Betfair Hollywood Park president Jack Liebau told the California Horse Racing Board Jan. 17 that it's time to revisit racing's business model with regard to pari-mutuel takeout.
Liebau made his remarks during the public comment period of the CHRB's meeting at Santa Anita Park, a short time before announcing Hollywood Park would return for its fall 2013 meet. He said the track plans to hold an open forum for stakeholders, regulators, and representatives of the wagering public to discuss changes in racing's business model so the sport can "improve and prosper."
"I am not yet a proponent of permanently lowering takeout," Liebau said, referring to the amount the state deducts from pari-mutuel wagering for purses, track commissions, and other things. "But I do believe it needs to be openly discussed by the stakeholders, and experiments with takeout should be undertaken."
While it certainly is an unusual position for a track executive to suggest, lower takeout needs to be addressed because of the current state of racing in California, he told the board.
Liebau said that adjusted for Breeders' Cup, total commingled pari-mutuel handle fom 2007 to 2012 declined 36%. He said the drop was due in part to a reduction in the number of racing days. But average daily handle over the same period also declined 23%, he maintained.
Liebau also noted that on-track handle declined from 16% of overall wagering to 14% over the same period, while advance deposit wagering jumped from 11% of the total pie to 17%.
He pointed to the success of the Pick 5 instituted at Hollywood Park last year with a 14% takeout, compared with the 23.68% takeout for the Pick 6.
Santa Anita was off considerably following legislation that increased the takeout on two-legged exotic bets by 2%, and by 3% on exotics of three legs or more.
"I believe the ensuing Hollywood meet was positively impacted by the by the introduction of the Pick 5," Liebau said. "For the first time, Hollywood's average daily handle exceeded that of Santa Anita."
The problem with the Pick 5 for tracks was that a disproportionate allocation of the takeout went to purses at the expense of track commissions.
"While changes in the racing business model may be necessary, a track cannot be expected to take all the risk or loss with respect to such changes, as was the case with the Pick 5," Liebau said. "I believe the trend lines must somehow be reversed."
