Spent the morning at the annual Jockey Club Round Table on Matters Pertaining to Racing, the annual get-together of the rich and famous organized by Dinny Phipps and Co. at the famed Gideon Putnam Hotel in Saratoga. Was definitely underdressed for the occasion -- Steve Crist and I seemed to be the only males not wearing ties -- but nonetheless picked up all sorts of interesting info, which will be grist for a series of upcoming blog posts.
But first, congratulations to New York Racing Association chairman Steve Duncker, who managed to include three really good points in his brief presentation.
First, Duncker ended his Power Point slide show with a sincere, and very prominent, "Thank You" to the owners and trainers who, by sending their best horses to race in New York, help maintain the state's position as the country's pre-eminent racing venue. (As an example, 36% of all the Grade 1 stakes races in the US are run at NYRA tracks.) Even for those who ofrten disagree with NYRA management, it's nice to be appreciated.
More substantively, Duncker pointed out that our product -- betting on horse racing, is grossly overpriced, and has been getting more expensive. From a blended takout rate of 15% a few decades ago, NYRA's takeout is now at a level of 19.8%. That's undoubtedly one of the factors causing the rankings of NYRA tracks by HANA, the Horseplayers' Association of North America, to be well below what would be suggested by the quality of New York racing. In those ratings, Saratoga ranks 16th of 69 rated tracks (Keeneland is rated No. 1), and Aqueduct and Belmont languish at 26th and 27th, respectively.
In contrast to the nearly 20% that NYRA charges the bettor, Duncker pointed out that the price of other forms of gambling is much cheaper. The "takeout" on craps averages 2%, on blackjack 3%, on slot machines, 6%, and on casino poker tournaments, 8%. No surprise that we're losing the business of the numerate younger generation.
Duncker acknowledged the problems with reducing takeout -- how to accommodate rebates for the "whales" who provide a large share of total handle, how to fairly split the pie among purses, track operators and off-track bet takers, etc. But even raising the issue in public represents a huge step forward, especiallly at the same time that California seems to be moving in the wrong direction with a major takeout increase.
Duncker's other really smart point was to analyze race track results by how much in handle is generated by each dollar of purse money. It's a great metric, one that I've used myself in looking at how the Saratoga and Monmouth meets compare, and one that would certainly be expected of a former Goldman Sachs partner, as Duncker is, but it's the first time I've heard this sort of rigorous quantitative analysis from a racetrack official. Just compare this approach to the blatherings of, say, Frank Stronach.
NYRA, unsurprisingly, is way ahead of the rest of US race tracks on this measure. Each dollar of purses at NYRA tracks, according to Duncker, generates $22 in total handle. That's twice as much or more than at any other track, and, with slot machine revenue finally in the foreseeable future in New York, augurs well for the continued viability of racing in New York. (According to data presented by Duncker at the Round Table, a "conservative" estimate of slots revenue from the Aqueduct racino would add $13,000 to the average overnight purse in New York. Who knows, it might even be possible to think about breaking even with a good horse.)
I'm sure there will be lots to disagree about in the future, but for now, Steve Duncker and NYRA seem to have gotten a few things right.