Takeout cut has little effect

An analysis of wagering totals during Laurel Park's 10-day meet did not produce any discernible impact from a cut in the takeout to 11.4 percent, and the track will not experiment with takeout cuts in the near future, Laurel's top official said Tuesday.

Lou Raffetto, chief operating officer of Laurel's owner, the Maryland Jockey Club, said the analysis of the five-day period from Aug. 15-19 revealed that average all-sources handle on Laurel's races was down from $1.66 million a day to $1.52 million a day, a decline of 9.2 percent. Raffetto said he used those five days because they matched up to last year's meet on an apples-to-apples comparison, based on the number of races run, the number of runners on the cards, and the number of turf races run.

Raffetto said that two large account-wagering operations, Youbet.com and International Racing Group, bet an average of $154,000 a day during the same five-day period last year. This year, the two account-wagering operations could not offer the Laurel signal due to a lack of agreement between the companies and a simulcast-marketing partnership formed by the MJC's parent company, Magna Entertainment Corp., and Churchill Downs Inc.

Out-of-state handle this year on the Laurel signal, including account-wagering companies, was $1.29 million a day during the five-day period, compared to $1.41 million last year. When the numbers from Youbet.com and IRG are taken out of last year's figures, out-of-state handle was up $34,000 a day.

Laurel cut its takeout to an effective blended rate of 11.4 percent for the 10-day meet as an experiment. Economists who have studied racing have persistently maintained that a significant cut in the takeout will result in handle increases, although those increases are most likely to be seen over the long term and not over a 10-day period.

Raffetto said the track may have made a mistake cutting the takeout while horseplayers were focused on racing at Saratoga, which dominates the East Coast betting market in August. Raffetto also said he believed it was hard to attract big bettors because of the small size of Laurel's pools.

"The little guy, it doesn't appear as if he cares" about the takeout level, Raffetto said. "The big guy may look at Laurel at August and say that it's great we cut the takeout, but we're only doing $1.5 million a day, and it's hard to play in those small pools."

Laurel Park, its sister track Pimlico, and Magna Entertainment have all been struggling financially, and for that reason, Laurel will not likely be cutting its takeout anytime soon, Raffetto said.

"I still think the industry needs to try new ideas, but there are financial ramifications to this, and, as you know, we're not that strong right now," Raffetto said.