Tackling the Takeout

- Charles Hayward sent along this breakdown of NYRA's handle in 2007; a detailed look at just who and where all that money is coming from. (Scroll to the right to see the breakdown by percentages.)




Hayward wanted to emphasize a couple of points. You might have noticed how evenly spread the wagering is between win/place/show, multiples (daily doubles, exactas, and quinellas), and exotics (everything else). Remarkably, they each account for around a third of the handle, with a slight edge to the multiples due to a distinct edge they have at OTB's. Funny how that is; I guess the good old doubles and exactas retain their appeal to the more hardcore amongst us.

If you scroll down, you'll see the current takeout rates for NYRA, Hollywood, and Churchill. Hayward points out that, given that one-third each split between wager types, the new rates (add a percentage point to each) will certainly ensure that NYRA's blended rate will exceed that of either of the other jurisdictions. So, any notion that NY will still retain a comparatively low takeout doesn't ring true; even the WPS rate will be greater or equal to those two rivals.

In addition, check out the percentages breaking down where the handle comes from - 12.2% at NYRA tracks, almost twice that at the OTB's, and a whopping 62.77% from out of state tracks. Hayward wrote: "Unless we can increase our price of the NYRA signal, the biggest short term beneficiary of the takeout increase will be out of state competitors (62+% of the handle)." He estimates that NYC OTB will pocket around $3 million more a year.

However, there's a potential complication regarding NYRA's ability to obtain those signal rate increases. Regarding the 1% surcharge on winnings from out-of-state tracks, Hayward feels that it's not nearly as simple as just skimming a point off the top. He believes that it may require the tracks and OTB's to enter net pool pricing agreements with other jurisdictions in order to have its own payouts. If that's the case, an entity like TrackNet would surely seek an increase of its own if a NY track wanted to enter into such an arrangement in order to impose a takeout increase. That wouldn't put NYRA into a very favorable bargaining position in what is an already challenging task.

Governor Paterson signed the OTB bill on Wednesday, and Bennett Liebman of Albany Law School wrote that the increase should go into effect on September 15. If that's the case, then aggrieved horseplayers like Ed, who is not Jessica but posting on Railbird nonetheless, can cancel his boycott of Saratoga. He and many others are particularly upset about the new 26% rate on exotics. I don't blame them. But the rate was already very high at 25%. So saying that you're boycotting at 26% seems to me like filling up the tank at $4.35 a gallon, but trading the car in for new shoes at $4.40! Well, hopefully the point will be moot at least for Saratoga this year anyway.

The original Railbird emailed to make fun of me for writing over the weekend that I had blog burnout; seems I was fairly productive this week, in quantity if nothing else. I guess it was really Belmont burnout, or Big Brown burnout. However, I find it's always good to take a break to recharge. The Head Chef and I are going down to my folks' house in Longboat Key, FL for a few days today; an easy and relatively cheap trip during the off season there. The rental car is less than $100; I might spend more on the gas. So, while I will have the laptop, posting will be light, and that's for sure this time. However, I do at some point want to write about Rap Tale, who will be making her debut on the turn in the feature on Friday; and since I won't be there, she will probably win.