05/27/2010 1:52PM

The H/P Ratio


As a follow-up to the previous post about purses across the country May 22, here are some of last Saturday's all-sources handle figures for some of those tracks. The final column is a metric I'm calling the "H/P Ratio" -- the amount of handle generated per purse dollar by each track:

(I haven't included CDI-owned tracks such as Arlington, Calder and Churchill because they do not release handle totals. If anyone has the spare time to do a pool-by-pool add-up off the results charts, I'll add them to the table.)

[Update: AP, CD and CRC have been added thanks to commenter Phil, who tallied up Saturday's pools. The Arlington figure is a little misleading because $300k of the $549k in purses came in two stakes races, making it an atypical Saturday there.]

Perhaps the most important thing to note is that the first five tracks on the list are at tracks without slot machines while the bottom five are all racino/slots facilities, where casino revenues subsidize purses. "Subsidize" is probably too weak a word, since the gross handle barely exceeds purses at facilities such as Prairie Meadows and Presque Isle, suggesting that over 90 percent of their purses are being supported by means other than handle commissions on their own races.

The H/P ratio does not fully reflect the economics of funding purses. Tracks receive the majority of commissions on bets placed by their patrons on other tracks. (If someone at Presque Isle bets on Hollywood, Hollywood gets roughly only 4 percent while Presque Isle takes around 14 percent, which is cut up among the track, purses, breeders, government, etc.) It would take a spreadsheet roughly the size of Rhode Island to detail the literally thousands of handle sources and splits on any day of racing.

What the H/P ratio does tell us is how "popular" each signal is with the national betting public relative to purse size. The high H/P's of Belmont and Hollywood speak to brand loyalty and customer familiarity with those circuits despite relatively undistinguished cards last Saturday. Those cards still outhandled Monmouth's gaudy opening-day card, though the point should not be lost that the excitement generated by the Monmouth "Elite Meet" experiment led to massive year-over-year gains.

Very roughly speaking, the national H/P ratio is right around $11: Last year in North America, $1.1 billion in purses generated $12.3 billion in parimutuel handle. This does not, however, mean that 9 percent of handle goes to purses: On the bulk of interstate simulcasting, it's closer to 2 percent. So an increasing share of those purses clearly is coming from racino "subsidies."

Just for fun, here are the H/P Ratios for some recent major days in American racing: