It is maddening when I read a comment by horse owners that reads something like this: “we invest a lot more than Horseplayers!” or “we should have the biggest say because we put on the show!” Both of these statements are untrue, and here is why:
Tackling the second statement. No, the track puts on the show, and the show is gambling. The proceeds from gambling losses by customers make the race track and the purses it gives out tick.
WHO CONTRIBUTES MORE MONEY?
It is estimated that thoroughbred horse owners collectively lose 40% of what they put in ( for some jurisdictions that have slots, this amount may be lower, while owners in jurisdictions that don’t have subsidized purse money added to purses may lose more).
In 2009 $1.1 Billion was distributed in purse money. After owners give 10% to trainers and pay the jockeys their share, that leaves around $900 million that goes to the owners. 40% of that is $360 million . Sounds like a lot, but it is pale in comparison to what Horseplayers lose. EDITORS UPDATE: Turns out that the number lost by owners could be closer to $1 billion, but if you take into account that Horseplayers lose after tax dollars, and much of the lost money for horse owners is pre tax dollars, the amount that Horseplayers lose in real money is much greater than what is lost by owners collectively.
$12 Billion was bet (I’ll stop short at calling this money invested, though horse owners like to use that term for the money they gamble on owning horses). The blended takeout rate is around 21%, but because of rebates the blended rate is probably closer to 18% these days. This means that over $2.1 Billion is lost each year by Horseplayers.
And if you include the lost money by gamblers at games like slots or Instant Racing, monies that are used to subsidize purses, gamblers/Horseplayers lose a lot more than $2.1 Billion each year.
I’m not even going to add the costs of Forms, data, transportation, admissions, and concessions (much of which owners can deduct, but the 99% of Horseplayers who lose money cannot).
Now, if we dissect the $360 million lost by owners further, almost all of it is lost within the industry, and a good amount of it goes to horse owners who have a horse racing related business on the side (like farms that break horses, etc.), or even a full time business (like a vet who owns horses). Some of it in the form of day pay goes to trainers, which helps subsidize the horses they own or co-own.
Another thing is that in many cases, horse owners only risk a small percentage of their whole net worth, while in many instances, Horseplayers are risking their entire net worth…in some cases, the Horseplayer doesn’t have a positive net worth.
So who exactly is more important to the racing industry? Those who lose less than $360 million $1 billion a year (mostly pre-tax), or those who lose more than $2.1 Billion after tax dollars?
Why does horse racing cater to owners and not Horseplayers? That is the bigger question. California is now a disaster thanks to putting the horse owner first. And why again do horse owners have such a major input in the price the track charges the customer?
UPDATE! QUOTE OF THE DECADE SO FAR:
“If there isn’t any gambling, owners lose a lot more. If there isn’t any gambling, gamblers lose a lot less.”
-CJ (PaceFigures.com)
GULFSTREAM PARK: P.T. BARNUM AND HARRY HOUDINI WOULD BE PROUD OF THEIR MARKETING
When reading all the fluff having to do with Gulfstream Park’s 2011 opening, one would really get the impression they have lowered their takeout rates. This is from their website:
Gulfstream Announces 2011 Wagering Menu
12/16/2010
Record Low Takeouts, New Wagers To Welcome Fans
HALLANDALE BEACH Gulfstream Park Racing & Casino announced today a wagering menu for its 2011 thoroughbred meet beginning Jan. 5 that includes:
A 50 cent Pick-5 with a record low 15 percent takeout.
Low takeout rates on Bet-3 and 50 cent Pick-4 wagers of only 20 percent.
An early and late 50 cent Pick-4.
A 10 cent Pick-6.
Rolling Daily Doubles, Superfectas and Bet-3s.
Win, Place, Show, Daily Double, Exacta and Trifecta wagers will be a $1 minimum wager.
There was a link in the rest of the article which gives takeout info on Gulfstream. I clicked it.
The first thing that struck me was seeing 26% on trifectas and superfectas. I could have sworn they were 25% last year.
It turns out I was wrong. They snuck in an unpublicized takeout hike of 1% on tris at the beginning of last year. This year, they have snuck in a 1% increase in superfecta takeout.
So what about “record low takeouts” that are being advertised on their site and being bought by the racing media?
The new pick 5 doesn’t count as a takeout drop because it is a brand new bet. And it isn’t a record low at 15%, it ties the record set by Monmouth Park.
The Bet 3 and Pick 4 rates of 20% are the same rates they had in 2010.
I don’t see record low takeoutS, I see one tied record low and that is it.
However if you look at the new Pick 6 which now resembles the Beulah Fortune 6, the nature of the bet has changed, and the takeout has gone up 33%, from 15% last year to 20% this year.
Depending on how successful the Pick 5 bet is, it will be a coin toss as to whether their actual blended rate goes up slightly or down slightly or remains around the same.
Yes, the Pick 6 has a shot of bringing in the lottery/slots crowd if the jackpot grows once or twice during the meeting, but to promote Gulfstream Park as a track that has lowered its takeout is just plain deceptive and wrong.
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Tags: Contributes, Horse, Horseplayer, More, Owner, Racing
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