Takeout Rates Again Fuel Conflict in New York

Pari-mutuel takeout wars have begun in New York, where a state senator has introduced legislation to increase the amount the New York Racing Association keeps on wagers. Though the measure's sponsor said the takeout hike is needed to help stop NYRA's financial bleeding, NYRA chairman Barry Schwartz insists the legislation would turn off bettors and decrease purses.

Sen. William Larkin, the Republican chairman of the Senate Racing Committee, wants to raise the takeout on win, place, and show wagers from the current range--12%-17&--to 16%-20%. On multiples, the range would be 19%-22%, up from 14%-21%. NYRA currently sets its win, place, and show takeout at 14%, and 17.5% on multiples.

Larkin and supporters of the measure, including the New York City Off-Track Betting Corp., believe NYRA's push in recent years to lower takeout has not resulted in a healthier industry, and is contributing to its own losses and that of the state's off-track betting corporations.

NYCOTB president Raymond Casey said distributors are being hit hardest by NYRA's lower takeout. He attributed a net loss of profit of more than $2.5 million in 2003 to NYRA's reduced takeout; in all since the takeout was lowered he said the city of New York, which gets NYCOTB revenues, has lost out on $7 million for city services because of the takeout situation.

Casey said the higher takeout would help the city and NYRA as both await some longer term benefits, such as the introduction of video lottery terminals in the coming year at Aqueduct.

"No one ever likes the message that prices need to go up a little, but you must also focus on the benefit of those small costs," Casey said. "We do not make candy bars--when costs rise, we can not make the candy bar smaller. Sometimes, the price must change a little and delivery must get more efficient. We must do both."

But Schwartz said takeout isn't causing problems for NYCOTB. "Maybe they ought to focus on the expense side of their business if they're having such trouble making a profit," he said.

Of NYCOTB, Schwartz said: "It's a well-known fact that it's rather bloated."

Schwartz likened the proposal to raising taxes during an economic downturn.

"The last thing we need to do is tax the horse player," said Schwartz, who contends the higher takeout would facilitate rebate shops. "Every time someone has a financial problem in this industry, they tax the horse player. They're going to tax them right out of our racetracks."

Adding fuel to the disagreement between NYRA and NYCOTB is the New York Thoroughbred Horsemen's Association. Richard Bomze, president of the organization, said it wouldn't support a takeout increase on its own but, if horsemen get legislation to open up NYRA's operations, they would be willing to back Larkin's bill.

The horsemen's proposal would force NYRA to repay millions of dollars it borrowed from purse accounts in recent years. It would also open up NYRA's operations to far greater public scrutiny and give horsemen a seat on the NYRA board of trustees.

"If it's part of a bill that takes the shield of invincibility and arrogance away from NYRA and opens it up and gives us a seat at the board, then I would have to say we'd support the bill," Bomze said.

Some New York THA board members are pressing for the takeout hike anyway, he said. Some "pretty rigorous debate" is expected when the board meets April 1, Bomze said.