CA Takeout Increase

[Jeff P]

The following was written for me by a fellow horseplayer who is a HANA supporter. I agree 100% with every word:


An Open Letter to Los Alamitos Horseplayers

Last week HANA Pres Jeff Platt spoke at a CHRB meeting in opposition to a proposed 2% takeout increase at Los Alamitos. The CHRB Board, despite the evidence presented that an increase in takeout rates would have a negative impact on handle and revenues, decided to institute the raise. They also included a review process, where by the CHRB would from time to time review Los Alamitos handle numbers between now and Sept 8th, 2010, in order to monitor the effect of this takeout increase on handle.

If the handle numbers come back weak, and show that horseplayers are reacting negatively to this takeout increase, there is a high likelihood it will be rescinded. If the handle numbers come back unchanged, there is a high likelihood the takeout increase will be made permanent. It is also likely, in our opinion, that if Los Alamitos handle is strong, that other California tracks will follow suit with takeout raises of their own. We know this would have a very negative effect on you, as a horseplayer, and in return on California Racing as a whole.

You, as a Los Alamitos bettor, have a very big say in all of this. Each dollar bet at Los Alamitos is a vote for making the takeout increase permanent, and a vote towards seeing higher takeouts across California. Each dollar withheld from Los Alamitos is a vote towards rescinding this takeout increase, and discrediting the notion that racing's revenue problems can be solved by simply raising the price of an already overpriced product. You are in the enviable position to have a direct and measurable impact on the future of California racing, and to make a statement on behalf of horseplayers everywhere.

We ask you to consider these facts, and we trust that your actions and decisions will help to bring about a better and brighter future for this game.

Please pass this message on to fellow horseplayers everywhere.


Jeff Platt

President, HANA

http://www.HorseplayersAssociation.com



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[Stillriledup]

Is this letter going to be published in the racing form? how is this letter going to get across to the horseplaying masses both live and offtrack who participate in the los al pools?

[chickenhead]

People with accounts on multiple boards, please cross post this, this really needs to get everywhere. You can also link here:

http://blog.horseplayersassociation.org/2010/01/ca-takeout-increase.html

[Jeff P]

An update for HANA Members about the 4/15/2010 CHRB Meeting:

Agenda Item #9 called for Los Al to present handle numbers to the Commissioners so that they could vote whether or not to continue the 2% takeout increase experiment approved for Los Al back in January.

I attended the meeting. HANA was there to challenge the handle numbers Los Al and CHRB audit staff were attempting to put in front of the Commissioners prior to the vote.

I used numbers taken directly from Equibase Charts to create a spreadsheet. On one side of the spreadsheet were handle numbers from 2010 for each race date since the start of the experiment (1/21/2010) through the end of March, 2010. On the other side of the spreadsheet were handle numbers for the same time period from 2009. At the bottom were totals for each column along with percentage change.

Comparing 2010 handle numbers to 2009 handle numbers, my spreadsheet very clearly shows a 30 percent drop in Los Al's on track handle since the beginning of the increased takeout experiment.

Numbers presented to the CHRB by Los Al (as well as numbers prepared for the Commissioners by CHRB audit staff) showed little or no change in handle since the start of the experiment.

How can this be? Handle is handle, right? What's really going on here?

The answer is complicated.

I see three things at work here:

1. Data Source
First, handle numbers in the Equibase Charts aren't "official" by any stretch of the imagination. In California, "official" handle numbers actually come from a company called CHRIMS.

One of the things I asked for during the meeting was that I be given access to data from CHRIMS. The Commissioners have assured me they will see to it that this happens shortly.

2. Field Size as a Determinant of Handle
Second, Los Al dropped their weakest day of the meet: Thursday.

That means they now are running fewer races in 2010 vs. what they ran in 2009.

Running fewer races means they have increased avg field size.

According to all of the industry paid for studies, increased field size is a determinant that drives handle upwards.

This means that improved field size is helping to drive handle upwards at Los Al.

Los Al admitted this during the meeting.

Commissioner Rosenberg asked me to verify this. I agreed. It should appear in the meeting transcript once that becomes public.

3. Handle Numbers: What Should The Commissiners be weighing before they vote?
Perhaps the most important thing of all when it comes to handle numbers is:

What matters the most?

The numbers prepared by both Los Al and CHRB audit staff attempt to emphasize average handle per race.

If you look at their numbers in a vacuum, you'd never realize on track business is down sharply this year vs. last year since they began charging a higher takeout.

The numbers in my spreadsheet examine total revenue during the time period of the experiment.

If you look at my numbers in a vacuum, you notice that business is off sharply - but avg handle per race is completely ignored.

One of the things I said to the Commissioners was this:

"What's more important? Average handle per race? Or maximizing your total revenue? You have a decision to make."

Based on the challenge by HANA to handle numbers presented by Los Al and handle numbers prepared by CHRB audit staff:

At the 4/15/2010 CHRB meeting the Commissioners decided to table voting on the agenda item until such time as handle numbers acceptable to all could be presented to the Commissioners.

Sometime in the next few weeks I will be meeting with Los Al and CHRB Staff. The purpose of those meetings will be an attempt come up handle numbers that are acceptable to all parties so that the Commissioners can use these numbers for their vote.



-jp

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[chickenhead]

Am I correct that both sets of data (yours and theirs) had Thursdays from 2009 Los Al included in these calculations of handle (total handle for you, per race handle for them)?

It seems to me the only way to correct for Thursdays being present in 2009 and gone in 2010 is to remove Thursdays from both samples before comparing. You are right that a field size increase will still have an effect of some kind, but it shouldn't be that pronounced. The Thursday data needs to be totally banished from all comparisons. Using per race handle should be as close to as we're going to get then.

I just have to believe they left Thursdays in for 2009 to show what they did, which is just flat out wrong, I can't believe field size made that much difference.

I don't like that two separate arguments seem to be getting intertwined a bit. From my POV Los Al can run as many or as few dates as they want, they can maximize for total revenue or per race revenue.

But takeout is separate from that, it will effect handle wherever and whenever it occurs, all in bunches are spread out over many days. Two totally separate arguments in my mind, dangerous to tie them together.

[DeanT]

The Thursday issue is completely disconcerting. It is amazing to me that we can not even compare handle numbers correctly!

Jeff's sheet was well done. Handle is off by quite a bit, and there is no sugar-coating that. Although Santa Anita has many issues with regard to business this meet, handle was down there as well. If people are betting Los Al, they are probably betting Santa Anita. If you give them less money back when they cash tickets at Los Al, they have less money to spend at Santa Anita. A rise in takeout is not only confined to the oval in question - it hurts all tracks - and it is why when one tracks raises it, others should be upset, too, because it takes food off their table, over the long term.