The Breeders’ Cup Forum: Doing the Tampa Takeout

by | 12.15.2010 | 11:45am

While Gulfstream Park and Calder racecourse in South Florida have been able to add slot machines to their wagering menus, the state's third active Thoroughbred track, Tampa Bay Downs, has been handcuffed in the face of increasing competition from the nearby Seminole Indian Hard Rock Casino & Hotel. Thanks in part to a stable management team and an increasingly player-friendly approach to the business that has seen reductions in takeout, the Oldsmar, Fla., track is holding its own against national trends, particularly on its simulcast signal. The 2010-11 Tampa Bay Downs season opened last Saturday.

Peter Berube, 47, has been on Tampa Bay's management team 15 years, starting out as the track's comptroller in 1995 and appointed vice president and general manager by owner Stella Thayer in 2001. The Rhode Island native first began attending the races at Narragansett Park with his father, Paul Berube, the retired president of the Thoroughbred Racing Protective Bureau.

How has Tampa Bay Downs compared with national trends the last few years, in terms of up or down handle, attendance and field size?
I believe we have exceeded national trends in most areas with the exception of on-track handle, where we are probably on par with the industry declines.

For example, using 2007 as the base year and comparing it to 2010 our daily attendance has declined 10%.  Field size has remained constant at nine starters per race.  Due to the severe economic downturn in the Florida economy and added competition from the Seminole Indian Casino located in Tampa, our average daily on-track handle has declined 31%.  However, our off-track handle has grown 5%, resulting in an overall handle increase of 2% to $4.2 million per day.
 
How much of that success on overall wagering do you attribute to your policy of lowering takeout on various bets?
Given the many variables that factor into handle generation it is extremely difficult to quantify how much our takeout reductions have contributed to our handle growth.  What we do know is that since 2004 we have made measured reduction each year in select pools — the result from the players pricing side has been a 12.5% reduction in blended takeout.
            
Is there a point of diminishing returns? In other words, if you lower the take too much, is the decline in revenue for the track and purses greater than the upside you get from increasing the amount wagered?
Obviously, there is a point of diminishing returns plus a point of pushback from simulcast partners.  The business of horse racing is very expensive to produce. Studies have concluded that the optimal price is between 8-12%.  However, at that level, handle would have to nearly double to break even with current takeouts.  I just don't believe that is realistic to assume, but I do feel tracks will continue to experiment with gradual reductions.
 
What is Tampa Bay Downs' current position on rebaters?
Generally, we will do business with rebaters if the following conditions are met:
-No Computer Robotic Wagering is permitted on Tampa's signal.
-TRPB (Thoroughbred Racing Protective Bureau) due diligence report has been completed.
– Adequate host fee is paid.

What do you think the net impact will be on Tampa Bay Downs from the legislation last year that gave a tax reduction to South Florida racetrack slots and authorized more gambling for the Seminole Indians? Was there anything in it for your track?
Outside of expanding poker operating hours and eliminating poker wagering limits there was nothing in the last year's legislation for Tampa. Prior to the legislation we were already at a competitive disadvantage with the South Florida racetracks.  Now that disadvantage is even more exacerbated.
 
Where is the majority of your horse population coming from this year, and is it any different than in past seasons?
We have horses coming from 32 different racetracks.  Major feeder circuits include Calder, Kentucky, Illinois, Pennsylvania and New Jersey. The diversity has been present for many years and makes for a great betting product.
 
Efforts to make the Tampa Bay Derby a serious prep on the road to the Kentucky Derby have paid off in recent years, with the Graded Stakes Committee's recent upgrade of the race to Grade 2. What are the factors — timing of the race vs. Gulfstream's preps, including the Florida Derby, the, purse — that have made it grow?
We know we can't really compete with Gulfstream's signature race purse-wise, so we look to compete timing-wise. Trainers today are generally looking for four weeks between Kentucky Derby prep races. With that in mind this year we scheduled the $225,000, Grade 3 Sam F. Davis for Feb. 12, followed by the $350,000 Grade 2 Tampa Bay Derby on March 12, which is eight weeks before the Kentucky Derby and allows for one more prep race four weeks prior to the Kentucky Derby.
 
What else will be new or improved at the 2010-11 Tampa Bay Downs meeting?
Along with the takeout reductions we added a $.50 pick 3 to go along with our $.50 trifecta and pick 4.  The Florida Oaks lost its graded status two weeks ago.  This race will now be switched to the turf and be run with a purse of $125,000.  Our goal is to regain graded status within three years. We also will continue fan favorites including free parking, free weekday grandstand admission and $2 draft beer specials on live weekdays.

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