19 December 2010

Who Should Boycott California Thoroughbred Racing?

Just in case you haven't heard yet, California thoroughbred track takeout goes up starting on December 26th January 1. Takeout on doubles and exactors will now be 22.68%, while other exotic bets will now be "taxed" at 23.68%. The takeout on all exotics used to be 20.68%, which used to be on the relative low side. It was one of the biggest reasons why California A tracks had such good handles relative to the industry.

Now their double and exactor takeout rates make California racing one of the worst bets in North America.

An organized Players Boycott has been started at PlayersBoycott.org sponsored by HANA (Horseplayers Association of North America).

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I want to reiterate what I've written in previous post that I can't fault the horsemen groups for pushing the takeout hike because the horsemen get the entire proceeds from the hike. What is does is change the cut from takeout of what goes towards purses. If the cut used to be around 45%, it is now over 50%.

Horsemen groups typically do not think of the long term welfare of the game. So their take it while you can attitude is expected. Most horsemen have no clue when it comes to the gambler, especially when it comes to Economics 101 and the concept of optimal pricing.

The blame clearly lies on the State of California and the racetrack owners. Why do horsemen groups have a say in the pricing of the product to the bettors? It makes no sense. It is akin to dentists setting prices at amusement parks. It isn't their business at all.

It is their business to negotiate what cut they get from the betting proceeds...this is much different than having a say in takeout. This power to be involved in what the takeout is must be evoked everywhere.

As for the track owners. I cannot believe their stupidity. Lets say handle drops 15% because of this takeout hike. Before, it was shared with the owners (purses would drop because of it). But now, the owners will absorb the entire loss on the first 15% decrease (purses will only have to go back to 2010 levels). Any losses above 15% in handle will be shared by tracks and purse losses.

The track owners, if they were under proper advisement, should have just changed the cut so as to increase purses. They are going to look like dimwits when the dust settles. They did have a choice.

It is the height of arrogance/idiocy to believe that handle won't suffer when prices go up to the consumer. Will going back to dirt at Santa Anita help? Maybe a little, but there are many tracks out there that run on dirt, some have actually dropped takeout recently. Field size? Maybe to begin with, but California has attracted a pool of horses who prefer artificial surfaces over the years. The different surfaces do matter to quite a few horses. That is going to eventually hurt the horse population going forward. Other than a few outfits bringing in some horses, I don't see much of an attraction to go to California for basically the same purses available at Penn and Philly, especially at around $100 a day in day rate versus $50 to $70 at Penn and Philly.

Boycott or not, those who bet California tracks will be lasting a lot less. If someone used to bet $100,000 a year on California exotics, they will now be out $2,500 a year, or $50 a week. The $2500 could be the difference in winning or losing or breaking even. It could be enough to turn the player off completely.

Smaller players will also not last as much. They will wind up going less. They will wind up taking their family or friends to the track or exposing them to racing on TV a lot less. This means the likelihood of newbies coming to the track and the growth this brings will be close to non existent.

The dummy money will dry up, creating a lot less value for huge bettors. Pool size will suffer big time.

Horse racing has been on a major downhill slide, especially the last 10 years, as total handle continues to diminish. Why? Horse racing's failure to compete with other games of chance. Instead of moving closer to optimal takeout, California went the other way and has put another nail in horse racing's coffin.


1. Any Horseplayer who gives a damn about horse racing's future. The sooner a boycott like this works, the quicker this takeout hike will be revoked. Handle will drop over time as explained above, but sometimes it does take a year or two to see the economics work. If the boycott is successful, the thought of raising takeout anywhere in North America will become a non issue.

2. Anyone who loses or breaks even betting on California tracks. It is only going to get worse. As for those who win at it, your days are numbered, you might as well boycott. The whales will still suck the value out of the pools and their will be a lot less dummy money in the pools.


1. The old people who live in California that David Israel was talking about. They have nothing better to do. They'll just lose their pension checks a little faster and become a bit more miserable to their kids and grand kids. You can't expect them to care about the future of racing in most cases either.

2. Racing execs and California horsemen. Horsemen especially better learn how to bet more if they want to keep their purse structure half decent. Won't happen, but they should still try.

3. Those who consider horse racing to only be a sport or a form of entertainment other than gambling. That should account for a couple of hundred bucks in handle a day in total.

4. Mindless gamblers who just don't give a crap about anything but betting where it is convenient to do so. This is the major group that the California "brain-trust" is counting on.

5. Bettors who can still actually make money long term playing California racing. I still have a problem with anyone shelving the good of the game concept for profit, but business is business. Now, I'm talking about people who really do make money, and that list isn't very long as even a 20.68% takeout is way too high.

The Player's Boycott is now starting to receive a lot of ink on the internet:

Bill Finley: 22.68 Reasons To Boycott Calif. Racing

Players Launch Boycott Website

Horseplayers Need To Represent And Be Represented

Boycott Launched To Protest Cal Takeout Increase

Richard Eng: Takeout Boost Stirs Backlash

Why I Support The California Thoroughbred Boycott

Thar She Blows Santa Anita

There is no reason not to bet as much as you usually do. You can simply divert it to other tracks like Tampa Bay which continues to lower takeout gradually, Hialeah (yeah I know, quarter horses) which has a 12% takeout on all bets, or Gulfstream which is also cognizant when it comes to lowering takeout to grow business. This way horse racing doesn't collectively suffer while California and any other jurisdiction that is thinking of upping takeout rates learns a valuable lesson which will lead to growth.
Sign up for PlayersBoycott.org here.


Tom said...

Thanks for hammering home the detriments of the huge take outs. I know it but I need to be reminded. Although I have been a huge fan of Cal racing I will boycott . So in most states
are the take out rates decided by state legislatures ? I remember learning many years ago
Ontario tracks determine their own take outs . Is this still the case ?

Cangamble said...

Some states mandate takeout, some put minimums/maximums, some allow tracks to decide (Florida/Ontario), and some just rubber stamp anything a track wants to do.
In Ontario, a track only has to give a week's notice regarding a takeout change.
Personally, I haven't made a wager on a California track since the day the Terminator signed the takeout bill. I don't intend to even look at California past performance until this takeout hike is at least rescinded.

The_Knight_Sky said...

>>> until this takeout hike is at least rescinded.


That should be the goal. Horseplayers should be willing to tough it out for 6 months to a year.

To give the leaders incentive to lower the takeout, we can also cook up a scenario of a nationwide "pool party" on California racing to celebrate a reduction.

But first things first.
I've made preparations to wean myself off Cal racing (both north and south). I'm all in for as long as it takes.