Takeout Increase Not Just Good for CA Horsemen

by | 12.21.2010 | 7:45am

California horse owners were supposed to be the only beneficiary of the increase in takeout on exotic bets that takes effect in the Golden State on Jan. 1, 2011, but tracks and horsemen in other states will also be getting a larger chunk of each dollar wagered on multi-race or multi-horse bets on California races.

The increase, part of the legislative initiative SB1072, calls for takeout to rise by 2% on two-horse or two-race bets (to 22.68%) and by 3% on bets involving three or more horses or races (to 23.68%). The new law mandates that all of the additional revenue go toward purses, with California tracks receiving no funds from the increase. It goes into effect on Jan. 1, 2011, one week after Santa Anita opens its winter-spring meet Dec. 26.

While the purse mandate may be true of wagers made in California and through ADW companies licensed by the California Horse Racing Board, there is no automatic pass through to purses from the takeout increase for out of state wagers on California races, which account for nearly one-half of all bets.

As a result of the increased takeout, all simulcasting contracts had to be renegotiated to reflect the higher takeout on exotic bets on California races. Scott Daruty, the former TrackNet Media executive who is handling simulcasting for Santa Anita, said that process is nearly concluded.

If the contracts were not renegotiated, all of the out-of-state revenue from the takeout increase would have remained with the simulcast receiving sites, to be divided between tracks and horsemen. (In the case of Nevada and other non-racing simulcast receivers, the additional revenue would have stayed entirely with the casinos  or bet takers.)

Daruty said his goal was to evenly divide the increase between California and the receiving site. Rather than charge a different rate for different bet types, the various takeouts were blended at the new rates, and the price of the signal was increased accordingly. For example, if the blended takeout of various bets (win/place/show, exacta, trifecta, pick 6, etc.) increased by 2.5%, the cost of the host fee paid to Santa Anita and the horsemen would go up by one-half, or 1.25%. The receiving site would get the other 1.25%.

“I've been pleased with the reception we've received,” Daruty told the Paulick Report. “Every group we've dealt with has been very cooperative.  I recognize there's a whole question about raising the price to the consumer, but we've said to all of our simulcast partners, we'll split that with you 50/50. So half (of the increase on out-of-state wagers) comes back to purses, and half stays (with the receiving site).”

Daruty said that spirit of cooperation included some of the biggest simulcast players, including the Nevada racebooks, the Mid-Atlantic Cooperative, the Canadian racetrack cooperative, and New York Racing Association and OTBs. Daruty said it would not be appropriate to disclose the terms of the contracts.

The big question remains whether the increase in takeout will result in a decline in handle. In protest of the increase, the Horseplayers Association of North America has advocated a boycott of Santa Anita, but many gamblers are itching to play the races there after the reinstallation of a dirt course at the “Great Race Place.”

California officials maintain the takeout rates for many wagers, even with the increase, remain lower than those at other tracks. Click here to view the comparative chart.

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