This week’s LET IT RIDE.COM HOT TOPIC comes from John Grupp of Pittsburgh Tribune-Review…take a read and VOICE AN OPINION!
Pa. horse racing: Not a sure bet
Imagine placing a $100 bet at the blackjack table. The dealer reaches over, grabs $30 of your wager and then deals the cards.
If you win, the profit is $70. If you lose, your $100 is gone.
Sound appealing? When it comes to thoroughbred or harness racing in Pennsylvania, those are the odds many bettors are working against.
Despite having one of the healthiest, slot-fueled equine racing industries in the nation, Pennsylvania tracks continue to have some of the highest takeout rates in the business, according to figures compiled this month by the Horseplayers Association of North America.
The takeout rate is the percentage of a betting pool that a racetrack keeps to defray costs — such as race purses, operational costs and taxes — and to benefit the owners.
“The player who is betting $25,000 a year at the (off-track betting parlor), a lot of them are avoiding Pennsylvania tracks like the plague,” HANA executive Dean Towers said.
Penn National outside Harrisburg has the highest trifecta and superfecta takeouts among 67 North American thoroughbred tracks at 31 and 30 percent. Parx Racing (formerly Philadelphia Park) is right behind with a 30 percent takeout on both bets.
The Meadows Racetrack and Casino in Washington County has a 35 percent takeout on trifecta bets, the maximum allowed by state law. According to HANA, that is the highest takeout of any bet at any track in the nation — harness or thoroughbred.
“I’m really depressed about this,” said Bob Zanakis, 56, of Canonsburg, a long-time Meadows bettor. “They are making more money on slots, (so) they should lower the (takeout).”
The cost of business
When bettors wager on a race, all of the money goes into a pool. Bettors who pick the winners share the money from the pool — minus the takeout.
If the takeout is 20 percent for the trifecta — in which the bettor picks the first three finishers in a race — and there is $10,000 in the betting pool, only $8,000 will be paid out for winning tickets.
Pennsylvania Director of Racing Daniel Tufano said the takeout rates are the cost of doing business at the state’s six tracks: Penn National, Parx Racing and Presque Isle in Erie for thoroughbred racing and the Meadows, Pocono Downs and Harrah’s in Chester for harness racing.
“That’s basically their revenue,” he said.
Takeout rates are submitted by each track to the state racing commission, which can approve or deny them. Tufano said rates have stayed fairly consistent in Pennsylvania, although two years ago the Meadows raised its trifecta takeout from 29 to 35 percent.
Takeout rates across the country typically vary from 15 to 25 percent. In Pennsylvania, the takeout includes a state tax of between 1.5 and 2.5 percent.
“If the takeout rates get too low, the tracks will lose money on those wagers,” Meadows president Mike Jeannot said. “We’ve lowered them and watched what happens, and there’s never been any evidence that lowering the takeout increases the (betting) handle.”
The Meadows isn’t a bettors’ graveyard. While the trifecta retention rate is the worst in the nation, the track collects 20 percent on all other exotics, the best value in Pennsylvania and competitive with the top U.S. harness tracks.
But there are wildly fluctuating takeouts on some bets in Pennsylvania. Many of them have profit-sapping grabs that give even the most astute handicapper barely much of a chance at getting ahead.
ï¿½ Pocono Downs has trifecta and superfecta takeouts of 35 percent, matching the highest of any bet in the land.
ï¿½ Penn National has the highest trifecta takeout (31 percent) among the 67 North American thoroughbred tracks. Parx Racing is the next highest at 30 percent.
ï¿½ The two also have a nation-worst takeout of 30 percent for superfecta bets (picking the top four finishers in order). By comparison, Kentucky tracks Churchill Downs and Keeneland stand at 19 percent for both bets.
ï¿½ Only four tracks in North America have a higher Pick 3 takeout than Pennsylvania’s thoroughbred tracks (26 percent), and three of them are in Canada. (Calder in Florida is the other.) Penn National has the highest Pick 4 takeout (28 percent) in the United States. (To win the Pick 3 or Pick 4, a bettor must correctly choose the winner in three or four consecutive races.)
Impact at the track
The high takeout rates come as the industry has flourished with the Pennsylvania Race Horse Development Fund, which uses a portion of slot profits to benefit the equine business. Ten percent of all slot revenue in Pennsylvania goes to the horse tracks — $200.6 million last year.
A study released by the Pennsylvania Racing Equine Industry in June shows the growth has created 8,760 ongoing jobs with a total economic impact of more than $875 million from 2006, when slots were introduced, through the end of 2009.
The average purse per race in Pennsylvania thoroughbred ($25,100) and harness ($15,300) racing is ranked seventh and third in the nation. The handle at Pennsylvania tracks — the total amount bet from all outlets, in-state, out-of-state and call-a-bet — has increased each of the past five years.
“We have discussions from time to time whether lower takeout rates will attract bettors,” said Sal DeBunda, the president of the Pennsylvania Thoroughbred Horseman’s Association, which represents the horsemen at Parx Racing. “To be honest, I have not heard a lot of complaining from our bettors. The payoffs are big enough that the bettors don’t really realize what (the takeout) is.”
Industry experts believe a majority of bettors, especially casual ones, aren’t deterred by takeout rates. A trip to the track or off-track facility is more about entertainment, they say. If the trifecta takeout at the big New York tracks is a profit-gouging 26 percent, so be it.
“If you are going to the track trying to make a fortune, find something else,” Tufano said. “If you are looking solely to win at gambling, there are better options.”
Odds-wise, horse racing trails the field. Among casino games, blackjack has a house edge of less than 1 percent. Craps is 1.5 percent, roulette 5.3 percent and slot machines about 10 percent. The lowest “house edge” on any horse race in the United States is about 15 percent. But because the bettors are playing against each other — not against the house — and because some exotic bets can pay thousands of dollars on a $2 ticket, they are willing to accept the high takeout.
“That’s the great thing about wagering on horse racing,” Tufano said. “You think you are smarter than anyone else.”
Bettors up in arms
But some big-time players are fighting back. When the California tracks this year raised their takeout rates on all exotic (multi-horse) wagers from 20 percent to 22.68 percent or 23.68 percent, there were calls for a national boycott.
The total handle at Santa Anita Park was down more than $77 million from last year’s meet — an average of more than $106,000 per race. Golden Gate Fields in Berkeley was down nearly $23.8 million — roughly $48,000 per race.
“If you are moving the opposite way, the bettors are going to hammer you,” Towers said. “They are going to be up in arms.”
When Tampa Bay Downs this year lowered takeout rates from 19 to 18 percent for its Pick 3, Pick 4 and Pick 6 bets, its handle increased more than $11.7 million.
“Obviously, the bettors reacted very favorably,” said Margo Flynn, the track’s vice president of marketing. “They were overwhelmingly supportive.”
In the 2011 HANA ratings, which rank tracks based on their takeout and other fan-friendly factors, the Pennsylvania thoroughbred tracks received poor grades. Presque Isle (45th), Parx Racing (56th) and Penn National (57th) ranked in the bottom third of the 67 North American tracks. Mountaineer Racetrack in Chester, W.Va., was 28th.
Nearly 65 percent of the participants in a 2009 HANA survey were “extremely concerned” with pari-mutuel takeout rates, the highest among nine issues in the survey.
“Ultimately, they are getting less value for their dollar,” Flynn said. “It’s that much harder to win, and anybody who is a regular patron should have a concern for the takeout.”
WHAT’S YOUR TAKE?