10/25/2016 3:38PM

Average handle falls at Meadowlands despite takeout cut

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Handle numbers were down significantly at the recently concluded Monmouth-at-the-Meadowlands all-turf meet in New Jersey despite a well-publicized cut in the track’s takeout rate to 15 percent across the board, the lowest in the country, according to figures compiled by Daily Racing Form that were confirmed by officials at the track.

Average handle per day was down 13 percent, from $1.24 million per card in 2015 to $1.07 million this year. The meet this year had 12 cards, and ran from Sept. 28 to Oct. 19. A Friday and a Saturday card early in the meet were canceled due to heavy rains. Last year’s meet had 10 cards, with two Friday cards and one Saturday card canceled. Each card during each meet had six live races.

Average field size during the meet was down nearly one horse per race, from 9.9 horses per race in 2015 to 9.03 horses per race this year. Declines in field size often lead to declines in handle. Still, the 9.03 average-field figure for the Meadowlands meet was well above the running national average of 7.7 horses per race through September of this year.

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John Heims, a spokesman for Monmouth, which is run by the same horsemen-led company that administers the Meadowlands Thoroughbred meet, said that the figures for the meet were disappointing because of expectations that the takeout cut would boost handle. However, he also said that the comparison of the two meets suffered from a decision this year to run live race cards on Wednesday nights and to run both a Monday and Tuesday card at the end of the meet.

“We were obviously disappointed,” Heims said. “The whole point of [cutting the takeout] was to see if we could get a boost from this. Having said that, there’s not enough data to make a definitive conclusion.”

The takeout is the percentage of each pool that is extracted prior to payouts being calculated. A cut in the takeout increases the amount of money distributed to bettors through higher payouts, but it simultaneously reduces into the amount of money retained by the racetrack to pay its bills and fund its purses, provided handle does not increase to an amount to make up for the reduction.

Most economists believe that cuts in the takeout should result in higher handle numbers because players are attracted to the potential for higher payouts and winners bet more of their money back into the pools, especially over the long term. However, that dynamic has stubbornly resisted measurement, in part because of limited data that can adequately weigh the effects of takeout reductions or increases in isolation of the myriad factors that can have significant influences on the amount of wagers a race attracts.

Horseplayer groups have been outspoken over the last several years of their support for reductions in takeout, especially in light of takeout increases in California in 2012 and at Churchill Downs in 2014. While racetrack executives rarely speak out in support of raising or maintaining takeout levels due to fears of public backlash, many privately grumble that supporters of takeout cuts consistently overstate the positive impacts while ignoring the negative effects on a racetrack’s revenue streams.

In the case of the Meadowlands, the takeout rate for win, place, and show wagers was cut to 15 percent from 17 percent; the takeout for exactas and daily double was cut from 19 percent; and the takeout for pick threes, trifectas, and superfectas was cut from 25 percent. Takeout on pick fours and pick fives remained at 15 percent. With the decline in average handle and the cut in the takeout rate, the meet likely generated at least $400,000 less in wagering revenue than last year, from total handle of $12.9 million.

Heims said track officials have not made a decision on whether to keep the takeout rate at 15 percent for the Meadowlands meet next year.  

The Meadowlands takeout cut was the second implemented by a racetrack this year. Canterbury Park in Minnesota cut its takeout for a 69-day meet from a blended rate of 20.4 percent to 16.5 percent, and while average all-sources handle rose 6.8 percent, track officials said that the overall increase was well below expectations and that the track retained less wagering revenue this year than in the prior year.

Like the Meadowlands, average field size dropped at Canterbury this year. Both meets were also conducted against a backdrop in which the most popular racing signals are attracting higher shares of the overall wagering market at the expense of mid-sized and small tracks.

Heims pointed out that average handle at this year’s Monmouth Park meet was down 25 percent in the midst of a cut in the number of daily races and drops in field size, and he said that bettors, for some unknown reason, may not be targeting New Jersey racing this year as aggressively as they have in the past.