In Long Run, Squeeze Play May Hurt Florida Racing

For decades, Florida’s midwinter racing has been simultaneously blessed and cursed.

It is usually blessed by wonderful weather, which lures stables from all parts of the country and gives Florida a bountiful supply of horses. Fans love the large, competitive fields and they love the ambience of Gulfstream Park and Hialeah, so the tracks here have always generated big business at the height of the tourist season.

But Florida is cursed by the fact that the prime part of the season is too short, causing the tracks here to fight each other viciously over possession of the most lucrative racing dates. Instead of working together to strengthen the sport, the tracks have dragged the industry down with their internecine warfare.

Florida’s problems became almost farcical last fall when the tracks’ warfare produced a legislative stalemate, and all of the state laws governing racing expired. There were no rules on the books to bar fixing races or drugging horses. A racing industry with so many natural assets seemed on the brink of self-destruction.

People involved in Florida racing have despaired for so long about the condition of the industry that they are now stunned to find themselves in the midst of a phenomenal boom created by off-track betting and simulcasting.

Florida has always had the potential for a successful off-track betting network, but the politically powerful dog-racing and jai-alai interests opposed any expansion of horse racing -- until they got a piece of the action.

The state’s off-track betting law permits horse tracks to telecast their races to greyhound and jai-alai establishments, giving tourists in Orlando, horse breeders in Ocala, residents of Palm Beach and others a convenient way to bet on the races in south Florida. Off-track betting on the Gulfstream races averages about $500,000 a day.

But it was Gulfstream’s simulcasting of its cards to northern tracks that has created a phenomenal success this winter. Betting at out-of-state tracks, notably the Meadowlands, has contributed as much as $2.5 million a day to the Gulfstream wagering pools. In addition, wagering in Canada on the Florida races -- which is not merged into Gulfstream’s pool -- has averaged more than $1 million.

The economic pie is now big enough that each of the Florida tracks may be content with its piece of the action. Representatives of Hialeah, Gulfstream and Calder were in Tallahassee Monday trying to work out an agreement that would settle for the next five years the destructive battles over racing dates.

Gulfstream is willing to settle for a shorter season in the prime midwinter period. Hialeah’s obstreperous owner, John Brunetti, may be willing to accept racing dates in late spring because the benefits of off-track betting are still substantial. Calder will operate from June through December. The tracks will prosper. Horsemen will prosper because of larger purses. The state will get more revenue. But there is one part of the racing community that won’t benefit from this boom: the betting public.

Before the season began, Gulfstream raised its takeout -- the percentage taken from each wager -- to all-time high levels: 18.1 on win, place and show, 24 percent on doubles, exactas and triples. The exacta takeout is higher than at any major track in the country.

Horseplayers around the country who bet on the Gulfstream simulcasts are taxed at Florida rate.

Doug Donn, Gulfstream’s president, said, “We’re all guilty as charged” for taking too much from the betting dollar, but pointed out that Florida laws mandate the percentages that go to purses, to breeders and to the state; the only thing elastic is the track’s revenue.

No track wants to give up money, even though they -- and the rest of the industry -- will suffer in the long run from squeezing their customers dry. The difference between a 19 percent and a 24 percent takeout on exactas is enormous. Those extra percentage points are enough to erase the profits of a moderately successful gambler, and to knock others out of action entirely.

If high takeout is hard on horseplayers betting a single racing card, it may have a devastating effect in the era of simulcasting. Bettors in many locations now have the chance to play the entire racing cards from several tracks.

The bankrolls of bettors playing so many races are going to be chewed up rapidly by high takeout. Racetracks ought to be taxing their customers less in the simulcasting era, but few track managements are willing to recognize this basic fact of economics -- least of all in Florida, where industry leaders aren’t known for their prudence.

Indeed, Brunetti has said he is considering raising the takeout on exactas and trifectas to 28 percent when his track opens next month. Even at a time when there are so many positive developments in Florida racing, track owners retain their unerring instincts for hurting the game.