The following is the sixth edition of a bi-weekly series entitled Between The Hedges, a column penned by Joe Longo, NYRA General Manager of Content Services. The series will revolve around the business of betting focusing on trending wagering topics and statistics. Send your questions for Between The Hedges to betweenthehedges@nyrainc.com.
The New York Racing Association, Inc. (NYRA) recently released its stakes schedule for the Belmont Spring/Summer meet featuring 59 stakes races worth $16.95 million in purse money.
Pari-mutuel wagering funds the majority of the NYRA purse account. In addition to pari-mutuel wagering, the remainder of the NYRA purse account is funded through VLT revenues generated by casinos located in downstate New York, most notably at Resorts World Casino at Aqueduct.
Both avenues were negatively impacted by COVID-19, but did you know that racetracks and their horsemen earn more from a wager placed on track or via NYRA Bets?
For example, if a customer is at Aqueduct and bets on a race from Aqueduct, approximately six percent of that wager goes to the purse account. If that on-track/NYRA Bets customer decides to wager on non-NYRA content, approximately five percent goes to the purse account.
With racing being conducted without spectators and off-track betting facilities closed during the pandemic, the high margin on-track wagering channel was significantly hampered.
By contrast, the shift from traditional bricks and mortar wagering to an online wagering platform or account deposit wagering (ADW) format has been expedited by the pandemic. Most horseplayers have multiple ADW accounts, so let's revisit the above example and demonstrate what happens when a customer wagers using an ADW that is not named NYRA Bets.
When this customer places a wager on Aqueduct, instead of the horsemen getting six percent to their purse account, they now get half of the host fee charged for the NYRA content. If that ADW is contractually obligated to pay 8 percent for the NYRA content, that means half or 4 percent goes to the purse account.
There is an additional tax or source market fee that an out of state ADW provider must pay for doing business in New York, but the amount that actually goes to NYRA's purses is about 0.5 percent. The same wager on the same content but different channel results in our horsemen earning 25 percent less in purse money.
If that same customer now wagers on content from a non-NYRA track, our horsemen earn the 0.5 percent from the source market fee instead of the 5 percent that would be made on track or via NYRA Bets. That is a reduction of 90 percent to the purse account.
The NYRA content is the best in the country so we can command a higher host fee than most. But what happens when you are a smaller track with less of a demand for their product?
Recent articles have brought to light that several smaller tracks, who realized a windfall in handle during the pandemic when other tracks were shut down, saw only marginal increases to their bottom line along with their purse accounts.
One such track has gone on record saying they were only getting a host fee of 3 percent. Splitting that with horsemen, 1.5 percent goes to their purse account. To maintain a daily purse level of $100,000 assuming all of it is funded through handle, they would have to average about $7 million in handle per day. How many small tracks do you know of that average $7 million per day?
As a steward of the industry, NYRA's mission is to ensure racing prospers in the state of New York and across our industry as a whole. So, support your local track.
Available in 30 states, NYRA Bets is a legal, US-based, regulated, and licensed provider of horse race wagering. Every wager on the NYRA Bets platform is an investment in New York racing and will ensure that we can continue to put on the best show in the country.
The post Between The Hedges: Where Do Purses Come From? appeared first on Horse Racing News | Paulick Report.
