03/31/2006 12:00AM

Bettors pay the price - again

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NEW YORK - Horseplayers took a combined 1.0 steps forward but potentially 1.1 steps backward over the last two weeks.

The forward motion was the overdue approval of a customer-rewards program that will rebate a minimum of 1.0 percent of handle to some account-holders who wager $2,000 or more a month on New York races. The retreats were a 1.0 percent increase in takeout on win, place, and show bets in New York, and a proposed 0.1 percent increase in takeout on all bets in Kentucky to fund insurance payments for jockeys.

In all three cases, racetrack operators worked on behalf of the horseplayers. The New York Racing Association, Keeneland, and Churchill Downs all vigorously opposed the takeout increases, which took effect in New York Saturday and are still pending state Senate approval in Kentucky. Unfortunately, the tracks' efforts on behalf of their customers were beaten down by a combination of familiar and new adversaries - offtrack betting interests in New York, and the Jockeys' Guild in Kentucky.

In New York, NYRA and Capitol OTB were finally given the green light by the State Racing and Wagering Board to begin cash-back awards. There are minor differences in the two programs, but both will offer eight tiers of rewards that begin at 1 percent for account holders who wager between $2,000 and $4,999 a month through telephone accounts or self-service terminals.

The rebates top out at 3 percent on straight bets, 4 percent on two-horse bets, and 7 percent on more exotic wagers for those wagering $500,000 a month or more - currently a phantom category of customer. More realistically, someone who bets $10,000 a month will receive rebates of 1.50, 1.75 and 2 percent on the three bet types. These awards are not competitive with those offered by some rebate houses, but will reward and incent those currently getting nothing while leery of betting through offshore websites.

There's no such thing as a free benefit in New York racing, though, and the price to which the NYRA reluctantly agreed was an elevation of the straight-bet takeout rate from a nation-low 14 percent to the more standard 15 percent. The OTB's have been complaining for years that NYRA's rate was too low and would have blocked the one-year rebate experiment without the tradeoff. The insistence on a takeout increase epitomizes the dysfunctional nature of the current structure of racing in New York, where the OTB's by legislative mandate are set up to raise as much money as possible for themselves at the direct expense of the racing industry and its customers.

The Kentucky situation is the result of an 11th-hour maneuver by the guild, which changed a widely accepted proposal that would have cost bettors nothing. Last year, Gov. Ernie Fletcher convened a panel to create a funding mechanism for jockeys' insurance, and after extensive study and negotiation the panel came up with a plan that would raise $1.2 to $1.5 million annually. The cost was to be shared, one-third by the tracks and two-thirds by horse owners through both a $20 per horse starter's fee and a direct payment from purses. The plan was approved unanimously by the Kentucky Horse Racing Authority and endorsed by the governor. Problem solved, it seemed.

The recommendations were drafted into a bill, but the Guild then claimed that it had never supported the formula. Darrell Haire, the Guild's representative on the KHRA committee, said he was not at the meeting in which the formula was officially adopted and that his deputy did not understand what he voted for. So the jockeys went to the legislature and said they wouldn't support the bill. Their objection was that because some of the funding would be derived from purses, they would be paying a small portion of their own insurance because their 10 percent share of those purses would decrease.

Imagine that - people who choose a dangerous freelance profession being asked to pay a tiny fraction of their own insurance costs.

The Kentucky House passed a bill transferring the entire cost to bettors by an 83-12 vote March 24, but it has been stalled in the Senate, and lobbyists think it may not pass. That would at least provide some time for the jockeys to reconsider a generous arrangement that had won support from every other segment of the industry.

Racing is the only gambling industry that tries to fix its short-term business problems by changing the rules and odds of the game. Casino operators do not defray costs by decreeing that ties at the blackjack table will henceforth go to the house, or that you have to bet $11.10 rather than $11 to win $10 in the sports book. They understand that by taking money out of circulation that would otherwise be bet numerous times, their short-term gains would be outweighed by long-term business decreases and the high cost of increasingly unhappy customers.

It is heartening to see that an increasing number of racetrack operators have embraced that point of view, but it is discouraging that other industry participants still just don't get it.