Archive for takeout

Tracks, Horseplayers Differ on Importance of Takeout

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.

� Pocono Downs has trifecta and superfecta takeouts of 35 percent, matching the highest of any bet in the land.

� 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.

� 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.

� 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.”

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Is Takeout the Key to California Racing’s Struggles???

This week’s LET IT RIDE.COM HOT TOPIC comes from Art Wilson of Inland Valley Daily Bulletin…take a read and VOICE AN OPINION!

TOC just doesn’t seem to get it

The guys and gals who comprise the Thoroughbred Owners of California may soon be receiving a huge thank-you note from the folks at Tampa Bay Downs in Oldsmar, Fla.

The TOC may not realize it, but it had a huge hand in Tampa Bay Downs’ 8 percent increase in all-sources handle for a 90-day record meet that wrapped up last Saturday.

A lot of large bettors who normally might have been wagering on California races turned to Tampa Bay Downs this year after a new bill in Sacramento, strongly supported by the TOC, raised the takeout on exotic bets as much as 3 percent and spurred a players’ boycott of the California tracks.

The biggest winner was Tampa Bay Downs, which lowered the takeout on its pick three, pick four, super high five and pick six from 19 to 18 percent and saw its business flourish during a time when others in the industry are blaming the economy for slumping numbers instead of looking in the mirror.

The officials at Tampa Bay Downs obviously get it – less (takeout) equals more (handle).

It’s a simple formula, really, but one the folks at the TOC seem to have trouble grasping.

“I am very pleased with the outcome of our season,” Tampa Bay Downs vice president and general manager Peter Berube said in a statement. “Fans and horsemen alike enjoyed a relatively dry and warm winter here, which certainly helped us increase attendance and on-track handle.

“Overall, we credit our lower takeout, large fields, 18 percent more turf racing and greater access to the California market as key to our success, as well as a larger simulcast following nationwide.”

Large fields?

Whereas local bettors are stuck with more six- and seven-horse lineups than we can stomach, Tampa Bay’s field size increased 1.8 percent to 9.11 horses per race this meet.

Track management also rolled the dice and went with an 18.5 percent increase in turf races, which generally draw more horses, as a way to boost field sizes.

It all led to $30.4 million more in all-sources handle.

The boom in business also led track officials to raise purses in February, and they were able to do it without an increase in takeout like the one that hamstrung Santa Anita this past meeting.

Santa Anita president George Haines admitted on closing day of the Arcadia track’s meet that he would love to have had a low-takeout early exotic bet like the 50-cent pick five that Hollywood Park debuted on opening day of its spring-summer meet.

Unfortunately, the TOC didn’t see the need until it was too late for Santa Anita.

Now, Hollywood Park is reaping the rewards of an early pick five that has a 14 percent takeout and is quickly becoming the most popular bet in Southern California.

Want proof?

On Thursday, Hollywood Park had its first pick five and pick six carryovers of the season. Guess which one had the larger handle – the low-takeout pick five or the pick six, which includes a takeout of 23.86 percent?

Uh huh.

The pick five had a total handle, including a $107,487 carryover, of $907,117, compared to the pick six, which produced a handle of $655,774, including a carryover of $91,681.

There was $235,537 more bet into the pick five Thursday than the pick six, which is quickly taking a backseat to the new kid on the block.

As one longtime bettor wrote in a mass e-mail to industry officials: “It’s not rocket science yet it took how many months/years to get the (low-takeout pick five) put in? Good for Hollywood Park and everyone else that fought for this bet. I wonder how many CHRB board members and TOC board members get it? Lower the takeout and get on the right side of things for once.”

According to Equibase charts, Hollywood Park’s all-sources handle was down 8.4 percent through the first three weeks of the meet, and the total exotic handle showed a 10.8 percent decline from a year ago.

Hollywood Park’s numbers for all-sources handle would be down even more if not for the pick five, which has generated more than $2.7 million through the first 13 days of the meet – $352,750 more than pick six wagering.

The field sizes, which we were told would increase with the larger takeout, have shown a small decrease from 8 horses per race in 2010 to 7.72 – a 3.5 percent decline.

Yes, the TOC needs to wake up and admit that lower takeout means higher handle, which in turn leads to an increase in purses.

The folks at Tampa Bay Downs get it.

Let’s hope the TOC realizes the error of its ways soon, before we’re all betting Tampa Bay Downs when there’s no more racing in California.

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California Increases Takeouts…Is Raising Taxes in a Down Economy Anyway to Treat a Punter?

This week’s Let It Ride.com HOT TOPIC comes from Steve Andersen of Daily Racing Form…take a read and VOICE AN OPINION!

SCHWARZENEGGER SIGNS TAKEOUT BILL

California Gov. Arnold Schwarzenegger signed a bill on Thursday that will increase the takeout on exotic bets on California races to fund an increase in overnight purses beginning this winter.

The announcement of the governor’s signature was made by Keith Brackpool, chairman of the California Horse Racing Board, at Thursday’s meeting of the board. Brackpool said the governor would make a formal statement about the bill Friday.

The legislation was approved on Aug. 31 and sent to Schwarzenegger’s office on Sept. 8.
Last November, while attending races at Hollywood Park, Schwarzenegger indicated that he wanted to sign legislation in 2010 to aid the state’s horse racing industry. Schwarzenegger leaves office at the end of this year.

The takeout increase will take effect on Dec. 26. The bill will raise the takeout on two-horse exotic wagers by 2 percent, from the current 20.68 percent to 22.68 percent, and increase the takeout on bets requiring three or more horses by 3 percent, from 20.68 to 23.68 percent. Takeout rates for win, place, and show betting will remain unchanged at 15.43 percent.

The legislation states that revenue from the higher takeout must go to fund overnight purses. The measure could raise $25 million to $30 million annually, racing officials said during the summer.

The legislation permits the launch of exchange betting in the state in 2012 and has provisions to promote the Breeders’ Cup financially when the event is run in California.

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