One of the latest trends at U.S. racetracks is the focus on “Big Days.” “Big Days” have always had a place on the racing calendar with the three Triple Crown race days as well as the two days of the Breeders’ Cup. However, racetracks big and small -- from Tampa Bay Downs to Belmont Park, and Charles Town to Parx -- are embracing the "Big Day" concept -- aggregating some of their major races on a single card with the hope of creating larger on track attendance and higher wagering both on track and throughout the simulcast network.
“Big” racing days are beneficial for the attention they bring to the sport. They are especially valuable to a racetrack when the wagering activity and the racing related revenues accrue to the financial benefit of the racetrack. However, consolidating stakes races on “Big Days” where the purses distributed are not covered by the wagering activity can be very detrimental to the health of the overall racing program. I believe that consolidating stakes too aggressively can have the opposite of the intended effect – actually reducing customer interest and wagering activity on regular and weekend race days throughout the rest of the meet. “Big Days” are exciting for the casual racetrack customer. However, I would suggest that offering consistent weekend race cards combined with a takeout reduction would be a better way to grow the racing business and make our product more competitive with other gambling and entertainment offerings.
I made my first 2015 visit to Belmont Park on Saturday, May 9. The weather was decent, racing surfaces were fast and firm, and the card offered four graded stakes: the G1 Man o’War, the G2 Peter Pan, the G2 Ruffian Handicap, and the G3 Beaugay. While the New York Racing Association (NYRA) did not market May 9 as a "Big Day," only Belmont Stakes Day and the Belmont Oaks/Derby Saturday will offer more graded stakes on a single day during the spring/summer meet. Friday of the Belmont Stakes Racing Festival will offer four graded stakes worth more than $2.5 million.
Setting that aside, have a look at the wagering numbers and the purse money for May 9. On-track handle was $1.827 million and simulcast handle was $11.417 million for an all source handle of $13.244 million. NYRA does not publish track attendance but if you divide the on track handle by 250, you get a pretty accurate estimate of the per cap wagering at Belmont Park on a Saturday, and this would indicate attendance of approximately 7,300.
Now let’s look at the handle numbers to estimate how much purse money was earned back through wagering. Under New York State statutes, the horsemen’s purse account receives approximately 6 percent of on-track wagers resulting in a purse contribution of approximately $109,620. For the simulcast handle, again based on my experience, let’s assume that NYRA gets a blended 7 percent host fee of which 50 percent would go to the purse account or $399,595. Therefore the estimated total purse contribution from wagering on May 9 would be $509,215. Unfortunately, the total purses for the day were $1.308 million, resulting in an estimated purse overpayment of almost $800,000. NYRA does receive purse payments from the video lottery terminals (otherwise known as slot machines) equal to one-third of the purse account, but it would appear that this race day did overpay prize money relative to purses earned by a substantial amount. Quite simply, “Big Days” should pay for themselves and be additive to the purse account and to the racetrack’s bottom line. Overpayment of purses on these days reduces the purse money available for the regular overnight program. It is likely no coincidence that Belmont’s card on Sunday, May 10, offered one ungraded stake with a $100,000 purse and two allowance optional claimers with $80,000 purses.
I would like to review in a similar manner a “Big Day” that NYRA created last Fourth of July weekend, the Stars & Stripes Festival featuring the new $1.25 million Belmont Derby and the new $1 million Belmont Oaks. NYRA deserves real credit for their effort to create two major turf races with potential international significance. However, to create a "Big Day" that effectively diminishes some of the weekend cards for the balance of the Belmont spring/summer meet could be problematical for total handle for the meet.
In 2014, the Stars & Stripes Festival consisted of 10 races with purses totaling $3.779 million. Wagering activity for the day included an on-track handle of $2.826 million, which -- using the same estimates as above -- would have yielded a $169,547 purse contribution. Simulcast handle of $16.003 million with a 7 percent host fee would have yielded a purse contribution of $561,121. Thus, the total estimated purse contribution from the wagering for the day nets out at $729,668, and total purses paid were $3.779 million. Again, VLT revenues should cover approximately one-third of the purse, which would still leave a $2.5 million outstanding purse obligation with less than one-third of that obligation being covered by the day’s wagering.
In fairness, it is important to acknowledge that this was the first year of this Festival with incremental growth certain to occur. However, there can be no question that aggregating these races and purses on such a day limits the amount of purse money that can be allocated to other events during the meet. The Stars & Stripes Festival will be conducted again this year on Saturday, July 4, and some handle growth can be expected.
Not all “Big Days” present this issue - NYRA made a brilliant strategic move in 2014 when they made Belmont Stakes Day much bigger by running a total of 10 stakes, nine graded, including the Met Mile that had previously been run on Memorial Day. Forget "Big Day" - this "Behemoth Day" (no doubt helped by California Chrome’s Triple crown bid) was a smashing wagering and business success. On track handle of $19.105 million was 32 percent higher than the previous record and all source total handle of $150.249 was a whopping 35 percent higher than the previous record.
“Big Days” certainly have their place on the racing calendar, and they do present an opportunity to introduce new customers to the sport. However, I would wager with anybody that more new customers have been introduced to Thoroughbred racing standing by the rail at Saratoga during morning workouts, or overlooking the paddock in the afternoon, than by spending the day at the Travers Stakes. Interestingly while the two Breeders’ Cup Championship days and the Kentucky Derby dominate media coverage of Thoroughbred racing, these three days combined only represented 3.3 percent of the total wagering activity on U.S. races in 2014.
If racetracks devoted the same time investment to researching the efficacy of their betting menus and estimating optimum takeout levels as they did planning “Big Days,” I believe the time spent analyzing wagering options would yield a higher return. Well-balanced race cards with good field sizes may not be as glamorous as “Big Days,” but I believe that they – combined with lower takeout to improve the economic return for customers, tracks, and horse owners, and more effective drug testing and stronger penalties for cheaters – would go much further in improving the future for Thoroughbred racing.