Takeout Hike Still Option in Workers' Comp Crisis

by Jack Shinar

California racing officials pondering what to do about a building workers' compensation insurance crisis are closer to submitting legislation that would increase pari-mutuel takeout in the state.

"We're still attempting to arrive at a consensus (on legislation)," said Jack Liebau, director of California racing for Magna Entertainment, which owns Santa Anita Park, Bay Meadows, and Golden Gate Fields. "We're not there yet, but we're getting closer. One of the main sticking points is that there remains some question as to the propriety of increasing the takeout."

Liebau and other industry representatives met for two hours at Santa Anita April 10. He said most horsemen support legislation that would funnel money from a takeout hike to an insurance program, but opposition from some members of the California Horse Racing Board is a concern.

Without a solid consensus, especially from the CHRB, horsemen and track owners believe there is little chance of getting legislative relief. Liebau said legislation, still in draft form, would probably amount to a takeout increase of a quarter of a percentage point or less.

The current takeout is 15.43% for win, place, and show wagers, and 20.18% for exotic bets. Liebau said the rates are the second-lowest in the country.

"We need to do some educating about the takeout in California," he said. "This is a business like any other business, and we haven't raised our prices since the 1980s."

Due to private insurers moving away from high-risk protection, California trainers have been forced to use the government's State Fund for workers' compensation needs, and the basic rates, at $43 per $100 of payroll and $93 per jockey ride, are considerably higher than private sources.

The rates are expected to be even higher on July 1, when the current policies for about two-thirds of the state's 600 Thoroughbred trainers are set to expire.

"The tracks aren't getting anything out of this," Liebau said. "But we recognize the magnitude of what could occur if this causes some trainers to move out of the state."

Liebau said that, along with the California Thoroughbred Trainers, the tracks still hope to attract private insurance carriers for workers' compensation coverage. He suggested that if the industry can learn to standardize its claims and processing methods, and institute new statewide safety measures, a private company could be convinced to specialize in writing racing policies.

"Ultimately, that's where our salvation is, if there is any salvation in any of this," Liebau said.

Another industry meeting on the topic was scheduled for April 18 in Sacramento.