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Monday, January 25, 2010

An Illustration for Less Racing

Standardbred racing returns to Chicago on Wednesday evening, January 27. While horsemen will be glad to be back in action, these are not happy times in Chi-town. It has been announced purses have been cut 25% for the start of the 2010 race meet at Balmoral and Maywood Parks. $4,000 claimers will be racing for a $1,800 purse with the FFA going for $10,000. We are not talking about tracks which handle less than $100,000 a night; handle often approaches $1 million each day. How do horsemen find themselves in this situation?

As you know, it is not only how much is wagered on the races, it is where it the money is wagered. Approximately 80% of the handle at Balmoral and Maywood is generated out of state where for each dollar wagered, $.014 gets contributed to the purse account versus the $.0475 to $.1175 contributed for each dollar wagered on track. Back in the old days, $1 million dollars bet on track may have contributed around $100,000 to the purse account. These days, using the 80% (simulcast) - 20% (on-track) split regarding where the gambling dollar is wagered, only $31,600 would go to the purse account. Is there any wonder the tracks have been overpaying purses? At the end of 2009, the horsemen's purse account had a deficit of $2.3 million (after starting 2009 with a deficit of $1.3 million). The purses were cut to reduce the deficit in the purse account.

Did you wonder why Balmoral and Maywood did not race the first three weeks of 2010? Racing was cancelled to help bring down the deficit in the purse account. By not racing, the deficit in the purse account was reduced to $1.5 million thanks to the horsemen’s purse account earning $800,000 by not racing, primarily due to simulcasting.

This is a perfect example why there needs to be less racing at each track. The current model does not permit this much racing. The horsemen were able to earn $800,000 by not racing for a three week period. For illustration purposes, let's say there was no deficit in the purse account. If Balmoral and Maywood raced only six months of the year, horsemen would have earned roughly $6.9 million dollars for their purse account to be distributed the rest of the year. This means for the other six months, racing ten races a night five days a week, the average purse for each race would be $5,300 without any wagering taking place. With simulcasting on other races in addition to wagering on the live product, the purses would be even higher.

Earlier it was demonstrated how little money is generated for the purse account as a result of out of state wagering. The only way a significant amount of money can be added to the purse account through ADW and simulcast wagering would be if more money went through the pools. With so many tracks racing at one time, there is no real way to increase wagering on any one track. If we had less tracks racing at one time by cutting dates, money which may have been wagered on other tracks would find its way into the Balmoral/Maywood pools allowing for increased contributions to the purse account. Perhaps the earlier $31,000 contribution to the purse account would now be $50,000 a day? Including the purse money earned during the down time and actual wagering during live racing, we may be dealing with an average purse of $10,300.

I realize this is a simplified example based on certain assumptions but this illustration clearly shows how horsemen would benefit by racing fewer days. While horsemen would need to travel during the year, wouldn't it be better to race all year for a minimum purse of $4,000 instead of finding yourself racing for $1,800 racing the whole year at one track?

If each track cut their race meets significantly, there would be more horses available for each track racing resulting in fuller fields and better racing. Some of the cheaper horses may find themselves without racing opportunities. I am not suggesting each track cut their race meets in half overnight, but cut the number of race dates over three years would allow for the horse supply to reach proper levels and allow horsemen to gradually adjust to the new racing model.

It can be done the hard way or the easy way. Sooner or later it is going to happen.


Pocket Up said...

You have to feel bad for Illinois racing. Getting money from the casinos has been an expensive disaster and still on going. It never ends for the horsemen. The once proud Chicago circuit is now reduced to this, racing for peanuts. It is a shame but not one that can't be corrected by the ideas you mention.

I see another topic of yours, Cal-Expo, is doing what you suggest, reducing dates to increase fields by necessity and deal with an over-paid purse account.

Good luck to the horsemen of both states.

Anonymous said...

The Chicago tracks have a population of nearly 9 million people to draw from. Are they really doing their level best to fill the stands? I don't think so.