Cali tracks get free hand to tinker with takeout..
 

This story emerged late Friday... Very problematic...


California law allows takeout increase
By Matt Hegarty

http://www.drf.com/news/article/108410.html

California Gov. Arnold Schwarzenegger signed a bill on Friday that would allow racetracks in the state to seek approval to raise takeout rates for any bet to up to 25 percent of the handle, according to state records.

The bill opens up the process by which takeout rates are set in California, gives racetracks the opportunity to dramatically increase existing takeout rates, and allows the racing industry to petition to redistribute portions of the takeout, according to officials. Under the legislation, any changes to the takeout rates or the way the takeout is distributed must be approved by the racetrack, the state's horsemen's association, and the California Horse Racing Board.

Reminds me of an old Three Stooges bit:

"There's a hole in the boat!"

"Hey, let's shoot holes to let the water out!"

This sport is so hopelessly dumb that it really is...hopeless.

Extremely problematic to people who still play those circuits and aren't getting rebates.

Steve,

I am sure you were re-assured just as I was when the track official said they were not looking to raise takeout, track officials care about the very people who provide the money that makes the industry survive and would be completely honest with us!

yea, I am sure no one else would think of making a move like this if someone sets the precedent.

Ostensibly, it appears that the bill is more for allowing re-distribution of existing takeout generated money as much as anything... California has low takeout rates as Hegarty points out (@15.5% on straight and @20.75% on exotics).

The CHRB would have to approve any actual increases that a track/fair/association may want... And while their track record is awful, you would sure hope that they would be made to understand the lunacy of wholesale takeout increases right now on their already beleaguered business.

I would vote with my wagering dollars. Higher takeout, less play.

Now here's an idea.....handle is down so let's up takeout to offset the losses. The only people hurt are those damn gamblers.
The wrong measure at the wrong time with impact felt by the wrong people....their customers.

Exactly doc, but look at states raising taxes and fees at the same time. Gross.

I'd prefer that this conversation not to turn into a pitchfork march on the 'ol Frankenstein place, (as is going on elsewhere.. ;) )...

But obviously, the concern here is that the CHRB, which has historically shown itself to largely be a tool of track management, simply is powerless to do the right thing. If the tracks are smart about it and sensitive to the realities, there probably is room to achieve whatever goals they are hoping for with this, while potentially GROWING business. That is of course wishful thinking, but I'm a wishful thinking kind of guy..

Makes perfect sense to me.. Might as well finish what the Cal Racing Board started.. Belmont, Philly Park, and Woodbine are looking for good Owners, Trainers, and Horses.. All are welcomed..Has Santa Anita announce a closing date or are the mules, quarters and paints lookin to fill the void?

he is right. at this rate there might not be racing out there for long. maybe that why the breeders cup is there again, its the last time. (or its a partnership to try to salvage each) i hope NYRA learns from these morons. keep the tracks dirt, takeout should be REDUCED. the breeders cup will be next to fold if it does not wake up. del mar can't fill a card and has to cut days. saratoga has trainers and owners fighting to get in(but the poly tracks are safer.....lol). they did great things for cali racing with their great ideas (yeah right). the nicest weather in the country and they put in poly thats 130 degrees at race time, its just brilliant. i heard hollywood is having an open house to pick your lot for a townhouse. that should tell you how much i bet there and if you think i'm the only one you are nuts!

Again, it may benefit everyone to read some of the details involved in this. I know it's more fun to call track management, state governments and racing regulatory bodies fools and morons, but let's all try to pretend they may be people looking to improve situations...

A few more tidbits about this bill and what it was intended to do from people I spoke with in California... This measure apparently was designed to assist the Fairs first and foremost. They were receiving support from the state via agricultural-related budgets, and that money is disappearing. Allegedly in the $30-40 million dollar range annually. By being able to ask CHRB for approval of various re-applications of revenue from takeout and maneuvering of some takeout rates, the fairs are hopeful they can 'find' that soon to be missing revenue. Otherwise, they may not survive.

As for the DMR, GG, HOL and SA, they get the option of trying to change some currently state-mandated distribution of revenue towards things they need including capital improvements. The state has percentage directives that the bill makes easier to change.

The sky is falling crowd may want to wait until something actually falls before putting on the tinfoil hats. California has some of the lowest takeout rates in the country as a reminder. There may be possible positives from this bill, as hard as it is for anyone to conceive of that.

Oh I agree Steve. I'm simply saying if they do raise takeout, it is a negative. I'll wait and see. But I don't play certain places based on the take.

My comments are directed to those that are eager to expect the worst.

But what if they were to drop WPS takeout to 14% from 15.43%; drop 2/3/4 horse exotics to 18% from 20.18%; BUT raise P3/P4/P6 to 24% from 20.18%? That would be felt less by players on the multi race side but still raise revenue and perhaps also raise churn on the reduced takeout wagers? Is that a viable approach to test the waters on reduced takeout?

New York and Illinois take 25% on P3-P4... I don't hear any screaming... I also don't hear a peep of praise for California having been kept at 20% all this time on those wagers...

The bill is designed to provide flexibility. The basics of the existing takeout system in CA isn't immediately affected. Is there potential for everyone involved to do the wrong thing? Yes.. Does it have to be assumed? No..

1. Given racing's track record why should I expect anything but the worst?
2. I know your using a hypathetical, but do you honestly believe they would lower takeout and raise others to offset that?
3. You dont think serious players in NY are upset with the 25% take? I certainly have always heard loud protest when New York raises the take out, I am surprised you don't recall those discussions.
4. Yea it is more flexibility, someone that is not comnforting to me, frankly because the State of California, the track owners, and the CHRB in the majority of cases give me little reason to think it has a positive outcome.

I guess I would compare it to the current discussions about using the "nuclear option" in the US Senate to bypass normal procedure, until it happens no ne should be concerned the loopholes are in place that it could happen? Sorry, if there is a problem I think its best to voice your concerns before you have to take it in the shorts.

If they don't get dirt back on the main tracks @ SA and DM, it won't matter what the takeout policy is.

Like Crist said in his latest DVD, "When it comes to takeout, it's heading in one direction: up."

Steve i'm primarily exotics/multi race bettor and i love playing CA tracks b/c the takeout is lower, what you suggest here would put CA tracks in line with everyone else. Is there anyway you can get somebody from CHRB on ATR to discuss this? I believe it would help to here their side.

I will have Ron Charles (SA), Joe Harper (DMR) and Jack Liebau (HOL) on between now and the BC. Perfect chance to address this while I broadcast from Santa Anita next week.

CHRB less of a concern really. They rubber stamp whatever the track managements tell them too.

its not that the sky is falling...its more like another nail in the coffin and the clouds are lowering. the management, governing bodies and such are not that bright either... to say they don't have problems out there and racing handle in general is like sticking your head in the sand. want to see this game go away, alienate the bettors. its pure economics, self interests and competition. its in the self interests of racing to give the best product (quality,quanity and cost) to the bettor (customer) or people will shop elswhere. try running a track that people don't like to bet on. or even worse one that owners/trainers don't want to race on. you have california in a nut shell. people call it complaining but how long will they last at the present course and then this board will be lit up with crying: "What happened ???!!!!" someone point out a good decision they've made in 5 years and i'll listen. they are hurting" lets raise the takeout that will drum up business"...lol...lol. desolation row, " was that some kind of joke!"

:tro: :tro:

The sky is falling. Lower takeout doesn't help much when the fields are horrendous and the racing surface is garbage.

How many of you have stopped gambling on CA racing because of the surface switch?

Honest question, just asking.

So who looks out for the players?

I wager a lot less, but its just one of several factors, not the key factor. The surface IMO is actually more predictable than dirt.

Certainly not CHRB... We have to look out for ourselves, and hope that there are a few in track management that have the right thing at heart.

Not that it has a thing to do with the surface, but I've played California way more than I ever have, particularly Hollywood, the last 2-2.5 years.

Cause and effect. NAFTA created the Cali economy and now the bills are coming due. The tracks used to benefit from agriculture, no more money, have to get it somewhere. Sad nobody thought that through.

Someone with better numbers than I can support or refute this but.....

Is it not true that handle and field size are down in So Cal out of proportion to what would be explained by the impact of the recent economic realities.

If you had to predict how handle is going to compare at the 2009 BC to last year wouldn't it be less than the previous year?

I am curious as to why you have played California more than previously because I cannot find anyone in my circle who plays more on the west coast than previously.

It would be great if the takeout was sliced to reduce vertical takeouts but increased on horizontal plays (P3's etc) with larger payouts that would be a responsible way to generate more revenue for the state.

As a player, I have no problem betting the surface. But the seemingly dwindling number of horses and big time trainers that avoid Cali is being caused by the surface IMO.

ahh this is a long discussion, that would involve politics but it is directly releated to the economy, taxes, the general business cliamate in socal. The middle of the road stable owner, not the super rich, not the guy who might own a horse or two, have been driven from the state.

Me.

I don't play Del Mar or SA at all. I did take cracks at large carryovers 4 times in the last year, but other than that, zero. I used to play both tracks heavily. I don't like to lose and after the surface switches, I was losing at an alarming rate at these two tracks. There are plenty of other places for me to play that give me a much greater chance of winning.

The only track I play in CA, is Hollywood.

like john lennon wrote years ago give peace a chance.
well give the cali tracks a chance and see if they lower takeout.

Welcome to California political logic.

We have our local BART train system. When ridership is down, the BART officials raise fees to offset the losses.

In fairness to California officials, voters normally seem to tax ourselves when given the chance. I can only think of one local measure raising our local taxes that didn't pass at the polls. And it took this year's economy to barely vote down a local school tax this past spring.

Sales tax here is 9.75%. I forget all the earmarks where it now goes to.

10,

1. While I don't know the players in CA as well as I know them in the East, I believe that there are many in track management that given the right opportunity will attempt to do the right thing.

2. I do think that a scenario exists (Hollywood Park) where a takeout reduction experiment can be attempted. And honestly, California rates are lower than almost anywhere in the country. Figure out where the revenue model is now first of all. Then, why not raise the take on P6 to 22-23% (from 20%) and drop it on P3-P4 to maybe 12% (from 20%) as a serious extended promotion to see what it does to handle. HANA and the takeout reduction crowd says it will drive handle up... Let's use this opportunity to prove it to the rest of the industry.

3. The NY thing was frustrating because Barry Schwartz was lowering takeout at NYRA tracks and the state screwed it up for everyone. I do not personally find the takeout onerous in NY.

4. Again, the bill was supposedly put together to benefit the fairs. I'll get Harper, Liebau and Charles on record as to DMR, HOL and SA's intentions, and let's see if we can motivate them to do something pro-active.

All the concerns are logical as the predictable outcome here certainly remains obvious, but as I am doing in concert with the Satish Sanan conversations weekly on ATR, I am eager to promote upbeat and positive influence on these kinds of scenarios by attempting to get players and fans to see the plus side of industry situations.

Because there is so much 'loss' and 'frustration' when playing the races, the overall mindset and approach of people around the game is negatively-tinged. We have to have a more positive outlook because not doing so only furthers the status quo and current malaise and ennui.

J/P,

I understand the dynamics. I deal with EVERYONE in the industry. Track management, government regulators, owners, trainers, riders, players, fans, media, information suppliers, industry support system operators, et al... Everyone wants the best but there is an overall lack of leadership. And since the business is enormous and far flung, there are few ways to provide widespread, tangible result-evident improvements.

But there are plenty of examples of things happening that have had impact like the Racing Medication and Testing Consortium making more progress in 2 years on testing and rule uniformity than was done in the previous 30 years. If you allow the negative influence to overwhelm everything about the sport, it is impossible to acknowledge ANY positives.

Meanwhile, racing handle is off 10% while casino gambling is off 30%. Doesn't that tell us anything? The bubble burst on the breeding side will end up a positive as well because its' effect could serve to force the reduction in meet days that so many believe will be a true benefit.

In life, if you meet every challenge with contempt and disdain for the mechanisms that are needed to implement action, no result can be well received. As LBJ said, "Don't spit in the soup, we all have to eat it."

The takeout is analogous to taxes. Raise taxes on something, like the infamous "yachts" example from the 1980's, and guess what -- people stop buying yachts. Then the yacht manufacturers start going out of business until the market seeks its new level: less buyers who are willing to pay the higher price.

Cutting taxes has the reverse effect.

If they had a short term plan to cut takeout to increase the health of the game, more money coming in at a lower takeout rate fueled my more players would still exceed the money coming in today at the higher rate fueled by less players.

As Steve often points out on his radio show, you still might have too much racing and need to close some tracks, reduce some dates, the breeding market will self regulate and there will be less horses, but with simulcasting and lower takeout the game could be in a lot better shape. The players would still have enough to wager on all day, and with better returns, it might be more attractive.

The government guys want the game to make money for the state every year, but they don't demand the same performance from the things they spend the money on, so how about giving the industry a break on earnings goals for a few years and let it get healthy?

I'll bet the BC cause I'll be there but that will be the first time I'll have bet CA racing since last BC. I don't even feel like handicapping the surface is that difficult, I simply don't like it as a dirt replacement and don't want my money going towards supporting it. If they make it a 3rd surface like it should be then I'll go back to wagering it.