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Slots racetracks: Who are the top performers?
By Matt Hegarty
Racetracks that received subsidies from slot machines in 2010 generated on average only two-fifths of the betting that non-subsidized tracks generated even though they distributed nearly equivalent levels of average daily purses, according to unofficial statistics assembled by Daily Racing Form.
The statistics were developed for 28 subsidized tracks and 37 non-subsidized tracks in North America for 2010 only.
Gulfstream Park outside Miami was the leading subsidized track in average daily betting handle at $6.88 million, followed by Oaklawn Park in Hot Springs, Ark., ($3.26 million), Fair Grounds in New Orleans ($2.97 million), Woodbine Racetrack outside Toronto ($2.36 million), and Calder Race Course in Miami ($1.93 million). Average handle at tracks with slot machines was $1.28 million, about 40 percent of the average of tracks without slots, $3.26 million.
Woodbine was far and away the leader among subsidized tracks in average daily purse distribution, at $536,789, but its average handle was $900,000 less than the average handle at tracks without slots. The average daily purse distribution at subsidized tracks was $195,524 – at least half estimated to be coming from the subsidies – compared with an average of $200,177 at non-subsidized tracks, a difference of 2.3 percent. Average field size did not vary greatly, 8.48 horses per race at subsidized tracks and 8.02 at non-subsidized tracks.
Perhaps most tellingly, subsidized tracks generated an average of $5.77 in handle for each dollar of purses they distributed while non-subsidized tracks generated an average of $14.35 in handle for each purse dollar, a difference of 249 percent. The ratio of all-sources handle to total purses is one measure of a track’s betting handle, and the accompanying table [follow the link in the opening paragraph] lists tracks by this formula.
DRF assembled statistics in three basic areas – field size, purses, and handle. Though handle figures are maintained by Equibase, the company declined to disclose the figures, citing a provision of its charter that characterizes wagering figures as proprietary information. Equibase is owned by a partnership of the Jockey Club and the Thoroughbred Racing Associations, a racetrack trade group.
DRF used a variety of sources, including state racing commissions, racetracks, and horsemen’s groups, and attempted to verify the handle data by using two sources for each figure. In some cases, DRF could only obtain one figure.
The 28 subsidized racetracks distributed $584.1 million in purses in 2010 compared with $420.7 million by non-subsidized tracks. The figure for subsidized tracks would have been higher if DRF included purse distribution at three tracks that did not neatly fit into the slots or no-slots categories. The three tracks were Monmouth Park, which used a one-time $19 million subsidy in 2010 to double its daily purses for an average of $657,662; and Tampa Bay Downs and Canterbury Park, which receive revenue from card clubs.
The gap in total purses between subsidized and non-subsidized tracks was due in part to the number of race days. Total race days in 2010 at subsidized tracks was 2,803 compared with 2,187 at tracks without slot machines. But despite that gap, the non-subsidized tracks attracted a total of $6.74 billion in all-sources wagers compared with $3.82 billion at subsidized tracks.
Saratoga Race Course was the leader among all tracks in nearly every category. The track distributed an average of $620,275 a day in purses; had average handle of $13.79 million – almost $4 million more than its closest competitor; drew an average of $165,316 in handle for each starter; and generated $22.23 in handle for each purse dollar distributed. Saratoga’s purse/handle ratio was second only to Tampa Bay, where a relatively modest average daily purse distribution and strong handle gains over the past several years pushed the track to the top of the list, at $25.71.
Saratoga and the two other tracks operated by the New York Racing Association, Aqueduct and Belmont, are expected to begin receiving subsidies with the opening of a casino at Aqueduct later this year.
The handle/purse ratio created some oddities. For example, Beulah Park ranked third among all tracks in handle/purse ratio, at $21.27, illustrating one of the marketplace realities – a track that distributes a small amount of purses can rank high on the purse/handle ratio by attracting a relatively strong amount of dollars in simulcasting. The same dynamic showed up in the purse/handle ratio for Portland Meadows in Oregon: Portland Meadows was sixth among all tracks, ahead of Belmont, Hollywood Park, Aqueduct, and Santa Anita.
“I think the figures certainly illustrate that the off-track marketplace is the primary driver of handle and [that a] small track like Beulah, properly positioned in the racing schedule, can draw attention of wagering guests from around the country,” said Chris McErlean, vice president of racing for Beulah’s parent company, Penn National Gaming Inc.
Each runner at a track that received subsidies attracted $15,804 in handle, on average, whereas racetracks without slot machines attracted three times that amount, $45,189 per runner. Significantly, the median figure for average handle per runner for non-subsidized tracks was almost half the average, at $25,488, indicating a large number of the tracks are performing below the average, principally in jurisdictions in which slot machines have not been legalized. Put simply, many of the non-subsidized tracks may be operating at a loss in the hopes of eventually receiving slot machines.
To be sure, the difference in wagering performance between the two classes of tracks is due in part to factors like brand recognition. Only a few subsidized tracks – Gulfstream, Oaklawn, and Fair Grounds – have wide, traditional followings. In addition, wagering performance is affected by market penetration of individual racing signals and the effect of takeout rates, to name only a few factors.
However, the wagering patterns should be an “ominous” sign for horsemen at tracks that receive subsidies, according to Chris Scherf, the executive vice president of the Thoroughbred Racing Associations, a racetrack trade group that includes both subsidized and non-subsidized tracks. The reason, Scherf said, is that the weakness of the subsidized tracks in the parimutuel market could lead legislators to cut off the subsidies, using the argument that the tracks are not being supported by the public.
“If politicians feel as if they are subsidizing an industry and not seeing any results, they can change things,” Scherf said. “And they often do.”
Without doubt, slot machines have benefited segments of the racing industry. Subsidies have bolstered struggling racetracks and enabled their owners to turn moribund facilities into profit centers. And they have provided billions of dollars to racehorse owners while providing a backstop to state breeding industries through purse awards and by bolstering a core economic component underlying auction prices.
In addition, the wagering numbers from 2010 do not take into account trends in handle over the last several years. For example, Todd Mostoller, the executive director of the Pennsylvania HBPA, said he believed subsidized racetracks in Pennsylvania are now attracting a larger share of the national wagering market since slot machines were legalized in 2005, citing lower rates of attrition at Pennsylvania tracks compared with overall declines in the national handle since 2008.
Mostoller acknowledged that horsemen are concerned about the low levels of handle at the state’s tracks compared with the purses that the tracks distribute. As a result, horsemen have attempted to convince the owners of the state’s racetracks, which have the highest blended takeout rates in the country, to experiment with measures that might spur handle, including across-the-board reductions in takeout. The owners have balked, Mostoller said.
“In some ways it’s a self-fulfilling prophecy,” Mostoller said. “The gaming companies don’t make any money from the racing, and so as a result, they don’t market the product. If they don’t market the product, they can’t make it any better. They’ve got no incentive to.”
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