I attended a meeting yesterday at Hollywood Park. This was a follow up to meetings held earlier this year well in advance of the Hollywood meet.
The premise for the original meeting was this:
1. All Sources California Thoroughbred Handle in 2010 (total customer spend) has shrunk to approximately ONE HALF of what it was just nine years earlier in 2001.
2. Handle (total customer spend) at California's two thoroughbred tracks for the first two months of 2011 are showing accelerated declines despite the takeout increase (where additional money was earmarked for purses.)
3. Let's identify the reasons behind the decline and air suggestions for reversing the trend.
(Kudos to Hollywood Park for providing the impetus to meet and look for solutions.)
During the original meeting the following problems (in no particular order of importance) were identified:
1. The horse population is shrinking.
2. Costs to maintain a horse in California are higher than elsewhere in the country.
3. Field Size continues to decline.
4. The price (takeout) is too high for the product offered.
There were about 40 people at the original meeting. Attending were management/leadership from all facets of the industry: track management, owners, trainers, breeders, the CHRB, and yes horseplayers.
It was decided that the issues involved were complex and that it would be best to break the attendees up into committees - with each committee assigned an individual area - and each committee to hold follow up meetings to discuss their assigned area of responsibility.
I was assigned to the committee charged with discussing pricing the game properly. (So I'll write the rest of this progress report from that perspective.)
At a follow up meeting (about two months ago) I mentioned that all sources handle numbers for California's two thoroughbred tracks were off more than $100 million vs. the same period the prior year and made the suggestion that an immediate rescinding of the takeout increase might be a wise thing to do.
I also suggested that CA State Law mandating the ADW Retention Cap be rescinded so that California residents could obtain rebates like the residents of other states.
Track management and horsemen (the TOC) weren't willing to rescind the takeout increase. Some of them mentioned being pressured by the CHRB to keep the takeout increase intact at all costs (a position the CHRB commissioners have apparently done a 180 on if you read the transcripts from the last public CHRB meeting.)
We suggested other ways they might reduce the trend, including the reduced takeout pick5 that Hollywood later adopted.
With five full months of handle numbers now in the books, the evidence is overwhelming:
The takeout increase has been a colossal failure. The strategy of increasing purses by removing money from customer wallets did not bring increased field sizes as promised. It only accelerated the decline in total customer spend.
On the bright side, the handle numbers clearly indicate the reduced takeout pick5 at Hollywood has been a success. Beyond whatever money the pick5 is generating on its own, having a reduced takeout pick5 in the early part of the card is generating overflow handle for their earlier races. (They admitted as much yesterday.)
Despite the evidence, which is crystal clear at this point, California's racing decision makers do not appear to be in any hurry to act.
At yesterday's meeting, when we suggested they rescind the takeout increase, looking around the room - I saw a lot of them rolling their eyes. (Many of them are still clinging to the idea that takeout doesn’t matter.)
I have some bad news to report. The senate bill authorizing the thoroughbred takeout increase also applies to the upcoming NorCal Fair meets.
Incredibly, at present, they plan on increasing exotics takeout at the NorCal Fairs as follows:
From 22.02% to 24.02%
TRI, P3, P4, SUPER, Place Pick All, Pick6, etc.
From 22.02% to 25.02%
I wish I had better news to report. Based on what I saw yesterday, they still have a long way to go when it comes to implementing the changes needed to reverse the trend and start earning player business.
Until or unless further changes are adopted (There ARE future meetings planned where further player friendly changes WILL be talked about.) I will continue my support of the Players Boycott – and recommend all players everywhere do the same.
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