California Rebates (not)

[rrbauer]

It was in February of this year that the CHRB announced that it was going to amend its anti-rebate stance. http://www.bloodhorse.com/horse-racing/articles/49388/chrb-moves-to-rescind-anti-rebate-stance

The timeframe mentioned was 45 days to accommodate a public-comment period and that action was to be takein at the April 2009 meeting to "remove the rule from the books". Yet, in the transcript of the April 2009 meeting there is nary a peep about the ADW rebate issue.

Fast forward to the June 2009 meeting and it comes up. Now if you want to indulge in a couple hundred pages of gobbledygook and attempts at comedy by people who think that getting their smart-ass comments on the record outweighs leading an industry in a business-like manner than go for it:
http://chrb.ca.gov/board_meeting_transcripts/TRANSCRIPT%2006-05-09.pdf

However, if you want to cut to the chase, just go down to page 207 where the repeal is introduced, seconded and voted into the record. voila. Rebates are in.

Oops. That was June. This is September. Any California residents getting ADW rebates from the Calif tracks? Why do you suppose that is?

I'll tell you why. The delay was to give meets like Del Mar and Oak Tree time to develop their own ADW's to mitigate a competitive disadvantage that they would otherwise be confronted with when rebates begin on their races in their markets. And, of course, having an ADW gives them the full pop on the commission minus what the horsemen are getting and in the cases mentioned minus whatever they have to pay Xpressbet for hosting their business. I haven't heard of a Hollywood Park ADW but you can bet your ass it is being developed. The other tracks are part of Magna (now) which has Xpressbet or HRTV which I guess is the same.

I guess HANA is on top of this. There should be enough Calif residents in the HANA membership to merit some attention to it.

[Jeff P]

Richard,

I'm on top of it as much as I can be.

Mike Marten of the CHRB told me:

Rebates had been restricted by a CHRB regulation, so we were able to change the regulation and eliminate that restriction on our own.
Rebates are now allowed by the CHRB when they were not allowed before. But that's only step one. I'll get to what needs to happen to make rebates in CA a reality in a minute.

The waiting out period for admin law review isn't something intended to give the good ole boys time to head it off at the pass as you suggest. The waiting out and review period is mandated by state law.

But I discovered things were headed off at the pass a long time ago.

I started talking to ADW Operators licensed in California about rebates.

Much to my dismay I discovered that Revenue Distribution by ADWs in California is restricted by California State Law.

Here's the exact passage from the statute:

(5) "Contractual compensation" means the amount paid to an ADW provider from advance deposit wagers originating in this state. Contractual compensation includes, but is not limited to, hub feepayments, and may include host fee payments, if any, for out-of-stateand out-of-country races. Contractual compensation is subject to thefollowing requirements: (A) Excluding contractual compensation for host fee payments,contractual compensation shall not exceed 6.5 percent of the amount wagered.The bolded part of the above passage from the statute is one of the most bettor unfriendly things I've ever seen written into state law. It's right up there with AZ state law which makes it a felony to bet a horse race over the phone or internet.

My understanding of what it means is that if a California Resident places a wager on a trifecta at Penn National where the takeout is 31 percent - the MAX that the ADW is allowed to keep for itself towards overhead/operating expenses is 6.5% of the amount wagered. Everything above and beyond 6.5% must be forked over to the tracks and the horsemen.

Obviously if the ADW only receives 6.5% there is very little room margin-wise for the ADW to rebate ANYTHING back to the customer.

Players have the fan friendly tracks AND the TOC to thank for this.

The extent to which track operators and leadership of horsemen groups like the TOC will go to screw over the player (without the player ever being aware of it) is simply frightening... and never ceases to amaze me.


I recently pointed out to the CHRB that not only is this one of the most player unfriendly statutes I've ever seen... but this particular statute is costing California Track Operators, California Horsemen, and the State of California general fund millions of dollars a year in lost revenue from depressed handle.

Bottom line:

Industry estimates put total rebated parimutuel handle at about 1.3 biilion a year.

Q. How how much of that handle originates from inside the State of California?

A. Zero.

California State Law causes anybody betting serious amounts of money with half a brain to get an out of state address or play offshore.


-jp

.

[InsideThePylons-MW]

Industry estimates put total rebated parimutuel handle at about 1.3 biilion a year

Can I please bet everything I have on the OVER?

[rrbauer]

The waiting out period for admin law review isn't something intended to give the good ole boys time to head it off at the pass as you suggest. The waiting out and review period is mandated by state law.


.

I don't know what the intent of the law is. But I do know what the effect of the law is: Delay, delay, delay. I can't imagine that more than 90 days is necessary to accomplish whatever it is that the delay is accomplishing and yet it's been that long since the CHRB stated that they were getting out of the way.

It's the kind of issue that HANA should be energizing its members towards email and letter-writing campaigns to state officials and industry officials to voice disapproval and concern over the continued interference with what should be a free market.

[Jeff P]

Richard,

You have no idea just how much I agree with that!

Right now we are formulating best strategies.


-jp

.

[rrbauer]

I neglected to mention in the previous post that the initial "public comment" period for the CHRB's action was to be 45 days, which from the February meeting would've been completed by the April meeting. But, the issue was tabled for some reason, never even mentioned in April and then showed up in June, a full 120 days after the February meeting. Plain and simple, someone was dragging their feet and got the issued tabled for an extra 2 months. This whole thing just smacks of game playing at the expense of the customers.

[Dave Schwartz]

Can I please bet everything I have on the OVER?

Inside,

You get my vote for funniest post of the week.

:lol:

Dave

[Jeff P]

Perhaps I should have used the phrase "conservative estimate"... :D

Seriously though...

You have to go to a lot of effort to get something like that written into state law...

It tells me just how anti-customer Track Management and the TOC really is.


-jp

.

[Indulto]

... Mike Marten of the CHRB told me:Rebates had been restricted by a CHRB regulation, so we were able to change the regulation and eliminate that restriction on our own. Rebates are now allowed by the CHRB when they were not allowed before. But that's only step one. I'll get to what needs to happen to make rebates in CA a reality in a minute.

The waiting out period for admin law review isn't something intended to give the good ole boys time to head it off at the pass as you suggest. The waiting out and review period is mandated by state law.

But I discovered things were headed off at the pass a long time ago.

I started talking to ADW Operators licensed in California about rebates.

Much to my dismay I discovered that Revenue Distribution by ADWs in California is restricted by California State Law.

Here's the exact passage from the statute:(5) "Contractual compensation" means the amount paid to an ADW provider from advance deposit wagers originating in this state. Contractual compensation includes, but is not limited to, hub feepayments, and may include host fee payments, if any, for out-of-stateand out-of-country races. Contractual compensation is subject to thefollowing requirements: (A) Excluding contractual compensation for host fee payments,contractual compensation shall not exceed 6.5 percent of the amount wagered.The bolded part of the above passage from the statute is one of the most bettor unfriendly things I've ever seen written into state law. It's right up there with AZ state law which makes it a felony to bet a horse race over the phone or internet.

My understanding of what it means is that if a California Resident places a wager on a trifecta at Penn National where the takeout is 31 percent - the MAX that the ADW is allowed to keep for itself towards overhead/operating expenses is 6.5% of the amount wagered. Everything above and beyond 6.5% must be forked over to the tracks and the horsemen.

Obviously if the ADW only receives 6.5% there is very little room margin-wise for the ADW to rebate ANYTHING back to the customer.

Players have the fan friendly tracks AND the TOC to thank for this.

The extent to which track operators and leadership of horsemen groups like the TOC will go to screw over the player (without the player ever being aware of it) is simply frightening... and never ceases to amaze me.


I recently pointed out to the CHRB that not only is this one of the most player unfriendly statutes I've ever seen... but this particular statute is costing California Track Operators, California Horsemen, and the State of California general fund millions of dollars a year in lost revenue from depressed handle.

Bottom line:

Industry estimates put total rebated parimutuel handle at about 1.3 biilion a year.

Q. How how much of that handle originates from inside the State of California?

A. Zero.

California State Law causes anybody betting serious amounts of money with half a brain to get an out of state address or play offshore. ...Thank you, jp, for sharing this information.

I'm sure all CA members of HANA would also find it interesting, and I hope that they all know to read the HANA threads here at PA as well as the blog and website.

[Indulto]

... Oops. That was June. This is September. Any California residents getting ADW rebates from the Calif tracks? Why do you suppose that is?

I'll tell you why. The delay was to give meets like Del Mar and Oak Tree time to develop their own ADW's to mitigate a competitive disadvantage that they would otherwise be confronted with when rebates begin on their races in their markets. And, of course, having an ADW gives them the full pop on the commission minus what the horsemen are getting and in the cases mentioned minus whatever they have to pay Xpressbet for hosting their business. I haven't heard of a Hollywood Park ADW but you can bet your ass it is being developed. The other tracks are part of Magna (now) which has Xpressbet or HRTV which I guess is the same. ...So do these "new" ADWs get around the statute jp mentioned? I didn't see anything at the oaktree bets site about rebates or cash rewards (beyond the bet $100, get $100 promotion).

BTW, jp, how old was that statute?

[Jeff P]

No. They don't.

Before he left the TOC, Drew Couto told me that the TOC position regarding rebates was that they be capped at 2%. It never made any sense to me why the TOC would take such a position.

Of course after becoming aware of the statute now I know why.

Apparently, the 6.5% cap on ADW revenue is something the TOC is quite proud of:
http://www.toconline.com/html/files/Archives/ADW.pdf

Excerpt:
Though the California ADW law caps the amount a
provider can receive as a Hub Fee at 6.5%, TOC negotiated
lower rates from the outset. By doing so, in less than three
years, TOC increased track and Thoroughbred purse revenues
in the State by over $8.6 million!

TOC leadership THINKS they are doing their horsemen a favor...

Do they not realize that if there is at least $1.3 billion annual rebated handle on North American Thoroughbred Racing... and I am being laughed at in this thread because that estimate is on the LOW side...

Do they not realize what the 6.5% cap on ADW retention really means?

It means that California's share of that $1.3 plus billion a year in handle is ZERO... BECUASE THE STATUTE PREVENTS LARGE PLAYERS FROM BETTING IN A PARIMUTUEL WAY WHERE THEIR HANDLE CAN BE RECOGNIZED AS ORIGINATING FROM WITHIN THE STATE OF CALIFORNIA.

California residents who are large players go out of state or bet offshore. NOBODY is betting serious money into the parimutuel pools from inside the state of California.

Other states are getting a cut of that rebated money - But not California.

Zero percent of $1.3 plus billion is ZERO.

100 percent of $0.00 works out to the same thing... ZERO!

The amount of money this statute has cost the State of California compounded over the number of years that rebates have been in place is simply staggering.


-jp

.

[CincyHorseplayer]

After hearing about the ADW dispute in Ohio last season I boycotted the circuit,even though I knew it inside out and could make money from it.I was just wanting to transfer my winter wagering to my house.But I was infuriated and looked elsewhere.

My question is,knowing what Jeff P stated,do you California players have the stones to boycott your circuit to prove the same point??

Everybody falls into their routines and home circuits and California is far and away better than Ohio.But does that really matter???

Between the hostile surface take over and these state laws,the time for non action should be now.Especially in losing the nostalgia for the Breeder's Cup and making a statement by not betting.

[Indulto]

After hearing about the ADW dispute in Ohio last season I boycotted the circuit,even though I knew it inside out and could make money from it.I was just wanting to transfer my winter wagering to my house.But I was infuriated and looked elsewhere.

My question is,knowing what Jeff P stated,do you California players have the stones to boycott your circuit to prove the same point??

Everybody falls into their routines and home circuits and California is far and away better than Ohio.But does that really matter???

Between the hostile surface take over and these state laws,the time for non action should be now.Especially in losing the nostalgia for the Breeder's Cup and making a statement by not betting.CHP,
Normally you post would be music to my ears.

I boycotted Filly Friday last year and this year’s entire DMR meet, both times with no support for the idea on this board. I almost succumbed on Pacific Classic day, but my steadfastness was rewarded when Bafflin' Bob Baffert's "Kid" beat the two horses I would have played in the top slot of my TRIs and dime supers.

The way Gordon Jones selects
Might also my decisions perplex
But my anti-Fairplex complex
Inhibits my ticket-punching reflex.

Oak Tree, however, is not a reasonable or worthwhile test of resolve this year; especially since the BC is already going back to dirt next year, and they are hitting an own-foot-shooting bulls-eye by not running Zenyatta’s race on Saturday.

Weekends of widespread BC preps loom
With bankroll-building breathing room
Before bunched BC races don’t discourage
Those whom graded stakes encourage
Success-based beliefs they can tip the scales
Against unfairly rebated whales

So would-be boycotters must be excused
For participating when they’ll be less abused
It seems pointless this year to dismiss
Six full days of horse betting bliss
When most contestants’ surface suitability
May finally translate into profitability.

So I will fly a flag of truce, temporarily, with non-confrontational seekers of reform.

The absence of boycott support and publicity
Does not suggest pro-status quo duplicity
On days we can watch champions prance
Or be beaten by longshots with a chance
And savor probability for opportunity

Horseplayer group-admired and adorned
Rebated whales should be forewarned
I won’t forego that six-day fray.
I’ll risk your feeding frenzy each day
My bankroll played will not be mourned

Unrebated and unrepenting,
I may yet undertake uniting
The unsavory or underappreciated
With the unappealing or underestimated
On ultimate pick six tickets however unappetizing.