HANA proposes Gambling Board for California
HANA proposes Gambling Board for California

The impetus behind the idea for this Gambling Board is simple. Pricing the game properly is critical when it comes to maximizing revenue for purses, tracks, and government coffers.

Racing has an industry wide problem. The cost of the game (takeout) is too high. It is too high to such an extent that we are driving business away. If we take all sources handle from 2003 and all sources handle from 2010, and then adjust for inflation and do a comparison we find that:

All sources handle from 2010 was approximately one half of what it was just seven years ago in 2003. Yet during that same time period, total revenue from other forms of gambling have actually grown. This should serve as a wake up call to every decision maker in racing.

Over the years the thoroughbred racing industry has paid out several hundred thousand dollars to consulting firms for economic studies. These studies have been prepared by highly intelligent very qualified people with impeccable backgrounds. Collectively, all of these studies basically say the same thing: Takeout has an optimal pricing point. If we make an effort to seek out that pricing point we can actually maximize revenue for purses, tracks, and government coffers.

However, we are not doing that. Instead of acting on the recommendations found in our own paid for studies, time after time racing's decision makers have purposely chosen to ignore them.

Let's use California as an example.

When the CHRB voted the Los Al takeout increase in last year, they used revenue projections that said handle would be unaffected by the takeout increase.

HANA testified at the January, 2010 CHRB meeting and told the Commissioners of the CHRB that those revenue projections were flawed and that handle at Los Al would be adversely impacted by a takeout increase.

During the 6 month period immediately following the Los Al takeout increase, year over year on track handle at Los Al was down more than 27%. Concrete evidence to substantiate that fact was presented to the CHRB and was made part of the CHRB's July, 2010 meeting package. Yet the commissioners of the CHRB ignored that evidence and voted unanimously to EXTEND the Los Al takeout increase.

Shortly after that, California track operators, the TOC, and the head of the CHRB lobbied the California legislature for a thoroughbred takeout increase. This time they gave the California legislature flawed revenue projections that said handle would be unaffected by the takeout increase.

Here we are a few weeks into the takeout increase. Year over year handle is down sharply at both Santa Anita and Golden Gate Fields. Yet at the same time, handle at other tracks is up.

The new California Gambling Board would be made up of three people: a wagering economist, a track representative who understands wagering, and a player representative who understands wagering. The objective of the new Gambling Board would be maximizing revenue for purses, tracks, and government coffers by pricing the game accordingly.

To summarize, the reason HANA has proposed a new Gambling Board is really quite simple:

In these economic times isn't maximizing revenue for purses, tracks, and government coffers more critical than ever? Wouldn't empowering people who are qualified to make decisions about pricing the game be the best way to accomplish that goal?

Jeff Platt
President, HANA

PS. HANA recently interviewed one such person who we feel is qualified to make decisions when it comes to setting takeout levels - Caroline Betts. Here's a link:

Copyright 2010