09/18/2003 11:00PM

Bettors face legal mugging


SARATOGA SPRINGS, N.Y. - My personal medical and automobile insurance premiums went up this year. Should horse owners pay the difference?

Of course not. So please explain to me why people who bet on California racing should now pay for higher workers' compensation fees for horsemen.

The recent proposal by the California racing industry to extract $10 million from bettors to pay for rising insurance costs is an outrage. Fortunately, California legislators adjourned for the year without acting on a bill that would have raised the takeout on all multiple-horse wagers by half a percent on $2 billion worth of annual handle. Supporters say they are confident they can pass the bill early next year. Horseplayers, regulators, and anyone with a sense of fair play should do whatever they can to make sure it never happens.

Why in the world should horseplayers pay this bill? It is neither their fault nor their problem, any more than higher feed bills or manure-removal costs should end up on their plate. The only reason bettors are being targeted for this robbery is why muggers go after little old ladies: They're defenseless, and they don't fight back.

Ed Halpern, executive director of California Thoroughbred Trainers, justified the idea by saying, "What we're talking about here is instead of an exacta paying $52, it will pay $51.50. I don't think many people are going to be upset about that." In other words, it's okay to steal from the public if you do it only a little bit at a time.

It is truly frightening how little some industry leaders understand the business they are in. This isn't about 50-cent pieces - for every California bettor who invests a mere $20 a race all year long, this will add up to an additional year-end loss of $200. In the bigger picture, returning $10 million a year less to the betting public will prove even more costly to the industry, because that sum will be multiplied many times over through lower churn and lost betting handle.

The idea might be marginally more palatable if this were truly being treated like a crisis in which every constituency in the game was being asked to make a sacrifice. If horseplayers are being asked to take smaller payouts to pay someone else's insurance bills, why aren't track operators, owners, breeders, and sales companies also being asked to pay a new tax? If a horseplayer isn't going to be hurt by $51.50 instead of $52, why not also take a little something out of every race purse, yearling sale, or hot dog purchase?

It's only because racetrack and horse owners have lobbyists and clout, and customers don't. The customers supposedly do in the form of the California Horse Racing Board, but the CHRB has blessed this unholy proposal. Nice job protecting the public.

It will be particularly grotesque if this bill is revived in January. That's when Magna Entertainment, which owns three of the state's five major tracks, will be staging another Sunshine Millions, an exercise in overpaying millions of dollars to owners and breeders in exchange for their loyalty and political support. The Sunshine Millions, which gave away $3.6 million in inflated race purses last year, is the pet project of Magna's chairman, Frank Stronach. On top of the purses, Magna purchases network television time to broadcast these races that have no chance of ever earning back their cost.

If the cost of workers' comp is making it unattractive for people to race in California, it's up to the tracks and government to solve the problem for an enterprise that makes the track owners and the state a great deal of money. Rather than increasing the parimutuel takeout, the state should be lowering its parimutuel tax and perhaps also using proceeds from uncashed tickets and breakage to alleviate the insurance costs. A regressive tax on an unjustly targeted group is the very last and worst approach.

The situation is reminiscent of the "checkoff bill" proposal of a decade ago, where an alliance of wealthy breeders decided that racing needed national marketing and that the customers alone should fund it through higher takeout. Fortunately, reason and public objections ultimately prevailed, and we ended up with the National Thoroughbred Racing Association and with the industry rather than the public properly picking up the check. A similar approach should be considered in California.

If the plan to mug the players passes, maybe it's time for the little old ladies to fight back. California's super-exotic bets would remain attractively priced, but there are plenty of out-of-state races Californians can play where exactas are taxed at less than the proposed 20.68 percent. Horseplayers, like little old ladies, might find that a pocketbook can be an effective weapon.