03/26/2004 12:00AM

Kill bill that's raising takeout


NEW YORK - It is not surprising that a bill has been introduced in the New York Legislature that would institute an astronomical increase in the takeout on New York racing. Such a measure has been expected for months from the state's OTB corporations, which perpetually support such increases since they would be the primary beneficiaries.

The surprising parts are that the bill's backers are being allowed to promulgate outright falsehoods while pretending that the bill is good for racing, and that the state's horsemen's organization has endorsed it in the mistaken belief that selling out the customers will somehow help the passage of another bill it supports.

New York Sen. William Larkin, chairman of the Senate's standing Committee on Racing and Wagering, on March 10 introduced Bill 6431, which would raise takeout rates by anywhere from 25 to 67 percent over current minimums and allow maximum rates that would be the highest in the industry, according to the following schedule:

Straight bets: currently taxed at 14 percent at New York Racing Association tracks, and allowed to be as low as 12 percent and as high as 17 percent, they would be increased to a minimum of 16 percent and a maximum of 20 percent.

Multiple (two-horse) bets: currently taxed at 17.5 percent, and allowed to be as low as 14 percent and as high as 21 percent, they would be increased to a minimum of 19 percent and a maximum of 22 percent.

Exotic (three-horse) bets: currently taxed at 25 percent, and allowed to be as low as 15 percent and as high as 25 percent, they would be increased to a minimum of 20 percent and a maximum of 30 percent.

Super-exotic (four- to six-horse) bets: currently taxed at 20 or 25 percent, and allowed to be as low as 15 percent and as high as 36 percent, they would be increased to a minimum of 25 percent and a maximum of 36 percent.

The rates are listed as ranges, and NYRA, which supports lower takeouts, would presumably opt for the new minimums. So as a practical matter, straight takeout would increase from 14 to 15 percent, multiples from 17.5 to 19 percent, and non-carryover pick-six takeout would go from 20 to 25 percent.

These increases, according to the past performances on every other takeout hike in the annals of the industry, would ultimately reduce overall handle by taking money out of circulation and drive borderline participants away from the game entirely. Yet even putting aside this proven principle, the idea that these increases would help racing is entirely fallacious.

"I don't know if you've noticed it, but NYRA is losing its shirt," said Steve Casscles, a counsel to Larkin, in an interview with Daily Racing Form last week. "There's a lot of people out there who believe that the low takeout is one of the reasons."

The only people saying such a thing would be OTB officials trying to keep a straight face while pulling the wool over legislators' eyes. More than 85 percent of the handle on NYRA races is bet through either OTB's or out-of-state simulcast locations, and NYRA would not receive an additional penny through higher takeout on that vast majority of the handle. Any higher retention on on-track handle would be immediately offset by lower churn and further customer defections from the game.

What more do you need to know than that NYRA, the supposed beneficiary of this attempt to help, adamantly opposes the bill and any takeout increases and in fact supports further takeout reductions?

The way this is supposed to work is that someone would explain all this to Casscles and his cohorts in Albany, the bill would go nowhere, and the OTB's would get some lesser sop such as the ability to pull in yet more simulcast signals to divert handle from the racing they are supposed to be supporting. The support of the takeout bill by the New York Thoroughbred Horseman's Association, however, prolongs its life and will give legislators the false impression that the racing industry supports takeout increases.

The horsemen's support, however, is completely unprincipled horse-trading. Richard Bomze, its president, says he agrees with NYRA's efforts to reduce takeout and that he believes "lowering the takeout in the long run increases handle." Yet he says he will support Bill 6431 to help pass Bill 6432, which gives the horsemen's organization a non-voting 26th seat on the NYRA board and allows it to demand state audits of the horsemen's purse account.

The two bills have nothing to do with each other besides consecutive numbers on the docket, and should be evaluated on their individual merits. Bill 6432 may have some, but Bill 6431 has none. All it will do is transfer money from the pockets of customers to the wasteful OTB system and to out-of-state bet-takers, ultimately leaving less for the tracks and purses. At least Bomze's audits should be easier with less money to count.