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?

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