Updated on 09/15/2011 1:53PM

Saratoga puzzle: New takeout, old handle

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Betting on races at Saratoga Race Course has not shifted toward the wagers with newly lowered takeout rates, according to figures provided by the New York Racing Association.

Bettors at the track, who account for approximately 22 percent of the Saratoga handle, seem to have adapted to the new rates, wagering much more on the reduced takeout bets. But horseplayers around the country have not followed suit, and the overall handle has not changed.

The results are cutting against conventional wisdom and the theories of several racing economists who have studied takeout reductions. Those economists argue that bettors will favor wagers with lower takeouts by concentrating on cheaper bets and by wagering more money into pools that appear to offer greater value. The end result, the theory says, will be an increase in handle.

However, offtrack bettors have not favored the cheaper bets, and all-sources handle is up only slightly at $356.6 million compared with $356.3 million last year over the first 25 days of the 36-day meet. Attendance at Saratoga is up approximately 1 percent over last year, to an average of 28,496 a day.

The bets most affected by the reductions - exactas - commingled wagering has actually decreased, forcing NYRA officials to search for answers.

"I've got to say that I'm surprised that there hasn't been that shift in total handle," said Bill Nader, a NYRA senior vice president. "It's a little disappointing."

As a result of legislation passed just before the Saratoga meet began on July 25, the takeout on win, place, and show wagers was reduced from 15 to 14 percent. Takeout on exactas, quinellas, and daily doubles was reduced from 20 to 17.5 percent, and the takeout on the pick six on non-carryover days was reduced from 25 to 20 percent.

Although a cool economy could account for the lack of growth in the overall handle, no good explanation seems to exist for the lack of interest in the cheaper bets. Out-of-state bettors may be unaware of the takeout reduction, but even if they are, the market share of cheaper bets should increase as bettors instinctively migrate toward value plays, economists argue. That has been the case both ontrack and at the Aqueduct simulcast facility.

In the national commingled pool, 32.94 percent of all wagers are being placed on win, place, and show bets compared with 32.53 percent last year, an increase of only 1.2 percent. But most surprisingly, the share of betting on exactas, quinellas, and daily doubles - the most popular form of wagers at NYRA tracks - has fallen nearly one percent, from 38.63 percent to 38.26 percent. On exactas alone, share has fallen from 32.60 percent to 31.53 percent.

The share of handle on exotic bets - those with three or more wagering interests - has risen to 28.80 percent from 28.78. The rise accompanies the implementation of a pick-four bet this year, which has siphoned money from more established exotic bets like the pick three and pick six.

Ontrack and at Aqueduct, the story has been much different. The share of wagering on win, place, and show bets has increased 8.5 percent, from 32.80 percent to 35.61, while betting on multiples has increased 6.4 percent, from 37.67 percent to 40.11 percent. The share of wagering on exotic bets, however, has plummeted 17.8 percent compared with last year, from 29.53 to 24.28 percent.

When asked to comment on the Saratoga handle, Richard Thalheimer, an economist at the University of Louisville who has made many studies of the takeout issue, said: "It's very hard to look at in isolation. The only thing you do know is that if takeout is reduced, people will wager more. So something else must be going on."

In order to get the takeout-reduction legislation passed, NYRA and its horsemen agreed to shoulder the burden of any decrease in revenues because of takeout reductions. So far, the cuts have cost $4.7 million, NYRA officials said, although that money has been redistributed to bettors.

NYRA is crediting the legislation, which allowed the association and the state's OTB companies to take additional signals during the Saratoga meet, for increasing handle in the state on horse racing. Total handle at Aqueduct in New York City, for example, has increased 35 percent, NYRA said, because of simulcasting. Handle on Saratoga's races at Aqueduct has increased 4.2 percent.

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