(Monday, October 26) Horse racing forums are abuzz thanks to Gov. Arnold Schwarzenegger, who signed a bill sponsored by Sen. Dean Florez that allows the tracks and racing associations in California to control takeout, the amount of the total wagering the tracks keep.

California has one of the lowest takeouts in the U.S., 15.43% on win, place, and show bets, and 20.18% on exotics bets like exactas, trifectas, and Pick 4’s.

By comparison, slots rich Philadelphia Park has a takeout of 17% on win, place, and show wagers, and exotics are as high as 30% for trifecta and super wagering.

With racing in decline in Southern California, the assumption many horseplayers are making is that a raise in takeout is imminent.

Not so according to Jack Liebau, the president of Hollywood Park, who told Daily Racing Form, “The purpose of the bill was to give the racing industry more flexibility. Hollywood Park or any other racetrack can't [raise the takeout unilaterally], and even if we could act unilaterally, we wouldn't do it at this time."

The state's horsemen's association, and the California Horse Racing Board would also have to approve a hike in takeout.

There is wording in the bill itself that seems to signal a takeout hike is coming:

“The author writes, "SB 517 would allow greater flexibility to direct the distribution of funds generated by a takeout increase to areas with the greatest economic benefit for the industry.”

The purpose is two-fold:

1. It would enable California to increase its competitiveness by establishing purses more consistent with slot-fueled purses in other major racing states (e.g., New York, Pennsylvania, West Virginia, Delaware, Iowa, Indiana, Louisiana, New Mexico, and Florida).


2. It would create a funding mechanism for the industry to invest in infrastructure and even acquire racing/training facilities through a not-for-profit business model, effectively containing profits within the industry instead of allowing them to be siphoned off for real estate development or out-of-state corporate interests."

Finally, the author notes "that even with a small increase in the takeout rate, California racing would still rank among the five lowest takeout structures in the country. Any proposed redirection of distributions would be focused on an agreed upon strategy for stabilizing industry operations. In the end, this bill is about self-reliance, re-investing in California for growth, and protecting jobs for the future."

Jeff Platt, president of the Horseplayers Association of North America wrote:

“This bill does not in itself change takeout rates. However, we are obviously concerned by the implications and the tone of the press releases.”

“HANA, on behalf of horseplayers everywhere, is currently seeking further information as to any immediate consequences from this change of law.”

“HANA is extremely dismayed to see the same false economics continue to be thrown about, that suggests prices can rise while sales remain constant.”

“A price increase would obviously only have one effect -- to further accelerate the mass exodus of players and their wagering dollars from this game.”

While it is certainly good news to take the process out of the hands of clueless politicians and hand the decision making to the tracks and horsemen, it sure looks like horseplayers are going to be asked to give more back to the game.

Granted, the take in California is low, but any track, state, or racing association that implements a takeout increase on its customers at this time would be making a foolish mistake.

It would be extremely dangerous for the California tracks to raise the price of playing their product.

With the decline of horse racing in Southern California, small fields, and synthetic surfaces, horseplayers do not need another excuse to abandon racing in the state.

I am actually rooting for the California tracks to go ahead with a takeout increase. I think it would be a good litmus test to see how fed up horseplayers really are.

Groups like HANA are growing. There already is a groundswell of players that are insisting they will not continue to play unless they start seeing a decrease in takeout rates.

The only way track executives and politicians are going to believe that they cannot tax the player any further, is to see the horseplayers revolt.

A racing jurisdiction with small fields, a synthetic surface, and a takeout increase might just offer the perfect storm for horseplayers to finally take a stand and draw a line in the sand (or should I say Poly, Pro Ride, or Cushion Track).

Sen. Florez and Gov. Schwarzenegger think they wrote and signed a bill that is going to produce $200 million annually to the industry.

What they may have actually done is put one of the final nails in the coffin.