SARATOGA SPRINGS, N.Y. – The Jockey Club will explore the possibility of becoming a buyer of last resort for failing racetracks while also potentially providing funding grants to existing tracks to upgrade their facilities and high-definition broadcasting capabilities, the organization’s top official said at the close of the Round Table Conference on Matters Pertaining to Racing on Sunday in Saratoga Springs. Though Jockey Club chairman Stuart Janney provided few details, the plans underline the deep pockets of The Jockey Club within the revenue-challenged racing industry and the organization’s accelerating ambitions to exert greater control over the industry’s direction. In addition to becoming a financial backstop for racetracks, Janney said The Jockey Club will lobby for reductions in the overall takeout rate for win, place, and show bets and press for racetracks to receive authorization to conduct fixed-odds wagering to better compete with legal sports wagering, among a laundry list of other action items for the organization. “For a long time, we have consistently and comprehensively engaged on issues whenever the industry was in need,” said Janney, who noted the organization’s board approved the action items at a meeting on Saturday morning. “The Jockey Club has – and will – be there for this industry.” The recommendations followed a lengthy presentation from officials of The Jockey Club and the consulting group McKinsey & Co. outlining the current state of the racing industry and a number of “disruptions” that have affected the racing industry, other sports and other entertainment options since McKinsey issued a wide-ranging report analyzing racing in 2011. The two presentations together took up nearly two hours of the entire 2 1/2-hour Round Table. Although the analysis of current trends in the racing industry showed handle stabilizing after steep declines surrounding the 2008 recession, Jockey Club officials said the racing industry should be concerned about sharp shifts in wagering from small tracks to the most popular tracks, a trend that suggests that smaller tracks are going to face increasing difficulties in maintaining profitability in the years ahead. In the past seven years, in fact, 11 tracks have closed, the officials said, a troubling statistic given that most new fans of the sport are created by trips to a live racetrack, according to survey data. Should tracks face the prospect of closing in the future, The Jockey Club could then present itself as a potential buyer provided no other racing buyers emerge, according to Jim Gagliano, The Jockey Club’s chief operating officer, speaking after the conference. Gagliano stressed that the organization did not plan to act as a competitor to any bids by a racing company interested in acquiring any distressed asset. The Jockey Club would also provide grant funding to racetracks that are struggling to raise money for capital improvement projects, in line with a recommendation from McKinsey that racetracks invest in their facilities to offer amenities comparable to other sports and entertainment options. Those grant funds could also be used to help tracks invest in high-definition broadcasting capabilities, Janney said. Only one-third of the industry’s racetracks can currently send out their signal in high definition, a capability that years ago became the unchallenged bare minimum for all sports broadcasts the world over. Also based on issues that McKinsey identified, The Jockey Club will urge racetracks to experiment with lower takeout rates for straight wagers, Janney said. McKinsey officials said during their presentation that a nonlinear regression analysis indicated that the ideal takeout rate to maximize revenue to racetracks from straight wagers would be 15.8 percent, rather than the current average of 17.3 percent. Racetrack revenue would be maximized under that rate through an expected jump in wagering in the straight pools and increased churn, the officials said. Takeout rates are one of the most pressing issues for hard-core gamblers, but despite widespread calls for lower takeout rates across the board from horseplayers over the past decade, the racing industry has not engaged in any significant rate-cutting aside from short experiments. The industry’s takeout rates also face significant upward pressure because of the widespread and growing use of large rebates to reward high-volume bettors, a practice that has the impact of lowering effective rates for those bettors while leaving little room to lower takeout rates for all players. The McKinsey officials cited widespread rebating when recommending that the industry leave takeout rates in exotic pools untouched, since the effective takeout rate is much lower than the overall rate due to the size and ubiquity of the rebates for those bets. That recommendation was also made in part because the industry’s existing exotic takeout rates are actually lower than many other low-cost, high-reward betting options, such as lotteries and sports parlay wagers, the officials said. “While we recognize that the takeout rate on exotics may seem way too high to core fans, especially at tracks with the highest takeout rates, so far, the analytics don’t demonstrate that racing could increase revenue by lowering them,” said Dan Singer, one of the McKinsey officials. The highest rebates in the racing industry are currently reserved for the operators of computerized robotic wagering systems, which are sophisticated suites of software that analyze racing pools and then use direct links to the sport’s bet-processing networks to dump hundreds of bets into the pools at the last minute, a practice that can sometimes be responsible for large fluctuations in odds that show up after the starting gates have opened. According to the McKinsey analysis, the robotic systems now account for 16 percent to 19 percent of the roughly $11 billion in annual wagering on racing, double what McKinsey estimated as the market share of the programs in 2011. Following the Round Table, one of the McKinsey officials who made the company’s presentation, Mike Salvaris, said the market-share estimate was derived through data provided by four racetracks and account-wagering companies. The data were provided on the condition of anonymity to assist McKinsey with its analysis, Salvaris said. The robotic programs are not profitable without significant rebates on their handle, and use of the programs is controversial in the racing industry. But most racetracks have welcomed the programs into their pools because of their often astounding volume, even though most racing officials acknowledge that the programs enjoy extraordinary advantages over regular players and that they often have a deleterious impact on casual players. In fact, Gagliano said in his own Round Table presentation that the market share of the programs has a mathematical limit in that “they need recreational players in the pool to be profitable and to continue betting.” The programs most often target the pools at the highest-handling tracks because the programs need to have large pools in order to properly estimate the impact of their bets on payouts, which is also why they dump their bets at the last possible moment before a race goes off. Gagliano said experts estimate that the programs would hit the mathematical limit at a market share of 20 percent. “So, we may be nearing the limits of the growth in computer wagering that we’ve seen over the past seven years,” Gagliano said. “If so, overall handle will decline again in the future unless racing can grow handle from recreational bettors.” Related to the discussion over the computerized programs, Janney said The Jockey Club would seek to partner with a company to begin a trial to test out a single-pool wagering system. The concept, which has been put in place in Hong Kong, merges all wagers from all bet types into one pool, with payouts imputed from the share of money that is bet on horses to finish in the positions specified by the bets. The concept is favored by the operators of robotic systems. Another substantial portion of the presentation by the McKinsey officials focused on the impact of sports wagering on racing, a topic that has generated an enormous amount of discussion in the racing industry since the U.S. Supreme Court in May threw out a federal law prohibiting states from authorizing sports betting. The McKinsey officials said they believed racing could hold its own in competition with sports betting, citing data from foreign countries where both forms of wagering are legal, but they also said racing needed to capitalize on the proliferation of the practice by positioning itself alongside sports-betting options on integrated betting platforms. In addition, the McKinsey officials said racing should press states to grant them the ability to offer fixed-odds wagering for win, place, and show bets, as is customary in many other countries. That would give racing the means to compete with the prices offered by bookmakers on sports, and satisfy the preferences of sports bettors for fixed-odds options. Janney said The Jockey Club would assist racetracks in lobbying for fixed odds. “In this new era of sports betting, shouldn’t horseracing be able to offer fixed odds like everyone else?” Janney said.