09/07/2003 11:00PM

Bill would raise takeout to offset insurance costs

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DEL MAR, Calif. - Legislation that would raise the takeout on exotic wagers in California by 0.5 percent in an effort to offset workers' compensations costs to trainers was introduced last week in the State Senate. Money raised by the takeout increase would go solely to defray insurance costs.

If passed, Assembly Bill 900, sponsored by Jerome Horton (D-Inglewood), would raise the takeout on all bets others than win, place, and show from 20.18 percent to 20.68.

The bill must be approved by the end of the session this week or it cannot be reintroduced until 2004.

California racing officials see the increase as a way to finance the crippling insurance premiums faced by trainers. Most private insurance companies stopped offering policies 18 months ago. Since then, rates have skyrocketed and forced some smaller trainers to disband their stables or move to other states.

Trainers have passed the higher costs to their owners through increased day rates. Many trainers fear that continued high premiums will lead owners to move their horses out of California.

"The half-point gives us significant relief that will make a dramatic difference in how owners and trainers operate," said Ron Charles, the president of the Thoroughbred Owners of California. "The entire state is buried by workers' compensation costs.

"It's something that racing really needs in California. The object is to keep owners here."

The higher takeout would pass some of the cost of higher insurance premiums to racing fans through exotic wagers, which are the most popular bets. But the proposed increase would still leave California's takeout rates among the lowest in the nation, track officials pointed out.

For example, Arlington Park has a takeout of 20.5 percent for daily doubles and exactas and a takeout of 25 percent for trifectas, superfectas, pick threes, and pick fours. Belmont Park also has a multi-tiered takeout structure: 17.5 percent for daily doubles, quinellas, and exactas, and 25 percent for trifectas, superfectas, pick threes, and pick fours.

The proposed legislation is the latest effort to cut insurance costs for California trainers. In the past year, racing officials have diverted money from a stabling and vanning fund and a market committee to help support the insurance program.

Funds from those programs were used to launch an industry-supported self-insurance program last December through the American Insurance Group. On July 1, rates in that program were raised by an average of 12 percent.

An increased takeout could raise $10 million for insurance premiums, racing officials said.

The average premium for trainers enrolled in the AIG program is $35 per $100 of payroll and $105 per jockey's mount. For trainers who have policies with the government-backed State Fund, the rates are $65 per $100 of payroll and $173 per jockey's mount. Many trainers pay less through discounts for a lack of claims.

If the takeout legislation is enacted, racing officials said, the rates could fall to $20 per $100 of payroll and $50 per jockey's mount. Track officials estimate that horsemen pay $12 million to $16 million annually in workers' compensation coverage.

The redirection of funds from the stabling and vanning fund and other sources has resulted in $5 million going toward insurance, but costs are rising, according to Jack Liebau, the president of the three California tracks owned by Magna Entertainment - Bay Meadows, Golden Gate Fields, and Santa Anita.

"We still haven't been able to stem the tide on workers' compensation," Liebau said. "Under this bill, all the money is going to workers' compensation. The tracks don't get anything."

Charles said that if the bill is passed, he hoped it would lead to an increase in participation from owners and make California racing more attractive to simulcast fans.

"If we don't do something about field size, the racing will deteriorate and the signal will be less desirable," Charles said.