Timely Topic: 'The Cost of a Bet'

The timing couldn't be better. But it's pure coincidence the International Simulcast Conference, which begins Monday in Louisville, Ky., includes a panel discussion titled "The Cost of a Bet."

That very issue played itself out in a big way recently when wagering outlets on the East Coast refused to the signal from Keeneland when the Lexington racetrack lowered its pari-mutuel takeout across the board to 16%. The receiving sites argued that the lower rate would reduce their revenue.

The 17 tracks in the Mid-Atlantic Cooperative made peace with Keeneland (details weren't made public) three days into the track's fall meet. But the issue lingers. How will the industry juggle attempts to aid the betting public with lower takeout rates and ensure that all parties receive what they believe is a fair share of revenue?

When simulcasting first began in the 1980s, a larger percentage of handle was wagered on track. That percentage has shifted greatly -- 80% or more of the total handle in the United States is generated off track. Some will argue the average 3% fee a host track receives for its signal is too low, while others say the receiving sites must be fairly compensated because of the handle shift.

Because states tax gross handle and not takeout, tracks can end up paying more in taxes if lower takeout rates generated more handle. A National Thoroughbred Racing Association task force on deregulation hopes to enact legislative change in states that request assistance.

In the meantime, the cost of a bet will be debated. The Mid-Atlantic Cooperative continues to have discussions with the New York Racing Association, which lowered takeout this summer during its meet at Saratoga. And companies such as Churchill Downs Inc. and Magna Entertainment will wield some clout in the marketplace by virtue of their numerous racetrack holdings.

Where the next battle might erupt remains to be seen.

"It's standard procedure to have ongoing discussions about simulcast signals," said Karl Schmitt Jr., senior vice president of communications for Churchill Downs Inc.