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Thursday, June 19, 2008

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.


Anonymous said...

Your gas price analogy to the new 26% takeout rate is a good one. The question still remains. What benefit will the customers get from this tax increase? I really do not see any.

From Mr. Hayward's comments, it does not look like the NY racing industry gets much of a beneift either. He says most of the take accout increase is captured by out of state concerns. I would be happy to pay more if the fans and/or the industry gets the bulk of the benefits. Not one cent of this increase is going toward purses, maintenance or customer service.

Mr. Hayward if you are reading, a few suggestions:

Follow Keenland's lead and broadcast in your signal in high definition. NYRA has spent money to install HD tv's at Belmont. It would be nice to be able to watch a HD signal on those nice new tv's.

Fix the plumbing at Belmont. NYRA's performance on Belmont Stakes day was inexcusable. Do not let it happen again.

Anonymous said...

Way to go Mr. Hayward.

NYRA plans to increase rebates to customers of its NYRA Rewards Program, Hayward said, because of the 1 percent takeout bump on NYRA's races.

"Our plan is to at least make those customers whole, and we may even try to make it a little better for them," Hayward said.

El Angelo said...

Boosting the rebate program's a nice thought, but it still doesn't do you any good if you bet under $2000 a month, which is an enormous amount of people, myself included. NYRA would benefit by extending the program to anyone who uses a NYRA Account at all, as they'd have more $$ in the account at all times, and wouldn't have to expend much.

SaratogaSpa said...

Agree with El Angelo--I have a NYRA Rewards account( Since the inception of the program) but I have not recieved a single dollar in reward money yet because I bet less than $2000 a month with them. I would think most people also bet less. If they expanded the program a bit and lessened the dollar bet requirement to a more reasonable amount, then we have something.

El Angelo said...

Frankly, it wouldn't even take a cash rebate to make it worthwhile, they could offer token stuff to at least show they appreciate your business. My father, for example, goes most Saturdays and bets in the neighborhood of $300-$350 on NYRA tracks. This doesn't get him anywhere near an award. But for someone with that level of action, wouldn't it make sense to give someone like him free admission, parking, program, etc., to encourage them returning?

Anonymous said...

Your Rap Tail a Pletcher reject will be lucky if he finishes 6th.Pletcher does not drop horses into claimer races unless there are some issuses . health problems down the road.

Anonymous said...

While a diiferent boycott, I hope someone brings up the issues that are happening at TVG that I covered at: