Sunday, July 13, 2008

Opinion: The Time Has Come For Takeout Reduction

For decades pari-mutuel betting was granted monopoly status by many states -- it was the only game in town.

Las Vegas offered legal gambling, but it didn't harm race track attendance in any meaningful way.

Racetrack attendance began to suffer when Atlantic City legalized casino gambling. Driving from New York City to the Playboy Casino suddenly seemed like a lot of fun compared to attending the races at Aqueduct.

State sponsored lotteries proliferated. Holders of winning lotto tickets could win life changing jackpots with only a $1 bet.

Now it seems that every state I travel through has billboards promoting casino gambling or state-run lotteries.

States in which casino gambling and lotto were legalized receive vast sums of gambling revenue and there is no turning back the clock on this easy money.

Unfortunately, racing began to decline as a result of the intense competition for the gambling and entertainment dollar. Those who benefit are not the ones who suffer.

Then, some smart racetrack owner figured out that they would offer to save racing at their track in exchange for a monopoly on running slot machines at their pari-mutuel facility. This worked beautifully at Mountaineer Park in West Virginia, for example. Purses are way, way up. The quality of horses running is way, way up.

A side note: I spent many days at Mountaineer Park when it was Waterford Park. The horses running now actually look like thoroughbreds. Not sure what was running there before. Although, I suspect many horses were literally running for their lives. Waterford Park was the last stop on the racing circuit. If they didn't win at Waterford it was off to the killer man. Fortunately, times have changed and that practice seems to have been eliminated.

What hasn't been eliminated is the extorsionist takeout rates on pari-mutuel gambling. For years, it was the horseplayers who kept the sport of racing alive. Through good times and bad horseplayers have stood by the sport they love and have bet their hard earned money which helps fund the purses for which the horsemen race their horses.

Today, racetracks with slots and casinos enjoy excellent revenue streams. Mountaineer has even opened a second racetrack with more slots at Presque Isle Downs. Horseman are filling up the racing cards due to the outstanding purse money so generously subsidized by slot machine revenue. The states are filling their coffers with tax revenue from gambling.

Despite all the easy money that is flowing, horseplayers are still suffering. The very people who made it possible to have purses in the first place are leaving the game. So while everyone else is getting an increased share of the easy money, the horseplayers are offered the same old takeouts.

It's time to return money to the horseplayers in the form of lower takeouts. Every student of Economics 101 knows that lower costs will increase sales volume.

So why haven't pari-mutuel takeouts been lowered at racinos?

I suspect it's partly because of inaction on the part of horseplayers.

This must change. The Horseplayers Association of North America (HANA) has a major goal -- working toward reducing takeouts.

HANA will do this by issuing press releases, letter writing campaigns to politicians and governing bodies, Youtube videos, blogs, message boards and making their message known anywhere HANA can find an audience.

As stated earlier, the ones who benefit are not the ones who suffer. Horseplayers are tired of being on the short end of the revenue stream. Horseplayers are as much a part of this game as Tracks, Horsemen, Jockeys, Backstretch workers, etc. It's time we stand and speak with one, unified voice so that everyone benefits and no one suffers.

This opinion piece was contributed by John Swetye, who is a long-time horseplayer and a proud, founding member of HANA.


Pull the Pocket said...

That is a good piece John.

Here in Ontario slots money has flowed for some time. $2B worth. Everyone seems to get a slice, and there is nothing wrong with that. Except the fact that "everyone" does not seem to include the horseplayers.

There was a simplistic (in my opinion) view that if purses were raised more money would be bet. True to some extent, but not enough. The players need a break from slots enriched jurisdictions. The players are the only ones left out of the windfall.

Anonymous said...

From a business standpoint, you don't just lower takeout to appease your fans, there has to be a reason.
Fortunately there is a very good reason. It will attract more of our betting money that may be going elsewhere, and more importantly lowering takeout will attract new players in all probability. This will lead to growth, and a better bottom line for the tracks.

And players have spoke up. Many players have left and/or are playing other games which give them a bigger bang for their buck.

What HANA represents is a bigger danger for the racing execs, as we have the ability to inform those who really don't think about why they wind up going broke at the track so fast.

Anonymous said...

Unfortunately you're wrong about Mountaineer and the knacker-as a recent HBO expose showed in gruesome detail, Mountaineer still welcomes the slaughter truck regularly. Increasing purses doesn't eliminate cruelty, only rules and stiff penalties will stop some "horsemen" from this heinous practice. Otherwise, your article makes all the sense in the world, and it goes hand in hand with the one that supports increasing handle. 10% of $1,000,000 > 20% of $400,000, and everybody wins.