In a Keeneland fall race meeting closely monitored by horseplayers and industry leaders following the track’s decision to increase takeout rates, the Lexington track reported an 8.4% all-sources handle decline on its races to $121,712,035 for the 17-day meeting that concluded Oct. 28.
Keeneland had been a long-time advocate of low takeout as a way to increase churn (winnings bet back into pools) and attract new players. But the Lexington track changed that approach ahead of the fall meeting. Takeout rates, the amount of money pulled from pari-mutuel pools to primarily pay tracks and horsemen, were increased at Keeneland from 16% to 17.5% on win, place, and show wagers and from 19% to 22% on all exotic bets except the Pick 5.
Before the meet, Keeneland vice president of racing and sales Bob Elliston said the goal of the takeout hike was to increase purse money needed to compete with other top tracks for horses, and he noted that the increase was not out of line with takeout rates at other top tracks. Despite the downturn in wagering at the Keeneland fall meet, more money was generated for purses at this meet than last year’s fall meet and Elliston believes the price increase is the right decision.
"We continue to believe that pricing our product similar to other major racing jurisdictions is the right approach," Elliston said. "We will use those added revenues to support purses, develop and market to new racing fans, and for equine research. We think as players see the continued quality of our product, they’ll continue to trust and support our racing."
The Horseplayers Association of North America called for a boycott of the Keeneland meet to protest the takeout increase, which essentially is a price increase for bettors. HANA president Jeff Platt said the boycott and the decline in wagering typically associated with takeout increases accounted for Keeneland’s handle decline.
"I don’t know how much of their drop-off is from the boycott and how much is just the market speaking," Platt said. "It’s not just the boycott. It’s the market reacting to the takeout increase."
In looking at where the decline occurred, Elliston said Keeneland’s on-track numbers were down just 0.1% from last year to $17,597,035. He said handle at Kentucky simulcast outlets was down about 2% and retail advance-deposit wagering outlets were off about 3%. Elliston believes the boycott may have accounted for about half the decline in handle, but he also thinks weather accounted for a lot of the drop-off.
"These are solid results, especially considering that eight races during the meet were taken off the turf and three race cards were conducted either entirely or partially on an off track," Elliston said. "Those factors adversely impacted field size and therefore overall wagering, particularly when compared to last fall, when we enjoyed perfect weather every race day.”
Elliston said Keeneland performs market comparisons to other major tracks and he noted that Belmont Park enjoyed increased handle at its fall meet, a trend he attributed to players wagering on that signal on some good-weather days in New York, on days that Keeneland had some off-tracks.
But Platt and professional horseplayer Mike Maloney believe handle was up at other major tracks, at least in part, because of recent changes in tax withholding and reporting and that Keeneland missed an opportunity. At the end of September, the U.S. Treasury and Internal Revenue Service updated rules on reporting and withholding of pari-mutuel winnings, effectively putting more money in horseplayers’ hands. The changes have been enthusiastically welcomed by horseplayers and the NTRA said they could lead to as much as a 10% handle spike.
The increased handle at tracks like Belmont suggests the new rules may be making a positive impact. In just over the first two weeks of the change, New York Racing Association officials reported an additional $23,000 being kept in play just at Belmont Park and through simulcasting at Aqueduct Racetrack. Applying those numbers to outlets across the country suggests a lot more money was available to horseplayers for wagering in October 2017 compared with October 2016.
"I think most reasonable observers would have expected Keeneland to be up a little in this environment," Maloney said.
It’s a small sample, but it’s safe to say Keeneland enjoyed some increased wagering from the added money in players’ hands since the tax changes. So perhaps the 8.4% year-over-year decline doesn’t tell the whole story. Elliston said the trend deserves monitoring.
As for other economic indicators, Keeneland reported strong performance. On-track attendance for the fall meet, held Oct. 6-28, totaled 270,555, second only to last fall’s record 276,543. Robust attendance was fueled by near-record crowds of 19,204 on opening day and 29,636 Oct. 14.
Keeneland awarded average daily purses of $698,036, a fall meet record and a 3.3% increase from $675,750 in 2016, among the richest racing programs in the country. Average starters per race was 9.2.
"The fall meet embodied Keeneland’s mission to offer the highest-quality racing possible," said Keeneland president and chief executive officer Bill Thomason. "Toward that goal, we enjoyed competition among the nation’s top owners, trainers, and jockeys; gave away record purse money; saw an increase in field size; and welcomed a large contingent of Breeders’ Cup-bound horses. Those elements make racing at Keeneland an experience like no other, and we are gratified by the loyal support of our fans and horsemen."
Still the takeout debate figures to continue at Keeneland and other tracks. While it’s accurate to say that Keeneland has moved pricing to a model similar to the rest of the major tracks, it’s also true that under this model, pari-mutuel wagering has seen a massive decline. From 2006-16 U.S. pari-mutuel handle on Thoroughbred races declined 27% and, despite some $400 million generated for U.S. purses from added-gaming in fiscal year 2016, purses have declined 3.3% during that time period.
Maloney believes increased takeout is negatively impacting handle and making it more difficult for racing to compete with other forms of wagering, including similar games that involve skill, like poker, sports wagering, and daily fantasy sports. Long-term, he believes this negative impact on handle reduces the money available for purses from pari-mutuel wagering.
"It’s disheartening," Maloney said. "If that type of decline happened in any other industry, you’d have studies done and people making serious changes."
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2017 Fall Meet at a Glance (Oct. 6-28) |
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|
|
Fall 2017 |
Fall 2016 |
% Change |
|
All-Sources Handle on Keeneland |
$121,712,702 |
$132,937,720 |
-8.44% |
|
Avg. Daily All-Sources Handle on Keeneland |
$7,159,571 |
$7,819,866 |
-8.44% |
|
Total On-Track Handle |
$17,597,035 |
$17,793,419 |
-1.10% |
|
Avg. Daily On-Track Handle |
$1,035,120 |
$1,046,672 |
-1.10% |
|
Total Attendance |
270,555 |
276,543 |
-2.17% |
|
Avg. Daily Attendance |
15,915 |
16,267 |
-2.17% |
