12/09/2010 3:11PM

California officials hope takeout increase leads to bigger fields


TUCSON, Ariz. – California racing officials stressed on Thursday that a takeout increase on exotic wagers that is scheduled to go into effect on Dec. 26 was supported only out of necessity, in the hopes that it would drive up field size and present a better wagering product to horseplayers.

“The takeout increase, it’s really a purse increase,” said the chief executive of Del Mar, Joe Harper, one of three California officials to appear on a panel on Thursday morning at the University of Arizona Symposium on Racing and Gaming, referring to a requirement that all additional revenue from the increase be directed to purses. “You hated to do it. Most of us – actually, I don’t think any of us – wanted to do it. But we felt we had to.”

The takeout increase has been heavily criticized by bettors, who stand to reap lower payoffs for winning bets in the exacta, trifecta, pick six, and other exotic wagering pools through the 2-point rise in two-horse bets and 3-point rise in three- or more-horse bets. On the flip side, horse owners stand to gain tremendously by the increase because of projections of a 25 percent boost to purses.

David Israel, the vice chairman of the California Horse Racing Board, said the purse increase would allow California to attract out-of-state trainers to the upcoming Santa Anita meet, which starts on Dec. 26. One of the problems affecting field size in California, Israel said, is that the state cannot easily attract horses to ship-in for one day because of the relatively vast distances between the tracks in the state and tracks in other states, when compared with tracks on the East Coast.

“We’re hoping that this will allow people to ship strings of horses in for the entire meet,” Israel said.

The panel, moderated by Daily Racing Form National Correspondent Jay Privman, who is based in California, touched on a variety of topics affecting California, from the circuit’s current financial struggles to the future make-up of its year-round racing schedule. The discussion was dampened somewhat by the limited representation of the panel’s members – in addition to Harper and Israel, the only other panelist was Norm Towne, a longtime racing lobbyist – but Privman said that representatives of the state’s owners’ and trainers’ groups, as well as the owner of Santa Anita and Golden Gate Fields, MI Developments, declined to appear on the panel or did not respond to invitations to sit in.

The takeout increase was part of a bill passed earlier this year that also legalized exchange wagering as of 2012. Exchange wagering is a type of betting pioneered in the United Kingdom that allows customers of an account-wagering service to post odds on horses and take bets from other customers of the service.

Under the law, racetracks, horsemen, and the racing board would all have to approve a contract with an exchange-wagering operator in order for the practice to be allowed. So far, the panelists said, California racing interests have yet to come to an agreement on what the model would look like.

The business model in place in the United Kingdom and other jurisdictions where exchange-wagering is allowed directs approximately 10 percent of the profits from a 5 percent commission on the wagers to the racing industry, an amount that critics contend is approximately 1/20th to 1/10th of the amount that racetracks and horsemen receive from parimutuel pools. Critics of the model have said that the model will need to be seriously tweaked in order for exchange wagering to find approval among U.S. racing interests.

Harper said he remained optimistic that a suitable model could be developed, citing his desire to introduce new bettors to racing through a type of wagering that has proven enormously popular overseas.

“I’m confident that down the road we’re going to see something that works,” Harper said. “There’s a huge market out there for something like this.”

In addition to economic concerns, Israel and Harper also said that the ability of players to bet on horses to lose would require strict oversight of the practice to guard against the possibility of fixed races.

“I’m concerned about how exchange wagering can allow you to finagle,” Israel said. “You are betting on horses to lose. If a horse finishes second, you win. The integrity of racing has to be ensured before I’m willing to accept that exchange wagering can work.”

The panelists also said they supported a year-round racing schedule that would include several two- or three-week gaps, and Harper reiterated that Del Mar would seek additional racing dates in the future, perhaps with short meets in the fall and spring, if and when Hollywood Park in Inglewood closes. The owners of Hollywood Park have said that they will redevelop the property when market conditions in California improve.

For now, though, Del Mar is satisfied with the makeup of its immensely popular seven-week stand from late July to early September, Harper said.

“The summer meet is just right,” said Harper. “It works. I’d hate to mess with it.”