09/23/2004 11:00PM

Two tracks plan to block rebate shops for 2nd year

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LEXINGTON, Ky. - At least two racetracks that cut off rebate shops this year are planning to do it again during their next meets, officials of the tracks said this week.

Oaklawn Park in Arkansas and Tampa Bay Downs in Florida plan to refuse to take wagers from players who bet through rebate shops. Other tracks, however, said that they have not decided how to treat rebate shops, with some maintaining that the issue needs more study.

The dilemma of how to deal with rebate shops and their increasingly powerful players, a controversial topic for several years, was recently brought to the fore by a report commissioned by the National Thoroughbred Racing Association. The report recommended that racetracks carefully study how handle affects revenue, including the possibility that some increases in handle may actually result in declines in net income.

The decisions by Oaklawn and Tampa Bay have created the possibility that bettors will increasingly be able to avoid tracks that allow the participation of players at rebate shops. Such players have posted consistently high winning rates over the past several years, sometimes with the aid of sophisticated betting programs.

At the same time, the two tracks' decisions have underscored fears that bettors who consistently win will be shut out of betting pools only because they are winning.

Bobby Geiger, the director of simulcasting and wagering at Oaklawn Park, which will run next year from Jan. 21 to April 16, said Friday that Oaklawn's policy will be to cut off players "who are receiving excessive rebates coupled with robotic wagering programs." He called the tools "unprecedented advantages" that have created a class of handicappers who receive better returns from the parimutuel system than someone who has made identical wagers at a site that does not award rebates.

"We are not interested in a great handicapper who is sitting at Keeneland, playing mano-a-mano against everybody else at the same takeout rate," Geiger said. "If he can win, while contributing to purses and racetracks like everyone else, more power to him. The only reason these other guys can win is because their rebate comes out of the industry's purses."

Peter Berube, the general manager of Tampa Bay Downs in Florida, said on Friday that his track would once again shut out rebate shops when Tampa's meet begins on Dec. 11. Last year, Tampa asked rebate shops to pay a dramatically higher fee for the Tampa signal, and when the shops declined, Tampa cut the sites off.

Berube, who credited the blackout for returning more money to his regular players, said he did not have problems with winners, but rather with the computer programs that are frequently used by rebate-shop players. The computer programs scan wagering pools, compare the anticipated odds to prices calculated by the computer, and then transmit wagers based on that analysis just before betting is closed on the race, the NTRA report said.

"It's not fair to the rest of the players for one guy or one syndicate to have the final look at the odds and then send in hundreds of bets without anyone seeing them," Berube said.

Rebate shops have thrived over the past five years by offering some of the best players in the game at least 10 percent of their handle back in cash. Because the rebates have allowed many of the players to consistently post profits, handle at the sites has surged. The NTRA study said that players at rebate shops were winning at such consistently high rates that other players were finding it harder and harder to beat the game's takeout - but, as officials have pointed out, that may also be because the best players in the game have migrated to the sites.

Most racetracks have been reluctant to cut off the shops because of the vast sums of money that the players at the sites provide to parimutuel pools. Last year, rebate shops accounted for $1.2 billion of the $15.2 billion U.S. handle total, the report said. Racetracks typically sell their signals to the shops for about 5 percent of handle, according to officials, slightly above the typical simulcast rate of 3 percent, but those figures have never been verified.

Churchill Downs Inc., which owns six racetracks, including Churchill, Hollywood Park in California, and Arlington Park in Illinois, is not taking any immediate action on the NTRA report's recommendations, according to Karl Schmitt, president of the track's simulcast company.

"From our standpoint, the jury is still out," Schmitt said. "We have a lot of thinking to do, and we need to analyze these issues further."