02/20/2012 9:09AM

Jay Bergman: Players' clubs imperfect but essential


Through the early stages of private ownership, the New Meadowlands has emerged as a racetrack in search of ways to attract customers. While not brand new, the Big M Club continues to evolve as a means of rewarding players for their play.

The club, which provides rebates in ranges from 2 to 7 percent of overall play, rewards players who come to the Meadowlands, or off-track wagering sites sponsored by New Jersey Sports and Exposition Authority-New Meadowlands. Thus, no phone wagering exists under this current clubs mandate, with N.J. Bets, a partnership among Monmouth, Freehold and Meadowlands, offering a separate benefit package to its players.

There are arguments among some about the value of givebacks to players, but most gambling houses understand the rules of play. Under its original structure, the Big M Club offered a flat rebate based on wagering alone. In 2010 a significant change was made to bring the give-backs more in line with the rate of takeout. Therefore players could receive a higher percentage of rebates when betting on tracks with higher takeouts.

The changes have helped the number of players in the club swell to 10,409.  Under former policy not all bettors were able to receive cash (betting vouchers) as a reward for play. But under new management any member who reaches a 2000-point minimum qualifies for a $20 betting voucher. Formulas vary on how points are acquired based on level of play and the takeout ratio.

Les Stark, a longtime Big M player and one of the track's higher-level clients, says, "I am a Big M Club member but have not used it for some time because the amount of rebate is not competitive with what's available."

Yet another big player sends all of his harness and Thoroughbred bets through the system. Anthony Altomonte uses the Meadowlands as his base of wagering as well as a base for his business as a horse agent. On the agency side, some of his best work has been spotting and purchasing racehorses. Million-dollar winner Enough Talk, Wearable Art and Pangiorno are three stellar purchases Altomonte helped generate for the account of owner Peter Kleinhans. On the wagering side, his strong action runs the gamut with what he claims is a 60-40 Thoroughbred to harness ratio when the Meadowlands offers live racing, to 75-25 when there is no live racing.

"How could you go without it?" said Altomonte in regard to the rebates. "The Pennsylvania tracks offer a higher rate of return because they have a higher takeout. But getting more of a rebate doesn't change the fact that they're taking too much out to begin with."

The other side of the coin for Altomonte and others is that because the Big M Club’s rebates are tied to the level of takeout, the New York Racing Association tracks and their low takeouts do not provide a strong rebate incentive for club members.

Obviously rebating players has an impact on the bottom line, but not having a club in today's market is essentially telling players to go somewhere else. Sure smart players can find a host of rebate programs that give some players more than 10 percent in kickbacks, but the average guy needs to know that the tracks not only want him to show up, but want him to be happy he came.

And there is really no secret about the return the track gets on its investment. Money rewarded to players "churns," or gets a multiplier effect, which helps increase overall handle.

The Meadowlands, of course, finds itself in a balancing act other tracks need not deal with. With every modification or give-back the track has to hope that the rewards outweigh the risks. If handle dips it could have a severely negative impact on the future product.
Last week I suggested to Jeff Gural that the Meadowlands might benefit from adding a few races on Friday or Saturday night with an improved handle. Gural made it quite clear that the track was walking a fine line between handle and purse payouts in order to ensure and maintain the existing levels through the balance of the meet.

What about Yonkers?

Since the fall of 2006, when slots and slot players first arrived at Yonkers, there became a two-caste system. Slot players were encouraged to sign up for membership and its rewards and horse players, well, they weren't told anything.

In the five years hence there is still no rewards system in place for horseplayers, although the Empire Club has been modified and improved.

How is it possible to provide rewards to slot players, when the essential takeout is just 8 percent, and offer nothing to horseplayers when the average takeout is well above 20 percent?

Of course the answers tend to be complex. Even the Meadowlands had to come up with new calculations to break down the rewards based on individual race types and racetracks. Yet despite the difficulty in creating such a system would take to create, offering no rewards program is essentially a deterrent to on-track play.

Yonkers did in fact get a boost in on-track play last year thanks mostly to the demise of New York City OTB. Yet with all of the other wagering options available to those left behind by NYC OTB one can only wonder how much Yonkers and its horsemen could have benefited with even a limited form of a player's club for horseplayers?

To this extent I have reached out to SOA of NY head Joe Faraldo.  Clearly Faraldo has been fighting the good fight for his horsemen for years and currently is embroiled in the rich debate over future casino legislation in New York. But where's the fight been for improving the handle? Where are player incentives?

Faraldo claimed in his response that the horsemen were "working" on a potential advance-deposit-wagering) account system with Yonkers management, which could address the issue, though nothing appears imminent.

While horsemen's groups in New York and surrounding slot states remain aligned about a need to maintain revenue subsidies to support the industry, one group is continuously left out of the equation – the bettor. The argument we hear is how slots money has helped the horse businesses grow. Green space is preserved and will be devastated should any of this slots money disappear. Trainers will leave and owners will follow if purse money suffers any meaningful reduction.

But the only group that could prove to politicians that the slots-for-purses program has achieved real success is the horseplayer. The green space in horseplayers' pockets needs to grow substantially to build this business.