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Who Cares? It's Just a Betting Fee

I've been reading the twitter and a lot of chatter about Monarch signal fees, takeout, NYRA ADW taxes and the like are filling it. Some seem to think none of this is really a big deal because bettors will play no matter what.

Back in 2009, New Hampshire added a tax on winning wagers at horse and dog simulcast centers. It was really "no big deal", according to many - it was not even as bad as a takeout hike, it was only on winning wagers of over $600.

It was a big deal:

"In the 2010 calendar year alone, the amount of money bet on simulcast Thoroughbred races at Rockingham Park, The Lodge, and Yankee Greyhound Park dropped by a combined $19,438,111. The overall handle at the three tracks, which no longer conduct live racing of any breed but also simulcast harness and greyhound racing, was off a total of $24,064,567"

"While Paul Kelley, the executive director of the state’s charitable gaming and racing commission, said it is difficult to ascribe a hard number to how much business was lost, handle figures that are public record prove the damage to be in the tens of millions of dollars."


In 2011, common sense and some hard work prevailed. They repealed the fee and hoped to get the lost handle back (that has not happened yet, because when players leave, they tend to leave for good at a fair to high propensity).

New Hampshire is a state without live racing, and one with barely more than one million people.Imagine what these type policies North American wide do.

When you make it harder to consume a betting product - whether it be raising a signal fee, adding an ADW tax, banning internet wagering or shutting off signals - players leave, and handle is lost. Some of it never to return.

Comments

Anonymous said…
Massachusetts did the same thing as New Hampshire last year (Suffolk downs didn't fight it, they played mickey the dunce) I know it hurt them but I haven't seen any figures.

Steve Wynn doesn't like it at all and will try to change it.
Anonymous said…
It's disbelief that horse racing elite believes bettors will bet through anything. At 10% takeout in 1948, handle was $8 million at Belmont.
Sal Carcia said…
Tracks getting a fairer share of the simo revenues is long overdue. Long term, it will help the game as it should help increase track revenues and purses.

With respect to the bettors, the nonrebate players should not be affected by a redistribution of signal fees. It is an internal distribution issue that should not be added to the takeout.

I imagine it will cut into the rebate play though. There will be less margin for the ADWs to give rebates. How, that affects the game long term is less clear to me.

Anonymous said…
>>>>Tracks getting a fairer share of the simo revenues is long overdue. Long term, it will help the game as it should help increase track revenues and purses.<<<<<

NYRA charging Gulfstream 10% instead of 5% and Gulfstream charging NYRA 10% instead of 5% just shuffles the money.
Ron said…
My adw will not be able to take Oaklawn this yr. I haven't been a big bettor in about 7 yrs, but I did bet 45 k on Oaklawn and planned to bet 60-70 depending on my results. Now I'll be betting 0.
craig said…
"I imagine it will cut into the rebate play though. There will be less margin for the ADWs to give rebates. How, that affects the game long term is less clear to me."

Rebate play, however, is the only thing that was keeping handle at levels that looked respectable. As rebates shrink, so is handle. Until takeout is lowered, via rebates or lower for all, that money isn't coming back.
Sal Carcia said…
Anon: Yes! It shuffles the money to the folks who put on the show. They are at least entitled to 50% of the distribution fees. The brand has been developed by the tracks and they are responsible for a lot of the marketing. That, along with the fact that tracks and horsepeople own the product, entitles them to a lager share.

How does this help the game? If the people who put on the show can not be financially viable, then game will struggle to survive. Without the people who put on the show, there will only be distributors left with no product.
Sal Carcia said…
Craig, I am not convinced that rebate play has really helped this game as much as some claim. Rebate play has driven the lower end of the market away. This happens as a result of the effective takeout of the smaller players being increased by rebate play. There are some qualifications to this statement.

I think also that if the tracks are given a high piece of the pools, then it leaves open the opportunity for the tracks to drop takeout for everyone and not just a few. Right now, with such a small piece of the pie, the tracks dare not lower takeout.
Pull the Pocket said…
Sal,

I love your optimism n' all about things, but you need to understand what that poster is alluding to.

Signal fees are push and pull. If GP raises their signal fee to Woodbine, people betting GP from Woodbine pay a little more to GP. But on the backside, people betting Woodbine from GP pay a higher percentage to Woodbine as they raise their signal fee. What you have is, as the poster said, nothing more than a shuffling of revenue. It does virtually nothing to grow the pie.

It's like that at every track.

And also of note, this is really peanuts anyway. 26 midatlantic tracks bet about $500,000 a day on GP. If the signal fee is raised, GP might get $20,000 more a day from those tracks. As those tracks raise their fees, they might get $15,000 of that $20,000 back.

All this is done for GP making $5,000 more a raceday. That money is coming from 26 other tracks that get $5000 less a raceday for their purses.

It's shuffling the deck chairs on the Titanic, and much ado about nothing. It does not grow the pie one inch.

PTP
Sal Carcia said…
PTP, I see your point. My argument holds up better with the split between the ADW and tracks.
Pull the Pocket said…
"PTP, I see your point. My argument holds up better with the split between the ADW and tracks."

You do know the splits there do you? And the possible gross gain?

While track to track signal fees can be 3%, to ADW's it's about triple that. The big bad rebaters pay upwards of 10% on all big signals already.

Raise it to 15%? Sure, but it's peanuts. And of course, handle will fall from them, and these players are not playing on track, they are quitting, or moving offshore.

This is much ado about nothing Sal. Even the gross numbers are nothing. It's about trying to get more of a shrinking pie. It's shuffling less revenue in the end. People have to dig into the numbers and stop thinking this is some sort of "fix". It will probably do more damage rather than fix anything.

PTP
Sal Carcia said…
So, the ADWs pay 9% and the rebaters 10%, then my call for a 50/50 split is there. I have seen those type of figures disputed in many conversations online.

If 85% of the revenues comes from remote betting, then I can't understand how it is much to do about nothing. It is a reshuffling of revenues back in the direction of the producers and marketers of the show. In this case, poor distribution deals might be iceberg.