NY Residents Can Kiss Their Rebates Goodbye Comes The New Year

[Robert Goren]

I firmly believe that anyplace that runs a Racino like NY state wants to out of the racing business as fast as possible because that is what makes sense financially. Brother, does it ever. Source fees are a means to that end. Expect more of the same until there is a complete disconnect between racing and casino gambling. As long as racing receives money from casinos, the casinos will be looking for ways to stop that expense. If they can't do it directly, they will try the back door. Take a look behind the curtain of this law and I strongly suspect you find state senators with ties to the casino end of the business.
Nobody outside of themselves gives a damn about the bettors. I am amaze by what is in threads like this. Some posters seem to think somebody cares about them. Not the state because the money in the big picture of state budgets is next to nothing. Not the horsemen, who have at best consider them a necessary evil. Not track management who think of them as geese laying golden eggs but who are too greedy to let a few of the hatch to make more geese. Not track owners who are just waiting for the right deal to come along in order to tear down the tracks.

[classhandicapper]

Could someone get to the bottom line on this so I don't have to try to understand the law and the ADW business model?

It seems to me they are building in a "potential" economic incentive for NY residents to bet through NYRA or the NY OTBs instead of other ADWs. The idea being to keep NY gambling money (handle) within NY because it's such a massive market.

Since those out of state ADWs will face additional charges when NY residents bet through them, they are less likely to offer "perks" to get or keep those NY customers.

I don't see it as a tax on players "unless" the out of state ADWs pass the cost along to customers in the form of lower rebates or fees (especially to NY customers). But even if that happens, if you are NY resident just open an NYRA account instead. The software is fine and they have rebates.

I'm not generally in favor of this kind of thing and it will probably suck some money out of the game if any of the costs are passed onto consumers, but on the flip side I can see why NY would want to keep the money at home and support it's own industry.

What am I missing?

[Tom]

Screw NY - boycott NY tracks.
I don't need some slime ball pols telling me where to bet.
Support out-of state tracks and ADW's.

[classhandicapper]

Originally Posted by Tom

Screw NY - boycott NY tracks.
I don't need some slime ball pols telling me where to bet.
Support out-of state tracks and ADW's.

It's a form of protectionism. It's kind of like adding tariffs on imported goods at the national level. Things like that are almost always bad long term economics (which is I why I tend to be against them), but I don't see any major negative implications for bettors unless you happen to hate NYRA or NYRA's software. I already have an account.

[Jeff P]

Originally Posted by classhandicapper

Could someone get to the bottom line on this so I don't have to try to understand the law and the ADW business model?

It seems to me they are building in a "potential" economic incentive for NY residents to bet through NYRA or the NY OTBs instead of other ADWs. The idea being to keep NY gambling money (handle) within NY because it's such a massive market.

Since those out of state ADWs will face additional charges when NY residents bet through them, they are less likely to offer "perks" to get or keep those NY customers.

I don't see it as a tax on players "unless" the out of state ADWs pass the cost along to customers in the form of lower rebates or fees (especially to NY customers). But even if that happens, if you are NY resident just open an NYRA account instead. The software is fine and they have rebates.

I'm not generally in favor of this kind of thing and it will probably suck some money out of the game if any of the costs are passed onto consumers, but on the flip side I can see why NY would want to keep the money at home and support it's own industry.

What am I missing?

Short answer:
Source market fee means you are harmed as a consumer because:

1. The number of choices open to you are reduced because what would normally be an open competitive marketplace is transformed into a quasi-monopoly.

2. The "fee" part of source market fee raises prices at the wholesale level.

3. Higher wholesale prices translate into higher retail prices.

Bottom line: As a consumer you will find fewer places to shop and you can expect to pay higher retail prices for the same goods.



Grocery Store Analogy
Suppose for the sake of argument a nearly identical law had been passed in NY. But instead of out of state ADWs, the statute had been crafted to penalize out of state grocers.

Suppose for the sake of argument that you had been (for years) a VERY satisfied customer purchasing lunchmeat, cheese, bread, produce, etc. from a boutique corner deli that's part of a privately owned but well known small chain.

Let's also suppose for the sake of argument, that the Local Grocery Workers Union, a larger grocery chain or two, and maybe the Local Truck Driver's Union (all headquartered in the state of NY) get together and lobby the NY Legislature and Governor's Office to write a state law for them. The new law requires the following of ALL grocery stores whose corporate headquarters are located outside the state of NY:

1. Must obtain a "license" to do business in the state of NY. (Annual cost for the license $20k. As part of the "costs" related to obtaining a "license" must undergo a NY state approved "background check" initial cost $30k... Total cost to be "licensed?" $50K that first year.)

2. Must pay a new "market origin fee" (it's a tax) to a new "state fund." Taxable amount equal to 5 percent of sales made to NY residents.

3. From there, the new "state fund" shall distribute 40% of market origin and license fees collected to the Local Grocery Workers Union, the larger grocery chains, and the Local Truck Driver's Union who lobbied the Legislature and Governor's Office to get the new law put in place.

As a result of the new law, the owners of the smaller boutique corner deli chain (whose headquarters happen to be in Oregon) make a business decision.

They look at the combined costs of doing business in the state of NY... $50k in costs to obtain the 1st year license along with the ongoing 5% tax... a tax that their direct competitors do not have to pay... along with the added insult of watching a not insignificant percentage of the new costs they are required to pay simply be handed over to their direct competitors...

And they decide to stop doing business in the state of NY.

What does this mean to you the consumer?

As a consumer (whether you realize it or not) you have been harmed by this.

As a result of the new law: The number of choices open to you is negatively impacted.

The marketplace where you had previously been shopping was an open competitive marketplace.

As a result of the new law: That marketplace is now a quasi monopoly... a monopoly created by and for the benefit of those who lobbied for the new law... the Local Grocery Workers Union, the larger grocery chains, and the Local Truck Driver's Union.

Maybe you're ok with this... Maybe your brother in law is a union truck driver. Or maybe you never set foot in the boutique corner deli that is now a thing of the past.

On the other hand, maybe you would have really LIKED shopping in the corner deli had you discovered it.

At any rate, as a consumer, you have been harmed.

You cannot go to the corner deli because it is not there anymore. If you want to buy the same items... if you can find the same selection at all (and that's a topic worthy of its own thread)... you have to do so from the larger chains who lobbied for the new law.

And wonder of wonders, when you do finally shop the larger chains in hopes of finding the same selection you notice that the price is higher.

THAT'S what this new law is all about.

And wonder of wonders, when you do finally shop the larger chains in hopes of finding the same selection you notice that the price is higher.

I quoted that last part for emphasis because there's one more point I want to touch on.

A number of NY players have reported to me that NYRA Rewards is not (repeat not) offering rates commensurate with what had up until now been available to them at their corner deli.... make that ADW... where they had been happy satisfied customers for years.



-jp
.

[riskman]

I am a NYC resident. For the past 30 years I have been wagering on the horses both at NYRA and out of state tracks. I have had several betting accounts over the years both at NYRA, OTB's and out of state ADW's. All my action at present is with an out of state ADW. The rebate I receive on NYRA action is a small percentage compared to the other tracks I wager. I have a decent bankroll and wager in the high six figures annually split approximately 50/50 between NYRA and other out of state tracks. I support NYRA racing despite the lower rebate I receive. It is all not economics but as I sit here, maybe it should have been. I carefully select the out of state tracks I wager on based on handicapping ability, pool size and many other factors including rebate offered by the ADW.
Anyone who wagers on the races on a consistent basis knows the how difficult it is to keep a straight head and also to put time into handicapping, record keeping, betting and to keep up to date with goings on in the industry as well as testing new ideas to determine if they hold promise in future betting. Bottom line, it is tough and I question wether it is worth it from an economic and sanity standpoint. This forum is a great place to hear opinions and to research further ideas that are presented. Personally, I do not contribute that much to the forum. There are many others here and the past that I learned from as well as my own mistakes that keep me going.. PA does an admirable job as well as the other moderators both on and off topic. It is a good resource for me and I appreciate it.
Despite all that I torture myself with everyday about this game I completely missed the legislation that was posted by Inffront in this thread. I also do not remember anything
being posted in this forum prior in Infront's post. The DRF article goes back to last August yet it went completely over my head. I must be losing it and had a senior citizen moment. At the very least, I would have contacted and wrote to my state senator in Albany. His office is only two blocks from where I live. My bad, I surely missed the boat on this one.It appears the legislation is signed sealed and delivered and is effective 1/1/14.Did anyone on the forum know of this legislation? I think it would have been a hot topic wether you are a New Yorker or not.
The question is, where do we go from here as classhandicapper said in his post. Sartogamike also brought up a lot of questions that are valid concerning this legislation. It appears this legislation was slipped in with some bill on Casino or other legislation to make it look innocuous and voted on without knowing its repercussions. This deliberate act totally turns me off on any future wagering with NYRA since they are now part of New York State. I doubt if the tracks were privatized that this legislation would have been passed.Who knows what the end game is of a bunch of. corrupt and ignorant legislators in NYS. I do not fault NYRA in this instance as their cut is minimal and they stand to lose handle from people like me.The regional OTB's getting a cut is shameless and embarrassing. The whole scheme is a piece of garbage at the expense of the horseplayer.
I do not know what my ADW will do concerning my account. I have not contacted them and they have not contacted me. I have to see where this leaves me after every thing shakes out. The future of riskman in betting horses does not look promising nor does it for hundreds or thousands of New Yorkers with out of state adw's.

[Stillriledup]

Originally Posted by TexasDolly

Large rebate players DO NOT pay 10-15% in rake . You need to restudy the takeout/rebate math.
TD

Instead of me "restudying" math, why don't you just explain in detail what i'm missing. I'm willing to learn.

[Jeff P]

Riskman,

Yours was a very poignant and well thought out post.

Where do we go from here?

Indeed.

The answer to that question troubles me deeply.

Based on demographics gleaned from HANA member sign up data, NY has a greater number of serious horseplayers - and the horseplayers in NY generate significantly more handle - than the horseplayers of any other state in the US - or any province in Canada.

If they are anything like Riskman - and my gut instinct tells me they are - this new law will cause them to bet significantly less on NY races than they are betting now.

If that should come to pass - and I predict it will - there will be a domino effect:

If NYRA tracks really are going to be privatized (roll eyes) and make it on revenue from racing alone (you know... decoupled from slots... roll eyes again) then they will eventually cut dates. And when that doesn't stop the bleeding there will be layoffs. (The same thing happened in CA. The workers whose union heads supported CA source market fee and then later two takeout increases ended up first having their hours cut and then later faced layoffs... This as a direct result of what they supported.)

But it doesn't stop there... We still have more dominoes.

NY horseplayers don't just bet NYRA races. As Riskman pointed out, about 50% of his handle is on out of state races.

It follows then that as Riskman and others like him bet less and less as a result of this law - handle and pool size for out of state races will fall too.

That means tracks, unions, and horsemen (who supported source market fee in states like CA, IL, PA, VA, etc,... and tracks and horsemen in states that are considering it such as KY... as well as tracks and horsemen in states that outlawed ADW wagering outright such as AZ, MI, and TX) are going to get squeezed too.

It's a case of "Be careful what you wish for."

If you are a horseman based in a US state other than NY or even in Canada: The new law in NY will eventually mean purse cuts for you.

If you are a track operator and your track is based in a US state other than NY or even in Canada: The new law in NY will eventually mean lower total revenue for your track.

If you are a horseplayer betting on races in a US state other than NY or at a track in Canada: The new law in NY means you will be betting into ever smaller pool sizes.

But wait... we still have more dominoes.

Fast forward 10-12 years.

Racing is still being run the same way. None of the economic fundamentals have been changed. Takeout is even higher now than it was back in 2013. Signal fees are higher now than they were in 2013. Source market fee is everywhere too.

But none of that stopped the bleeding or fixed the problem. The problem all along was failure to recognize and satisfy customer needs and wants. (And at no point in time was any meaningful effort made to address that.)

Price sensitive guys like CJ, Thaskalso, Track Collector, Riskman, and myself aren't betting large amounts any more. Those days have passed. But we're still fans of the game. And as such (not wishing to speak for the others so I'll just speak for myself) I'm betting a mere fraction now vs. what I used to bet back in the day.

Handle has fallen from $11 billion in 2013 (remember the good olde days?) and is on pace to come in at $6 billion this year (2025.)

Tracks, the ones that are still open, are bleeding money. FYI, most have been reduced to running FRI-SAT-SUN only.

Horsemen are still crying that in the face of falling customer demand for the product they need bigger purses. (And the heads of their aplphabet groups go right on acting as if things like takeout, odds that change after the bell, and drugs cannot possibly have played any part in racing's continued decline.)

So here's the last domino...

Policiticians can still be bought.

In state after state, tracks, horsemen, and union heads keep perpetuating the cause of their own self made problem. They go back in for another round - lobbying their collective Legislatures for ever higher takeout, ever higher signal fees, and ever tighter hoops players will have to jump through in order to bet races over the internet, etc.

I'm a betting man. Anyone care to take me up on my prediction? (I would love to be proven wrong.)


-jp

.

[lamboguy]

good reply jeff.

when it comes to this game, i am always optimistic. i can't argue with the points that you have brought up, the picture you paint sure looks like what the future has in store for it.

from what i can see, Frank Stronach is dead set against lasix and other drugs. while he is in his 80's and a pretty healthy looking man after seeing him early November. he is interested in seeing this game survive. his children run his race tracks these days. so far they are the only ones that are negotiating Hong Kong racing out of the major adw's to bring to this country. probably one of the major reason's that company wants to bring it here is to show how successful racing is there because they have a different way of doing things. this is the kind of product that people want to bet. i promise you that after 3 months of watching the racing there and seeing the numbers that it will put up at odd hours of the night, someone will pickup on it and change racing all-together.

some of the things that i have wanted here, Hong Kong has. if anyone remembers, i begged for the racing form to include the medications and missed training days for horses that run in this country. i said i would gladly pay $20 a day to get it. in Hong Kong you get that information for free right on their website. they also tell you if a horse is going to wear a shadow roll or a tongue tie for the very first time along with front wraps. i mentioned before that the odds board does not change that much from 12 minutes to post all the way to post time. i have never seen odds change during a race. if there are 14 horses in a race there are 14 stewards watching those horses. if a horse doesn't show speed that usually does show speed the people involved in the horse have questions to answer. if a horse doesn't run within 3 weeks, the trainer gets fined unless he has a great reason for it. if you win a race you move up in class.

these are the things that horse players all over North America are looking for and will come out of the woodwork to bet on. Hong Kong is going to shock everyone how well its going to do here.

[Track Collector]

Originally Posted by proximity

also, i'd expect it to be in the nature of a "real gambler" to relish the challenge of playing in pools with a master like cj.

Originally Posted by Robert Goren

Of all the dumb things that have been stated here over the years, this has to be the dumbest.

Looks like you missed it Robert. The above was a tongue in cheek remark with regards to a side discussion on the attributes of a "real gambler" earlier in this thread.

[TexasDolly]

Originally Posted by Stillriledup

Instead of me "restudying" math, why don't you just explain in detail what i'm missing. I'm willing to learn.

There have been any number of posts dealing with the rebate issue. You might want to start with those. I have no interest beyond what I have posted both here and in the past to spend anymore time trying to convince you that large rebate bettors cause the smaller players to foot most of the takeout.
TD

[classhandicapper]

Originally Posted by Jeff P

Short answer:
Source market fee means you are harmed as a consumer because:

1. The number of choices open to you are reduced because what would normally be an open competitive marketplace is transformed into a quasi-monopoly.

2. The "fee" part of source market fee raises prices at the wholesale level.

3. Higher wholesale prices translate into higher retail prices.

Bottom line: As a consumer you will find fewer places to shop and you can expect to pay higher retail prices for the same goods.



Grocery Store Analogy
Suppose for the sake of argument a nearly identical law had been passed in NY. But instead of out of state ADWs, the statute had been crafted to penalize out of state grocers.

Suppose for the sake of argument that you had been (for years) a VERY satisfied customer purchasing lunchmeat, cheese, bread, produce, etc. from a boutique corner deli that's part of a privately owned but well known small chain.

Let's also suppose for the sake of argument, that the Local Grocery Workers Union, a larger grocery chain or two, and maybe the Local Truck Driver's Union (all headquartered in the state of NY) get together and lobby the NY Legislature and Governor's Office to write a state law for them. The new law requires the following of ALL grocery stores whose corporate headquarters are located outside the state of NY:

1. Must obtain a "license" to do business in the state of NY. (Annual cost for the license $20k. As part of the "costs" related to obtaining a "license" must undergo a NY state approved "background check" initial cost $30k... Total cost to be "licensed?" $50K that first year.)

2. Must pay a new "market origin fee" (it's a tax) to a new "state fund." Taxable amount equal to 5 percent of sales made to NY residents.

3. From there, the new "state fund" shall distribute 40% of market origin and license fees collected to the Local Grocery Workers Union, the larger grocery chains, and the Local Truck Driver's Union who lobbied the Legislature and Governor's Office to get the new law put in place.

As a result of the new law, the owners of the smaller boutique corner deli chain (whose headquarters happen to be in Oregon) make a business decision.

They look at the combined costs of doing business in the state of NY... $50k in costs to obtain the 1st year license along with the ongoing 5% tax... a tax that their direct competitors do not have to pay... along with the added insult of watching a not insignificant percentage of the new costs they are required to pay simply be handed over to their direct competitors...

And they decide to stop doing business in the state of NY.

What does this mean to you the consumer?

As a consumer (whether you realize it or not) you have been harmed by this.

As a result of the new law: The number of choices open to you is negatively impacted.

The marketplace where you had previously been shopping was an open competitive marketplace.

As a result of the new law: That marketplace is now a quasi monopoly... a monopoly created by and for the benefit of those who lobbied for the new law... the Local Grocery Workers Union, the larger grocery chains, and the Local Truck Driver's Union.

Maybe you're ok with this... Maybe your brother in law is a union truck driver. Or maybe you never set foot in the boutique corner deli that is now a thing of the past.

On the other hand, maybe you would have really LIKED shopping in the corner deli had you discovered it.

At any rate, as a consumer, you have been harmed.

You cannot go to the corner deli because it is not there anymore. If you want to buy the same items... if you can find the same selection at all (and that's a topic worthy of its own thread)... you have to do so from the larger chains who lobbied for the new law.

And wonder of wonders, when you do finally shop the larger chains in hopes of finding the same selection you notice that the price is higher.

THAT'S what this new law is all about.


I quoted that last part for emphasis because there's one more point I want to touch on.

A number of NY players have reported to me that NYRA Rewards is not (repeat not) offering rates commensurate with what had up until now been available to them at their corner deli.... make that ADW... where they had been happy satisfied customers for years.



-jp
.

I understand the basic economics. That's why I am opposed to them. But those costs have NOT been passed on to the consumer yet, no one has left the market yet, and there are several options for horse players in NY that are equal or better anyway.

Imagine your grocery store scenario except there are several other grocery stores right in the neighborhood without such additional costs. Yea, I've lost an option, but I still have plenty of equal or better choices that ensure a competitive landscape without any costs passed on to me.

That's where we are.

It's a non issue right now even though I agree on the basic economics and am against actions like these as a general rule. Plus, like TLG said, rules like this are not unique to NY. States and tracks are trying to protect their handle.

Open a NYRA account. The software is good. The rebates are good. They are investing in the product trying to make it better. No problemo.

[Robert Goren]

BEL went 65k mdn races in 2011 to 95k mdn races in 2013 with bigger purses to come. Where did that extra 30k come from? The handle sure in Hell didn't go up 50% in the last 2 years. It came from slots that's where. And the slot money has even began to come yet. In another 5 years, they'll be running 150k mdn races and the handle will be less than it is now. The days of telling NY horsemen that we pay their bills are over. The slots pay the bills. The only people who care about the horse bettor is the casino owner and they want them to go away so they can close the track which is costing them a lot of money. At some point there will be a bunch of casinos in NYC. There is too much money to be made by a lot of people for that not happen. If you think they are go to stand still for a big much of their profits going to 300k mdn races, you are crazy. NY racing may shine bright for a few years, but sooner or late greedier heads will prevail and the gravy train will end and it will be 2010 all over again if there is racing at all. Slot money perverts everything racing until racing becomes so perverted that it can't survive.

[riskman]

Originally Posted by classhandicapper

I understand the basic economics. That's why I am opposed to them. But those costs have NOT been passed on to the consumer yet, no one has left the market yet, and there are several options for horse players in NY that are equal or better anyway.

Imagine your grocery store scenario except there are several other grocery stores right in the neighborhood without such additional costs. Yea, I've lost an option, but I still have plenty of equal or better choices that ensure a competitive landscape without any costs passed on to me.

That's where we are.

It's a non issue right now even though I agree on the basic economics and am against actions like these as a general rule. Plus, like TLG said, rules like this are not unique to NY. States and tracks are trying to protect their handle.

Open a NYRA account. The software is good. The rebates are good. They are investing in the product trying to make it better. No problemo.

I agree with you on your first paragraph. Nothing has happened "yet" I will sit tight and see what happens with my out of state ADW and if anything comes down with NYRA to clarify this subject ,if anything. With respect to NYRA Rewards Schedule it is competitive with my ADW for NYRA races.
A half-point for every dollar wagered on a simulcast(out of state) event is not competitive with my ADW but may be after my ADW puts me through the ringer as a result of the new law.
Again, was anybody aware of this new law until Infront posted about in this thread. The DRF article was written in August. I completely missed the boat on this one. It just may be there are few that care about the legislation and it does not affect them. Just surprised at the response. Oh, other states did it so we will do it to protect our handle.What BS this was if you look at the distribution of fees in the law and the way it was passed under cover if in fact this was the case.

[cj]

Originally Posted by classhandicapper

...and there are several options for horse players in NY that are equal or better anyway.

There are? I'm not so sure about that one.