Letter to the Editor: First, Stop the Bleeding

T.D. Thornton's report on racetrack closures in California (TDN, 12/6/23) and Dan Ross's piece on Pat Cummings's research into Computer Assisted Wagering in California (TDN 2/13/24) are frightening for all tracks not supported by casinos/slots.

Santa Anita and Del Mar are high-profile tracks in trouble, but they are not alone. The problem? Host tracks are now receiving very little for their racing content.

Remember Napster, when a lot of people were stealing songs and nobody knew what to do about it?

I'm not Steve Jobs, who saved the music industry from Napster, but I'm going to tell you how to save Santa Anita and Del Mar and the rest of our tracks. When you understand how we came to this situation, you will see how easy it is to fix it.

I started working for the Thoroughbred Record in 1972. Then, the revenue from wagers was split 50/50 between the two “partners” in racing: half for the track and half for the racehorse owners' purse account. Each received about 8% of the on-track wager. It was a simple business isolated to the track location.

Off-track wagering across state lines was legalized with the Interstate Horseracing Act (IHA) in 1978. Although Congress has protected dairy farmers since 1946 with a “price floor” on milk, there was no price floor put into the IHA to protect the host tracks. A huge mistake!

After the IHA became law, Tommy Roberts, who pioneered simulcasting, negotiated a deal between Vegas sports books and some thirty tracks. Tommy told me Vegas said they could pay 10% of the wager to the host tracks. But, Vegas' actual offer was 2%. The tracks caved and accepted 2%, which meant the host track and purse account would only get 1% each and the bet takers in Vegas kept up to 15% of the wager. It was a very bad, upside-down deal.

The Vegas deal of 2% became the effective off-track distribution rate for every off-track bet taker, not just receiving tracks. As OTB's expanded off-track wagering locations, they cut into host track attendance, thus high-profit on-track wagering and concessions revenue dropped. Host track admissions and parking revenue vanished. Today off-track is more than 90% of all handle and host tracks and their purse accounts are suffering.

With the 2% rate in place, the major tracks were preyed upon by receiving tracks. NYRA, Keeneland and Hollywood Park all tried to increase the off-track rate for their races, but the hundred smaller tracks colluded to keep the rate as low as possible because they benefitted as bet takers on the major tracks' races. That was not the intent of the IHA.

The godsend of off-track wagering has now turned on racing and is devouring it. In the early days, most off-track bets were being made at receiving tracks and the money stayed in the sport. That ship sailed with computers and mobile phones. Today ADW's and robots are taking the most bets. What they pay the host tracks is so low they have enough margin to give up to 10% to whales. The money is bleeding out of host tracks and purses.

The first step for any business in trouble: Stop the bleeding.

Breeding, raising and racing Thoroughbreds is an agricultural business and sport. Over the years, Congress has responded with every possible advantage.

To stop the bleeding, Congress can establish a “price floor,” a minimum rate that off-track bet takers must pay host tracks. When Congress moved to save dairy farmers, lobbyists for the milk processors preying on them said the free market should set prices. But, the majority in Congress said “Sorry, we like milk and we are going to protect those who produce it.” There are many in Congress who like and care deeply about the Thoroughbred industry too.

Can we fix it? Yes, if Stuart Janney will commit to a “price floor” being put into the IHA, our tracks, purses and thousands of jobs in the industry will be saved. It is that simple.

Stuart Janney, chairman of The Jockey Club, personally committed to reduce the threat cheating has on the integrity of our sport. He worked with bi-partisan help from Andy Barr (R-KY) and Paul Tonko (D-NY) to pass the Horseracing Integrity and Safety Act (HISA). You need someone who has been successful with Congress to get back in harness and repeat the process.

Congress is the fastest way to save California tracks and all other racing states that do not have casino/slots support. As Mr. Janney related in working to pass HISA, you cannot do it state by state, or track by track. It has to be done at the federal level.

Today, the “partnership” between tracks and racehorse owners is far from simple and far from fair. Tracks have created subsidiaries outside the partnership with racehorse owners to take bets on other tracks' races and exploit the high profit margin. As a result, the percentage of off-track wagers going to purses drops every year. Purses fuel foal crops and ours have dropped from 50,000 to 17,000. Nobody wants track closures to return us to the days of Man o' War with a foal crop of 1,680.

The IHA puts people with feet of clay in position to approve multi-million dollar off-track bet taking deals. Dan Ross's piece told of death threats and extreme pressure on these individuals. To reduce the threats and the grip bet-takers have on the integrity of the wager, we need a “price floor” to protect the people giving IHA approval. The price floor will become the non-negotiable base rate for most approvals.

I don't expect tracks with wagering subsidiaries to support a price floor being put into the IHA any more than we expected all trainers and horsemen to support HISA. I don't expect those receiving rebates now to support a price floor anymore than those who got free music with Napster wanted to switch to iTunes. Most times, leaders have to step up and piss off some people to do what is right for the sport.

I believe a price floor on off-track wagers will allow host tracks to refocus on live racing that people want to see and they will be able to sell their product at a good price in the off-track market, something they cannot do today.

There's nothing magic about taking bets. Lotteries pay gas stations a 5% fee for punching in the customers' numbers and taking their wager. A price floor in the IHA is the first step for host tracks to change off-track wagering from a “buyers' market” to a “sellers' market,” where those producing the racing content drive down the costs of bet taking.

Is it more important for us to save Santa Anita, Del Mar and other tracks, or to let the money from their racing content go to Fan Duel and Draft Kings?

What is the fair rate for a price floor?

I believe it is 10%, meaning 5% of the off-track wager goes to the host track and 5% to the racehorse owners' purse account. Blended with on-track handle and imported handle, the host track and purses could exceed 15% of the total wagered on their races.

With a flat rate of 10%, mandated by federal law taking precedence, the states will not be able to pass laws to get a competitive advantage in the off-track market. We've had enough of that. (NJ passed a law prohibiting their receiving tracks from paying more than 3% to a host track.) Each host track would still have the freedom to negotiate a higher rate than the price floor for their racing content.

That's how you stop the bleeding and allow Thoroughbred racing to be turned around.

I doubt most of you give much thought to track business and off-track wagering revenue. But, in the changing world of Thoroughbred racing, that's make or break for our sport. Take the time to learn how who gets what from racing impacts the breeding shed.

And right now, for Santa Anita, Del Mar and the life you love, contact Stuart Janney at The Jockey Club and voice your support for a price floor of 10% to host tracks on all off-track wagers be put into the IHA. Quickly.

The post Letter to the Editor: First, Stop the Bleeding appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

Source of original post

Bill Legalizing Horse Racing In North Carolina Advances

Tar Heel Downs anyone?

A sports betting bill that also contains language that will legalize racing in North Carolina was passed by the North Carolina State Senate Wednesday and now heads back to the House for a final vote. A similar bill, but one that did not include racing, has already been passed by the House, which will now vote on the amended legislation. The House is expected to vote in favor of the amended bill and North Carolina Governor Roy Cooper is also believed to be on board.

But even if the bill is signed into law, it appears unlikely that anyone would step forward to open a track in the state. The bill does not include any provisions where a track could partner with a casino or have historical horse racing machines.

“We have a long way to go,” said North Carolina-based owner Hubert Vester Jr. “This bill moves us a step closer but I would have some concerns about the economic impact and the viability of actually having a racetrack here in North Carolina. Maybe if they had something in the Charlotte area it could draw enough people, but I think, first, it would take having an economic study that would address the viability of having a track in the state. It would be an uphill battle. Now that it's about to be legal, maybe that is a step in the right direction. But I still think there are some economic hurdles that would have to be crossed.”

While live racing is unlikely to happen in the state, the bill will allow for North Carolina residents to open Advance Deposit Wagering (ADW) accounts, which are currently illegal.

“This is long overdue,” said North Carolina resident and owner-breeder Bill Thompson Jr. “There has been a conservative majority in the state for a while representing a religious constituency. We've had a state lottery for quite some time, but that's all we've had. Pari-mutuel betting in the state has been prohibited. To me, that's been a big inconvenience, not being able to bet on your own horses. To have it legalized now where it will come to pass that we can have ADW accounts and mobile wagering, that will be very much welcomed.”

The post Bill Legalizing Horse Racing In North Carolina Advances appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

Source of original post

Caesars Launching Racebook App in Partnership With NYRA

Caesars Sportsbook, in partnership with NYRA Bets, is launching a new horse racing account wagering app, Caesars Racebook, Caesars and the New York Racing Association announced Thursday. Available for download this spring, Caesars Racebook will utilize the NYRA Bets platform to provide bettors with pari-mutuel wagering services on premier horse racing content from more than 250 tracks around the world.

Caesars Racebook will offer wagering on marquee horse racing events in the United States, as well as on international tracks. The new app will also offer players all the additional benefits of NYRA Bets, including race replays, handicapping insights and more.

“Following our successful rollout of Caesars Sportsbook, we're delighted to launch Caesars Racebook in partnership with NYRA Bets,” said Dan Shapiro, Senior Vice President and Chief Development Officer of Caesars Digital. “NYRA conducts world-class horse racing and NYRA Bets has access to the best horse racing content from around the world, including from Caesars-operated racetracks. We're proud to support the horse racing industry while introducing the new Caesars Racebook app and Caesars Rewards to horse racing bettors.”

NYRA Bets, the fastest-growing national advance deposit wagering platform, is available in 30 states and continues to expand its reach and customer base throughout the country. “NYRA considers it a core responsibility to grow the sport by increasing consumer access to world-class horse racing both in New York and around the country,” said Dave O'Rourke, NYRA President & CEO. “Pairing the world-renowned Caesars brand with the rapidly growing NYRA Bets wagering platform is an ideal way to launch Caesars Racebook, which will soon deliver all the NYRA Bets tools and advantages to the Caesars customer base.”

Horse racing and sports fans across the country will soon be able to download the Caesars Racebook app on iOS or Android. Similar to the Caesars Sportsbook app, every wager placed on Caesars Racebook will earn Caesars Rewards.

The post Caesars Launching Racebook App in Partnership With NYRA appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

Source of original post

Taking Up For Bettors: Kentucky Rep. Koenig Seeks To Eliminate ‘Breakage’

Kentucky State Representative Adam Koenig is taking up the banner for the most-neglected component of horse racing: the bettors.

Koenig is co-chair, with Sen. Damon Thayer, of the Pari-Mutuel Wagering Taxation Task Force appointed to review taxation policies on gambling on the Commonwealth's horse-racing products. Koenig said on last Friday's Kentucky Racing Spotlight weekly radio show on Louisville's ESPN 680 that based on the task force's findings, he will introduce legislation for a flat 1.5-percent tax on the gross (before winning bettors are paid off) of pari-mutuel wagers, including the highly successful historical horse racing operations. Such a measure would substantially increase the tax on bets placed on Kentucky racing through online platforms, known as Advance Deposit Wagering (ADW).

Another provision Koenig is championing in the bill he plans to introduce during the current 2022 state legislative session: rounding payoffs down to the penny, rather than down to the dime on a $1 mutuel.

The practice of rounding down is known as breakage. It's a decades-old policy that allows racetracks and any licensed bet-taker, including ADWs, to keep the extra money, to the frustration of horseplayers who believe it should be returned to winning bettors.

“The thing I'm perhaps most excited about is the elimination of breakage on live racing,” Koenig told Kentucky Racing Spotlight hosts Joe Clabes and Jennie Rees on the show. “It's something that happens at every track everywhere. Win, place, show … they (pay off) – at least in Kentucky and most other states – to every 20 cents (on a $2 mutuel). You pay $3.20 or $3.40 or $3.80. But it doesn't work out that way. You might deserve $3.47 or $3.68. We're going to try to make that happen. Because it's your money and it goes back to – I don't know, the 1930 or 40s – when the only place you could gamble legally was the track. There were long, deep lines, and they didn't want to pay everybody to the penny every time they came up.”

If Koenig is successful, Kentucky would be the first state to essentially eliminate breakage. New York, with a sliding breakage calculation, is the only state in the last 30 years to address breakage, but the proposed plan for Kentucky is easily the most player-friendly of any, according to industry expert Pat Cummings of the Thoroughbred Idea Foundation.

“I think not only will it be great for the bettors, but I believe it will be an incentive for people across the country to bet on Kentucky racing,” said Koenig, an Erlanger resident whose district in Boone and Kenton County is adjacent to Turfway Park. “Maybe if you're a bettor like me who bets $5 to win, place on a race, it's not that big a deal. But if you're somebody who doesn't mind betting $200 across the board on a horse, that adds up to real money over time. I think the tracks will get the money back with additional wagering.”

“… I'm not doing it to cost the (tracks) money or even to help their product. I'm doing it because with the passage of this HHR (legislation) and increasing the numbers of HHR machines, we've taken care of the breeders, taken care of the owners; the trainers and jockeys are running for bigger purses,” Koenig continued, referencing legislation passed last February to protect historical horse racing. “The only person we haven't taken care of is the bettor. You can't run the show without all of those people — but you have to have the bettors.”

[Story Continues Below]

The task force was convened in the wake of last year's passage of SB 120 that cleaned up the language to ensure that historical horse racing was legal under the Kentucky constitution. Some lawmakers felt HHR should be taxed at a higher rate, with more money going to the state's General Fund. Subsequent testimony documented that — by being taxed on the gross rather than on net revenue and with a mandated amount going toward purses for live racing — the excise tax on HHR is effectively 32.2 percent.

That places Kentucky's tax rate on the high end of surrounding states with casino gaming, testimony before the task force documented. While standardizing the 1.5-percent excise tax, Koenig's bill would increase the tax on online and phone wagers made in the state from 0.5 percent to 1.5 percent.

“There is a range of tax rates when you make a wager,” said Koenig, who continues to work on the language of the bill before filing. “… When you're at a track and you go to the window, go to a (self-bet) machine, there's a 1 1/2-percent tax on that. But if I am at Keeneland or Churchill Downs and I bet on a simulcast race, say Oaklawn, that's taxed at 3 percent. If I bet on that same race at Oaklawn on my phone, it's taxed at one-half of 1 percent. I'm sure these tax rates made sense when they were created. But now, they don't make so much sense.

“… I believe we're going to generate a fair amount of money, especially with raising the ADW tax from a half of a percent to 1 1/2 percent. It's very complicated because within those tax rates you're funding purses for thoroughbreds, for standardbreds, funding the University of Louisville (equine business) program. Funding pays for improvements at the track. It's more complicated than I ever thought. We're going to make it more even, so that it makes more sense, and we're going to generate some additional revenue for the General Fund.”

Koenig said his bill also will remove any restrictions on how Kentucky Thoroughbred Development Fund (KTDF) supplements can be used as long as recipient horses are foaled in the commonwealth and sired by a Kentucky stallion. The bill would leave it up to the Kentucky Horse Racing Commission's KTDF advisory committee to set the policy but would be expected to allow the Kentucky-bred supplements to be added onto claiming races for the first time.

Among other likely provisions:

Funding for the equine programs at the University of Kentucky and the Bluegrass Community & Technical College.

Requiring that the horse-racing industry pay for the cost of its regulation, with the budget for the racing commission currently coming out of the General Fund.

Creation of a revenue stream to provide help for problem gamblers. HHR facilities would be required to maintain and share self-exclusion lists, where problem gamblers who ask to join the list will be refused admission to such properties.

Kentucky's 2022 legislative session runs through April 14.

Kentucky Racing Spotlight, presented by the Kentucky HBPA, will run Fridays from 6-7 p.m. ET through March 4 on ESPN 680/105.7 with streaming at espnlouisville.com, the ESPN 680 app and the iHeart and TuneIn apps. The shows are archived at davisinnovation.com/kyracing. In addition to the Kentucky HBPA, Kentucky Racing Spotlight is sponsored by Davis Innovation, NKY Tribune and the Louisville Thoroughbred Society.

The post Taking Up For Bettors: Kentucky Rep. Koenig Seeks To Eliminate ‘Breakage’ appeared first on Horse Racing News | Paulick Report.

Source of original post

Verified by MonsterInsights