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Friday, February 17, 2012

A Day at the Oversight Board

We're going away and therefore scrambling around to get ready, but I gotta take time out to squeeze in a last post to get that really crappy horse pick in the last one off the top spot on the page. So I'll mention the session of the Franchise Oversight Board that was held on Wednesday. The most widely-reported news from the session was NYRA President Charlie Hayward's proposal to install self-service betting machines at selected restaurants; 10 at first, eventually growing to as many as 40 by the third year. That effectively would put NYRA in the OTB business.

“It’s a big deal,” NYRA president Charles Hayward said of the new effort....In year one, officials project the sites will generate $45 million in handle. By year three, the 40 sites would handle $165 million in bets. For the state, NYRA is dangling the prospects of more money in the form of revenue-sharing: nearly $5 million over the three years in state taxes and about $19 million for purses. []
That doesn't seem like all that much money for the state compared to what it reaps from VLT's, and even to the purse money mentioned along with it. Probably what prompted this response from Oversight Board Chairman Robert Megna:
“Is it too much,” he said of projected purse increases. Megna did not elaborate, but told Hayward, “We are always going to be asking you about it because it’s a lot of money.”
Actually sounded more like a statement than a question. And that could really be the big storyline buried in the coverage of the meeting: Cuomo's budget director discussing, with a fair amount of skepticism, the allocation of slots revenue, which fits with this whole scenario of questioning the cut of slots money directed to purses - subsidies, if you will - that is currently being played out in Ontario and Pennsylvania (again).

In any event, NYRA's idea would have to win approval in Albany.
“NYRA will be discussing the plan with the administration [of Gov. Andrew Cuomo] and the legislature in Albany with the hope of gaining their support to implement this strategy in the very near future,” [Dan] Silver said. [Daily Racing Form]
We know how that goes, and we've recently seen a hostile attitude towards NYRA and racing in general from the governor.

According to the Bloodhorse piece, Megna urged NYRA to devise a strategy for the types of bettors it is trying to attract at the facilities. Huh? Really? This state is making plans to further expand degenerate casino gambling, and this guy is questioning the "types of bettors" at OTB's? That's a hoot.

Additionally, NYRA revealed that it's traced around $500,000 of $1.2 million owed to bettors due to the incorrect takeout charged on some exotics, defended the $92,000 it spends on transporting horses back and forth between downstate tracks ("This is an expense that actually generates revenue....The comptroller doesn’t share that view.” [Saratogian], and derided the comptroller's suggestion that it conduct a study comparing its business practices with the industry nationwide.
“That report would probably cost us $5 million,” he said. “Guess what? We got an ‘F’ on that one, which, frankly, I don’t think is a fair grade.” [Saratogian]
That does seem like a really expensive study. Maybe they're pricing it out with Getnick and Getnick. Also discussed was NYRA's ballooning pension costs and efforts to rein them in. And Hayward had to defend the bidding procedure for its hiring of a PR firm from accusations that NYRA had written a "directed contract" for the incumbent public relations and marketing firm in Saratoga Springs, Ed Lewi & Associates. [Schenectady Gazette] All in all, sounds like he had a really fun day.

Anyway, the Head Chef and I are off to have a really fun week, and it's questionable at best whether I'll be posting during that time. If not, best of luck, have a great week and I'll speak to you soon.


Anonymous said...

NYRA needs to lower the takeout as soon as possible.

Dan said...

What should the takeout rates be for WPS, DD & EX & P3,P4,P6, Tri & Superfectas?

Would you reduce every bet by 2%?

El Angelo said...

How about a uniform takeout rate for *all* bets? Or is that just ridiculous?

kyle said...

Takeout rates should be a function of field size. Takeout for WPS should be 1.5% per betting interest with a maximum take of 15%. Exotics should have a takeout of 2% per betting interest with a mximum take of 20%.

Anonymous said...

No bet should have an extreme takeout of 20%.

Figless said...

Once again I must point out that the takeout rates can not simply be adjusted by NYRA at their whim. This is negotiated with the other parties.

So which party should take the brunt of the hit from this takeout reduction? How would you allocate the 15% (since 20% seems so high to you) and how do you propose getting the interested parties to agree.

I nominate anon 1209 for the position of "Takeout Reduction Czar". You will work free of charge, your compensation will be 1% of any reduction achieved. Good luck.

Anonymous said...

Only a tiny group of people care about takeout. People don't go to the track because they think it's filled with degenerates and grouchy old men (pretty much true) or because handicapping is too challenging to them, not because of the takeout.

Figless said...

anon 1003, +1000%.

Racing is Entertainment, which includes gambling as a component, and should be marketed as such. The fact is the pure gamblers can accomplish their goal from the comfort of their office or living room nowadays. The Racetrack needs more than just windows to bet.

Empire City gets it, they attempt to entertain the masses, some would say distract them, so they dont even notice they are spending their money.

Haven't seen this from Genting yet, which probably accounts for the underwhelming per machine "win" so far.

NYRA does a good job of this at Spa, but that place is easy, it runs itself. Not so good at Belmont, should be an easy sell with the beautiful grounds, we will see if they improve with their new found marketing budget.

Big A, not a whole lot they can do with that place, but at a minimum they should make it attractive and comfortable in case some disoriented Genting patron accidentally wanders in from the other side looking to try their luck at something different after getting murdered at the VLTs.

Indulto said...

The variable aspect of your suggestion has merit. I think takeout should start at current levels, but then be decremented dynamically according to pre-defined increments in individual pool handle.

Thus whales could be rewarded for their volume without rebates, while ensuring a level playing field for each pool participant.

Since handle generally increases for larger fields, horsemen could also be rewarded with purse increases tied to handle level.

To eliminate rebates, tracks would have to charge ADWs more for their signals, but then reward them whenever they contributed to increases in handle, particularly when they exceeded their expected percentage of total handle. No more tail wagging the dog.

If anyone can point out the flaw(s) in this approach, I'd appreciate the criticism.

Anonymous said...

I think Wayne the idiot Luk-ass should keep running Optimizer on the dirt. After all, he's by turf champion English Channel and he won and finished 2nd in his two turf races, seemed to do pretty well on the poly track and subsequently has been off the board in FOUR consecutive dirt races. Geez Wayne, why not run him in the Louisiana derby, ya fricking butcher! -jp