Wednesday, January 20, 2010

It's Not Just Racing That's Suffering

Interesting figures from Poker News Daily on the decline in revenue for Atlantic City casinos in 2009. Overall casino "gross win" (what bettors pay, less what the casinos return to the bettors) was down 13.2% from 2008, coming in at $3.9 billion. The drop was spread pretty much equally between slot machines (down 13.1%) and table games (down 13.5%). The slots, by the way, account for roughly two-thirds of Atlantic City casino revenues.

The official explanation, from Casino Control Commission Chair Linda Kassekert, was pretty much what one would expect. Kassekert blamed the weak national economy, growing competition from casinos in neighboring states, and the partial ban on smoking in New Jersey casinos.As for the last of those, all I can say is that it's nice to be able to breathe in a poker room.

Compare to the Atlantic City figures, the recently released numbers for thoroughbred betting handle nationally and for the New York Racing Association (NYRA) don't look quite so bad. Nationally, total handle declined by 9.88% in 2009, as compared to the previous year, while in New York, NYRA's all-sources handle dropped by 10.24% That's not great news, but it somewhat belies the argument that racing is losing handle to other forms of gambling. That may have been the case in earlier years, as new casinos opened across the country and siphoned off players, but now that there are casinos everywhere (except, of course, at Aqueduct, where inept New York politicians continue to stall), it's interesting to see that the trend in casinos' revenues is no better than, and in 2009 at least, even worse than that of race track handle.

NYRA, which accounts for about 18% of total national handle, through its meets at Aqueduct, Belmont and Saratoga, saw betting decline from just under $2.5 billion on 249 racing days in 2008 to $2.2 billion on 250 racing days in 2009. Among the specifics cited by NYRA for the decline were the lack of a Triple Crown possibility for the Belmont Stakes (but all-sources handle on Belmont day was down only 10.2%, the same decline as for the year as a whole); bad weather on Travers Day, when handle declined by 18%; and the rainout of 144 scheduled turf races. As to the last of those reasons, I don't know what the average annual number of races taken off the turf might be, but 144 does seem high. And turf races tend to draw big fields, which always leads to better handle.

Industry wide handle was $12.3 billion last year, down from $13.7 billion in 2008. If we assume that the average takeout rate was 20% (close enough, and it makes the calculations easy), then the total amount flowing to tracks, horsemen, and, increasingly, OTB and ADW operators, was about $2.5 billion, or roughly what Atlantic City brings in just from its slot machines. Purses, interestingly, declined by only 5.6% nationally, though that decline is continuing into 2009, as track operators try to make up for the missing revenue.

I find the numbers to be good news in some ways. If racing's revenues are declining at the same rate, or less, than those of other forms of gambling, just think how much better we could be with some imaginative management, better marketing, and better pricing (takeout). A little imagination might go a long way.

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