Calif. law allows takeout changes

California Gov. Arnold Schwarzenegger signed a bill Friday that would allow racetracks in the state to seek approval to raise takeout rates for any bet to up to 25 percent of the handle, according to state records.

The bill opens up the process by which takeout rates are set in California, gives racetracks the opportunity to dramatically increase existing takeout rates, and allows the racing industry to petition to redistribute portions of the takeout, according to officials. Under the legislation, any changes to the takeout rates or the way the takeout is distributed must be approved by the racetrack, the state's horsemen's association, and the California Horse Racing Board.

Jack Liebau, president of Hollywood Park, said Monday morning that Hollywood has no intention of seeking an increase in takeout rates, citing also a resistance to increased takeout rates among members of the state racing board. Under rules in place prior to the legislation being approved, major Thoroughbred tracks in the state have withheld 15.43 percent of all win, place, and show bets, and 20.68 percent of all other bets, some of the lowest rates in the country.

"The purpose of the bill was to give the racing industry more flexibility," Liebau said. "Hollywood Park or any other racetrack can't [raise the takeout unilaterally], and even if we could act unilaterally, we wouldn't do it at this time."

Under the new rules, racetracks will likely seek to redistribute portions of the takeout from programs that historically run at a surplus, such as a joint marketing fund, to programs that currently run at a deficit, such as a fund that provides for off-site stabling and shipping, Liebau said.

California racetracks are struggling to fill races, maintain a year-round racing schedule, and stem persistent declines in handle and attendance. In addition, Bay Meadows Race Course in Northern California has closed; the owner of Santa Anita Park and Golden Gates Fields, Magna Entertainment Corp., is attempting to sell its tracks after filing for bankruptcy in March; and the owners of Hollywood Park in Southern California have said that they expect to demolish Hollywood and redevelop the site in the next several years.

Ron Charles, the president of Santa Anita, echoed Liebau's comments, contending that Santa Anita and other major Thoroughbred tracks did not intend to seek a takeout increase under the bill.

"We have absolutely no plans to get an increase in takeout," Charles said. "That's a horrible idea right now. What this does do is allow us to redirect money within the takeout."

Sharon Autry, a spokesperson for Fairplex Park, which runs a three-week meet in September, said that she could not comment on whether the track would seek an increase in takeout, though she said the track supported the legislation.

Representatives of the Thoroughbred Owners of California, which would have to approve any increase in the takeout, did not immediately return phone calls Monday.

Horseplayers typically resist any increases in takeout because it reduces the amount of money available to be distributed to winning bettors. Economists who have studied racing also have warned that takeout increases ultimately damage racing's market share by reducing the amount of money that bettors are able to wager back into the pools and increasing the cost of making bets relative to other gambling options, such as the lottery or slot machines.