily existance the mood was depressing.  Fortunately the situation has changed and the future looks promising.  My mare is pregnant with a foal that will be Maryland bred, (not by me but by a friend), and we have 10 years of stability to look forward to.  

I think some of the problems you are addressing need less-fractured government involvement (in Maryland, Kentucky, New York, California, etc..) and perhaps a governing body that decides racing dates and policy independent of which political pickpockets are the flavor of the month.

Horse racing has seen its betting popularity decline from the days when bingo halls were the only competition to today where the lotteries and casinos offer people a quicker gambling fix, simpler betting methods, and more tax income to the states.

You are right that the racing industry has to wake up to the wolf at the door.  Everybody knows there's a problem, somebody should fix it, but nobody is going to do nothing...  (intentional double  negative)    

07 Jan 2013 3:23 PM
Bill Two

Can't believe the Jerome can keep its graded status. What are these guys thinking in NY?  Who decided the race should be run at this time of year? Why?  

07 Jan 2013 3:27 PM
Jim Swaps

The powers that be seem totally clueless and oblivious to how confiscatory the takeout is.

A more moderate takeout of say, 10% across all wagers, would bring back hoards of BIG MONEY players that have fled the game.

07 Jan 2013 11:06 PM
predict

Back in the 60s when I first began betting on horses the minimum bet for win, place or show was $2. Today  that minimum still remains the same. Sure you can bet more if you like, but seriously, how much excitement does a $2 bet generate today, as compared to the result in the 60s when $2 could actually buy 8 gallons of gas for example, today not even a gallon. Just to keep up with inflation the minimum bet today should be $20, doing this would most likely be seen as a death move for racing, but it's dying anyway, so why not make a bet a little more exciting in terms of what is at stake, and maybe, just maybe, it might create a little more interest in horse racing. And while they're at it, get rid of the 10-cent exotic wagers. It's the old expression, "you get what you pay for". ....just thinking out loud here.

08 Jan 2013 2:26 AM
Pedigree Ann

The Jerome keeping G2 status, despite leaving the track (Belmont) and time of year (Fall Championship Meet) that allowed it to earn that rating is a farce. Does anyone think that a G2-type field of 3YOs would assemble in NY in the dead of winter on the Inner? The Graded Stakes Committee is asleep at the switch and has been for a decade at least.

08 Jan 2013 12:56 PM
Douglas Amos

The non-competitive funeral processions occurring currently in NY are exactly what Andrew the Great needs to get rid of racing and consummate a full-fledged relationship with the casinos.

08 Jan 2013 8:02 PM
woodshade

The thing thats makes me go Hmmmm

is the fact that your still on THS. Come on Tom, You were well over a -$500.00 loss for 2012. And it has been many many weeks since you have even had a winner. Whats up! Because you are co-producer you think you have to be on the show and like seeing your face. Lets face it, you are "NO" handicapper and you should save the Blood-Horse and your self from looking bad. There are other people that can be put on the show with Pete. Man up, do the right thing and get off the show.

09 Jan 2013 2:05 PM
@STLdustin

How much of the $4B drop in handle is a direct result of online wagering with offshore books? I'd venture to say at least 50%. Why is this not being discussed? I live in St. Louis and I literally have no other choice than to bet with Bovada or another offshore book (TVG and TwinSpires are not available in the state of MO). Why can't we get legislation passed to keep the money in this country?!

09 Jan 2013 3:34 PM
JerseyTom

STLdustin: Good observation. The industry throws numbers around but apparently doesn't know how much handle is siphoned by offshore shops.

We do know Churchill Downs Inc. has opened a rebate shop on the Isle of Man. We do know the horsemen, after years of screaming about rates, have been silent for a few years now. We do know the industry, collectively, shows no interest in addressing the issue. And we do know stakeholders in the industry will suck up every dime they can get.

So one can conclude people are making money? Well, maybe, but the average player is not.

Thanks for the insight. I'll put this one on our list of potential stories for 2013.

09 Jan 2013 4:44 PM
JerseyTom

An addendum to "upset of the year," since the information was received after the blog was posted. ... The Meadows Casino & Racetrack in PA reported total handle gain of 15% in 2012.

As stated I believe the PA takeout rates stink, and the gains in handle could be because The Meadows has finally settled on the right schedule of day and night racing each week.

That said, having been there multiple times, it is a very nice facility with a consistent year-round product and people on staff who do give a bleep about racing. I guess the numbers suggest there is something to be said for that.

09 Jan 2013 5:21 PM
JerseyTom

woodshade: I don't know who you are, but you've had your say, including sending emails to my boss saying I suck at handicapping and should be canned.

Here's the deal: People who know me (you don't) know my bread and butter: I invest my money on tracks such at Turfway Park. I'm a modest-race handicapper that focuses on a few tracks. I do fairly well.

I am not co-producer. I handicap races. We provide a service, and that service doesn't allow me to say who I like at my tracks on a given weekend. We handicap major races ... days in advance by the way, with no idea of track condition, scratches, etc.

You noted I was minus $500 in 2012, which is true, but you were nowhere to be found when I was up $400 in 2011. So what is your point?

If you want to bitch about my handicapping, call me (859-276-6795, a direct line). Love to talk to you. But use your brain as other readers have and discuss the important issues at hand in this blog. The industry's future depends on it.

09 Jan 2013 5:47 PM
woodshade

Jersey Tom, I believe I only sent one email to a Mitchell man and never said you "suck" at handicapping. Believe the word was "terrible". Never asked for you to canned from the Blood Horse. Just removed from THS. And your record proves why.

At the end of your show it says

Hosted by: Tom LaMarra

Produced by: You and Alex Cutadean. So I'm wrong about who

produces the show?

You are a Turf Writer, not a handicapper. If the Mitchell's want to keep you on the show, so be it. They are doing a disservice

to the fans who are looking for some good advice. Man up and let

Claire take over.

10 Jan 2013 12:04 AM
Claire Novak

woodshade - anyone who thinks I'm a better handicapper than Tom LaMarra needs to have their head examined.

Tom has played more $$ at the races than I'll probably play in my entire life. And he devotes a hell of a lot more time to handicapping than I ever do.

As much as I appreciate your support, I'm also a Turf Writer, so I'm not sure why you think I'm a better candidate to handicap on the show.

You've had your say behind a fake name without having the guts to talk to Tom in person. Way to go. Hopefully that gives you some degree of satisfaction, because nothing is going to change.

My advice to you is simple: Get a life.

15 Jan 2013 10:06 AM
chicago-linny

Way to go Claire! Tom is great but your the best!

I simply do not bet on any track in PA. Indeed, the takeout is just too high. when will these tracks learn?

I love horse racing but there has to be changing quickly for it to survive. We need someone to step up. We must have a central voice, a national leader or organization, to work as one on a single mission to improve the sport.

16 Jan 2013 9:51 PM
Bill Two

Hey Tom, don't get bent out of shape over this guy.  There's always room for a difference of opinion.  Trying to pick winners of contentious major races days in advance is problematic at best. People have to understand this. Opinions are what makes horse racing the great game it is, but I don't think it's fair to criticize you in this way. For what it's worth, good luck.

17 Jan 2013 11:25 AM
Pedigree Ann

One more thing to go HMMM about-

The CHRB chairman who let Stronach, et. al., take over the Oak Tree meeting is leaving the board to ... (wait for it) ... 'join the Stronach' organization.' Why does this smell so bad?

19 Jan 2013 2:40 PM
J Shandler

I agree, Tom is a terrible handicapper. But as bad as he is at handicapping he is a worse cook, driver, dresser, baseball fan, and pet owner. He has many flaws.

As for Claire, she has too many flaws to mention on one page. Hahahahaha!!

20 Jan 2013 12:20 AM
JerseyTom

Shandler! Nice of you to drop by. How can you attack my cooking when you've enjoyed it on several occasions? And stop picking on Claire.

20 Jan 2013 2:22 PM

Recent Posts

More Blogs

Archives