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Growth in Average Daily Purses Among U.S. Tracks

MarketWatch: Top 10 tracks by percentage increase

 

Changes made in 2017 to federal tax withholding and reporting on winning pari-mutuel wagers was expected to boost overall handle figures by promoting more churn through the windows. Higher churn was then expected to boost purses, which are fueled largely from a percentage of wagering.

Expectations came to fruition, with Equibase reporting growth in both United States purses and handle reported for 2018. Wagering increased 3.3% to more than $11.26 billion and purses grew 3.5% to more than $1.11 billion.

Just how deeply were racetracks affected by this growth?

Significantly, according to an annual review of average daily purses compiled per track by BloodHorse MarketWatch. Look for a complete breakdown in the Feb. 16 issue of BloodHorse magazine. In the meantime, MarketWatch wanted to see which of the larger race meets saw the biggest increases in average daily purse between 2017 and 2018.

Our annual purse review includes racetracks that ran at least five live dates and paid gross purses of $100,000 or more. These criteria fit 84 racetracks in 2017, of which 46 (55%) reported an increase in average daily purses compared with 2016. In 2018, 80 racetracks met the criteria and of these 50 (62.5%) reported an increase in average daily purse.

Among racetracks running 50 or more days of live racing, Delta Downs reported the largest increase in average daily purse—a 32% increase to $273,809. Since 2001, Delta Downs has had the benefit of slots machines to enhance purses. The top 10 racetracks by percent increase in average daily purse include only two that do not offer any kind of alternative gambling. Those who reported growth without the benefit of slot machines or card tables are Arlington International Racecourse, up 14%, and Golden Gate Fields, up 7.9%.

Arlington was able to increase its purses in 2018 due to an underpayment in the 2017 purse account and because state lawmakers approved more than $1.6 million for owners awards and stakes races, according to the Illinois Thoroughbred Breeders Fund. Arlington paid an average $239,114 in purses last year, which apparently helped raise field size slightly from 7.23 starters per race to 7.46.

Golden Gate Fields was reportedly able to grow its handle by separating its post times from the biggest races across the country, racing secretary Patrick Mackey told the San Francisco Chronicle last August. With bettors more engaged due to the changes in withholding and some additional help from bad weather and cancellations in the East, Golden Gate was able to increase its out-of-state handle by 48% and bolster its total handle by 18%.

“We had competitive races for leading rider and trainer, and not a lot of races with 1-5 or 2-5 shots winning,” Mackey told the Chronicle. “The days of (trainer) Jerry (Hollendorfer) and (jockey) Russell (Baze) winning every race at 2-5 are gone. It’s a different product where you can find betting value. When you have gamblers behind you, they keep coming back.”

 

Leading Racetracks by % Increase in Avg. Daily Purse, ‘17-’18

Includes racetracks running 50 or more live race dates in 2018

Track (State)

’18 Dates

2018 Avg. Starter”

2018 Daily Avg. Purse

% Chg. Avg. ‘17-’18

2018 Gross Purse

Delta Downs (LA)

83

8.68

$273,809

32%

$22,726,110

Mahoning Valley Race Course (OH)

100

8.61

$150,644

18%

$15,064,430

Gulfstream Park (FL)

198

8.30

$469,242

17%

$92,909,925

Arlington Int’l Racecourse (IL)

71

7.46

$239,114

14%

$16,977,066

JACKS Thistledown (OH)

100

7.29

$166,986

12%

$16,698,586

Aqueduct (NY)

91

7.16

$541,328

10%

$49,260,878

Albuquerque Downs (NM)

53

8.04

$89,165

9.6%

$4,725,732

Churchill Downs (KY)

70

8.23

$567,787

9.3%

$39,745,062

Laurel Park (MD)

156

7.77

$342,471

8.9%

$53,425,438

Golden Gate Fields (CA)

150

6.93

$152,590

7.9%

$22,888,444

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New Georgia Racing Bill Strips Out Gaming References

By T. D. Thornton

The latest bill in a decades-long string of legislative efforts to legalize pari-mutuel horse wagering in Georgia was filed on Wednesday.

In a change of tactics from similar bills that failed in recent years, this year’s version does not tie the sport to any racino/casino gaming and focuses strictly on creating a mixed-use Thoroughbred venue that would host boutique seasonal meets and other non-racing events.

According to the Atlanta Business Chronicle, which first broke the story, the Rural Georgia Jobs and Growth Act filed by Republican Senator Brandon Beach pitches horse racing as “an economic development boon for struggling rural communities, which could see the creation of a new industry surrounding the raising of racehorses.”

“Each racehorse can have a ripple effect of creating more than 20 jobs,” Beach told the ABC. “This legislation provides my colleagues with a clear vision of the benefits of horse racing facilities, including new revenue streams to keep up with increasing demand for education funding.”

Beach told the Atlanta Journal-Constitution earlier this week that, “We need to be in the equine industry. There’s more to it than racing. There’s horse farms and hay farms and breeding and auctions.”

The stumbling block to getting parimutuel laws enacted in Georgia–as it has been for the past 30 years–has nothing to do with a lack of enthusiasm for horses. The difficulty has always been rounding up enough elected officials who are willing to support expanded gambling in a state where moral objections to it run high and religious conservatism carries considerable clout.

Dean Reeves, president of the Georgia Horse Racing Coalition, told the ABC that his group is committed to building “world-class facilities that would benefit the state and serve as an asset to local communities. Our industry wants to be a part of a solution that gives rural Georgia an economic boost while also providing new revenues for the entire state,” he said.

The ABC reported that legalizing parimutuel betting in Georgia requires a constitutional amendment that would be subject to a statewide referendum.

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Illinois Racing Board Moves Ahead on Historical Racing

Board accepted report that defines historical horse racing as pari-mutuel.

The Illinois Racing Board agreed at its July 26 meeting to move forward with planning for implementation of wagering on historical horse racing terminals through the state’s three remaining racetracks.

Without objection, the full board accepted a report from a committee headed by commissioner Thomas McCauley that found historical horse racing is pari-mutuel wagering, as defined under Illinois law, and could be implemented without legislative action.

By accepting the report, the board also agreed that staff “be directed to draft suggested rules to be considered by the board, whereby organization licensees could lawfully and permissibly conduct historical horse racing.”

Before historical horse racing can become a reality, those rules would have to be approved by the IRB and the governor’s staff, then submitted to and approved by the legislature’s Joint Committee on Administrative Rules. A court challenge also would be likely, as anti-gambling groups steadfastly oppose any expansion.

McCauley and chairman Jeffrey Brincat emphasized historical horse racing—a slot machine-like game with pari-mutuel pools and payouts based on results of previously run races—is the industry’s second choice to legislation that would authorize full casino gaming at tracks. A gaming expansion bill was left pending in Springfield, Ill., at the end of the spring legislative session but could be revived in the post-election veto session.

“Were that to happen, the HHR committee suspects that HHR might then be dropped for the much more lucrative games, which the casinos have,” McCauley said. “But that is speculation, and we have to deal with the reality that confronts us.”

Asked whether HHR rules might be ready to roll out in November, absent legislative action on gaming expansion, Brincat said he believes the process will be “expeditious.” But he warned delays are possible in a complicated legal and political environment.

Fairmount Park in downstate Collinsville, Ill., and Hawthorne Race Course in suburban Chicago actively support the historical horse racing proposal. Arlington International Racecourse, the report noted, is neutral.

McCauley said the Illinois horse racing industry “is in a desperate economic condition. It is not hyperbolic to say that its viability is in doubt. Two of five tracks have closed in the last several years. The live dates of certain Thoroughbred race meetings have declined by 40% or more.”

The report noted that Illinois racing has not been allowed to compete with tracks that have gaming in nearby states.

“This may seem shocking at first blush,” the report said, “but for those of us who have witnessed the industry’s steady downward spiral, caused almost entirely by the state government’s refusal over the last 17 years to allow meaningful competition (with other states), that tragedy does not shock. Indeed, it undoubtedly was inevitable.”

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Horseracing Wins As Treasury/IRS Issue Updated Tax Rules

The U.S. Treasury Department and the Internal Revenue Service (IRS) today announced that they will formally adopt modernized regulations regarding the withholding and reporting of pari-mutuel proceeds. The National Thoroughbred Racing Association (NTRA) has long pressed for these updated regulations that will allow horseplayers to keep more of their winnings, thereby increasing the amount wagered on U.S. pari-mutuel racing by as much as 10 percent annually, or upwards of $1 billion, according to independent estimates. The new rules were posted late Monday afternoon as a Public Inspection Document. They are scheduled to be officially published in Wednesday’s edition of the Federal Register and will go into full effect by no later than Nov. 14, giving racing associations, totalisator companies, and advance deposit wagering (ADW) operators up to 45 days to implement these important changes; however, some may elect to start as soon as Thursday.

“These landmark U.S. Treasury regulations will have an enormously positive impact on horseplayers, the racing industry, and the federal government,” said NTRA President & CEO Alex Waldrop. “I am extremely proud of the NTRA’s legislative team for spearheading this effort, which will prove to be among the most meaningful regulatory advances made by our industry in decades. The results of this much-needed measure will be horseplayers keeping more of their winnings, racetracks generating more pari-mutuel handle, and government collecting additional tax revenue. This is a sure bet where everyone wins!”

Added Waldrop: “This day would never have come without the persistence of Thoroughbred racing’s friends in Congress, especially Rep. John Yarmuth of Kentucky, Rep. Pat Meehan of Pennsylvania, Senate Majority Leader Mitch McConnell and our many bipartisan supporters on Capitol Hill. We also are indebted to the industry stakeholders and thousands of customers of Thoroughbred racing who signed our petition or submitted public comments in favor of these changes.”

Under the new regulations, the IRS will consider the inclusion of a bettor’s entire investment in a single pari-mutuel pool when determining the amount reported or withheld for tax purposes, as opposed to only the amount wagered on the correct result.

For example, the amount wagered by a Pick Six player who hits with one of 140 combinations on a $1-minimum wager now will be $140, which is the total amount bet into the Pick Six pool. This more accurate calculation will remove the significant reporting and withholding obligations on horseplayers and the unnecessary paperwork for the IRS that was a result of the prior rule that used only the $1 bet on the single winning combination as the amount wagered.

“This is a major victory for all pari-mutuel wagering customers,” said Judy Wagner, the Horseplayers’ Representative on the NTRA Board of Directors and winner of the 2001 National Horseplayers Championship (NHC). “It would not have occurred without the leadership of the NTRA and the support of thousands of horseplayers who actively participated in the process to modernize these regulations.”

The amended regulations, advocated by the NTRA and its legislative team, define the “amount of the wager” to include the entire amount wagered into a specific pari-mutuel pool by an individual – not just the winning base unit as is the case today – so long as all wagers made into a specific pool by an individual are made on a single totalisator ticket if the wager is placed onsite. The modernized regulations will have the same positive results for ADW customers and will not impact how those wagers are currently made.

View the full text of the new rule under section 3402(q) of the Internal Revenue Code here: https://s3.amazonaws.com/public-inspection.federalregister.gov/2017-20720.pdf.

The NTRA has pushed for the modernization of pari-mutuel withholding and reporting rules for several years. As more and more pari-mutuel wagering was directed toward exotic wagering pools it become clear that the tax rules were becoming an increasing and unfair burden on horseplayers as those outdated rules significantly increased the incidence of winning tickets subject to withholding and reporting. These new rules are the product of all the work the NTRA, and other industry stakeholders, undertook with Congressional representatives and Treasury and IRS officials.

“This represents a great triumph by the entire NTRA legislative team, including the bipartisan Horse PAC, which played an instrumental role in the passage of these regulations that will benefit all segments of the industry,” said Horse PAC chairman William S. (Bill) Farish. “We thank the hundreds of individual stakeholders who contribute to Horse PAC; they played a major role in today’s victory.”

Waldrop noted that the NTRA has been working behind the scenes since January with industry groups – including totalisator companies, ADWs, and racing organizations – to ensure a smooth implementation for customers.

“For the industry to fully realize the benefits of modernized regulations for pari-mutuel withholding and reporting it is essential that we deliver a seamless transition to our customers,” he said. “We are optimistic that the industry will be fully prepared to institute these landmark changes by no later than November 14.”

About the NTRA
The NTRA, based in Lexington, Ky., is a broad-based coalition of more than 100 horse racing interests and thousands of individual stakeholders consisting of horseplayers, racetrack operators, owners, breeders, trainers and affiliated horse racing associations, charged with increasing the popularity, welfare and integrity of Thoroughbred racing through consensus-based leadership, legislative advocacy, safety and integrity initiatives, fan engagement and corporate partner development. The NTRA owns and manages the NTRA Safety and Integrity Alliance; NTRA.com; the Eclipse Awards; the National Handicapping Championship; NTRA Advantage, a corporate partner sales and sponsorship program; and Horse PAC®, a federal political action committee. NTRA press releases appear on NTRA.com, Twitter (@ntra) and Facebook (facebook.com/1NTRA).

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