HANA Update on CHRB Meeting

Agenda Item #9 called for Los Al to present handle numbers to the Commissioners so that they could vote whether or not to continue the 2% takeout increase experiment approved for Los Al back in January.

I attended the meeting. HANA was there to challenge the handle numbers Los Al and CHRB audit staff were attempting to put in front of the Commissioners prior to the vote.

I used numbers taken directly from Equibase Charts to create a spreadsheet. On one side of the spreadsheet were handle numbers from 2010 for each race date since the start of the experiment (1/21/2010) through the end of March, 2010. On the other side of the spreadsheet were handle numbers for the same time period from 2009. At the bottom were totals for each column along with percentage change.

Comparing 2010 handle numbers to 2009 handle numbers, my spreadsheet very clearly shows a 30 percent drop in Los Al's on track handle since the beginning of the increased takeout experiment.

Numbers presented to the CHRB by Los Al (as well as numbers prepared for the Commissioners by CHRB audit staff) showed little or no change in handle since the start of the experiment.

How can this be? Handle is handle, right? What's really going on here?

The answer is complicated.

I see three things at work here:

1. Data Source
First, handle numbers in the Equibase Charts aren't "official" by any stretch of the imagination. In California, "official" handle numbers actually come from a company called CHRIMS.

One of the things I asked for during the meeting was that I be given access to data from CHRIMS. The Commissioners have assured me they will see to it that this happens shortly.

2. Field Size as a Determinant of Handle
Second, Los Al dropped their weakest day of the meet: Thursday.

That means they now are running fewer races in 2010 vs. what they ran in 2009.

Running fewer races means they have increased avg field size.

According to all of the industry paid for studies, increased field size is a determinant that drives handle upwards.

This means that improved field size is helping to drive handle upwards at Los Al.

Los Al admitted this during the meeting.

Commissioner Rosenberg asked me to verify this. I agreed. It should appear in the meeting transcript once that becomes public.

3. Handle Numbers: What Should The Commissiners be weighing before they vote?
Perhaps the most important thing of all when it comes to handle numbers is:

What matters the most?

The numbers prepared by both Los Al and CHRB audit staff attempt to emphasize average handle per race.

If you look at their numbers in a vacuum, you'd never realize on track business is down sharply this year vs. last year since they began charging a higher takeout.

The numbers in my spreadsheet examine total revenue during the time period of the experiment.

If you look at my numbers in a vacuum, you notice that business is off sharply - but avg handle per race is completely ignored.

One of the things I said to the Commissioners was this:

"What's more important? Average handle per race? Or maximizing your total revenue? You have a decision to make."

Based on the challenge by HANA to handle numbers presented by Los Al and handle numbers prepared by CHRB audit staff:

At the 4/15/2010 CHRB meeting the Commissioners decided to table voting on the agenda item until such time as handle numbers acceptable to all could be presented to the Commissioners.

Sometime in the next few weeks I will be meeting with Los Al and CHRB Staff. The purpose of those meetings will be an attempt come up handle numbers that are acceptable to all parties so that the Commissioners can use these numbers for their vote.

-Jeff Platt