A Missed Opportunity for Churchill Downs

[Wandering Eyes]

Churchill Downs is a bottom-lined company, and while there’s nothing wrong with that it sometimes loses sight of the fact that good will and good public relations matter, too.

It was certainly welcome news for owners and trainers when Churchill announced last week that its first condition book would include a 46 percent purse increase over last year’s levels. The money is coming from profits from instant racing machines at Churchill’s Derby City Gaming venue, where business has been much better than anyone expected. It’s great news for the owners, and they deserve it. It’s very difficult to make a profit owning horses and the purse increase will put needed money in their pockets. Owners are the second most important segment of the game.

Who’s first? The horseplayer. Without them, there would be no owners, there would be no racing. Because takeout levels in horse racing are so high, and well above the norm for virtually every other type of gambling, people who play the horses largely take a beating. But they are a remarkably loyal bunch and keep coming back for more. But how long can that last?

Handle on American racing peaked in 2003 at $15.1 billion. It now down to $10.9 billion. Even without factoring in inflation, that’s a 28% decline. In any other industry, they would be panicking. In racing, there hardly seems to be any concern, and one of the reasons for that is that so many racing operators, like Churchill, are making so much money off their slot or instant racing machines that the drop in wagering is, well, just not a big deal.

In 2014, Churchill Downs announced that it was raising takeout. The takeout on win, place and show bets went from 16% to 17.5%. The take on “exotic” wagers was raised from 19 to 22%.

The given reason was that Churchill needed the additional money it would take in from a higher takeout to use for extra purse money to stay competitive with other states.

“If Churchill Downs is to present a competitive racing product, purses must be strong enough to keep current stables in the state and attract new stables and horses to the Kentucky racing circuit,” the late John Asher, a Churchill Downs spokesman, said at the time. “Our stakes program is also essential to attracting and retaining stables filled with quality horses. Without the change in takeout, our purses in the spring meet would have certainly declined, stakes purses would have been reduced, and some stakes races would have been dropped from the schedule.”

Based on that logic, now that Churchill purses have skyrocketed due to the instant racing games, there should no longer be any need to pick the horseplayers’ pockets with the higher takeout. Apparently, management doesn’t see it that way, as there have been no announcements about lowering the takeout back to its former levels.

This was a perfect opportunity for Churchill, which comes under a lot of criticism, to look like the good guys for once. Be one of the few tracks that is looking out for the player and give them a break. Give them back the lower takeout. Doesn’t look like it’s gong to happen. No surprise there.

 

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