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Racing’s saviour: handicaps? Or Gully Bop?

Published:Tuesday | March 31, 2015 | 12:00 AMGordon Robinson

I've stopped listening to radio's tiresome and uninformed horse-racing coverage.

One Gleaner-affiliated radio station treats listeners to a weekly whine about the claiming system, giving the impression that, if only handicapping returned, racing would magically become profitable again.

The bellyaching Power Pair insist claiming succeeds nowhere while handicapping succeeds everywhere (ROFL). They cite Trinidad, where they claim (ouch) Chris Armond was forced to bring back handicapping. Maybe. Trinidad's January 31 nine-race card included five optional claimers, two maiden races, and two 'handicaps'. And Trinidad offers rich purses.

Even Trinidad's ballyhooed prosperity appears illusory. On Arima's finances, AndrÈ Baptiste (Guardian, March 4) wrote: "It's understood placed prize money hasn't been paid for a few race days, and some owners are being asked to not attempt to cash their winner's cheques from as far back as Boxing Day 2014." Baptiste also raised concerns regarding possible increased corruption, the bane of handicapping systems everywhere.

Racing systems (handicapping/claiming), without more, don't significantly affect profitability. The Power pair nostalgically romanticise "the good old days" (1960s/'70s), forgetting horse racing was then the only game in town. Now, worldwide competition is a click away. CTL competes or dies.

These financial fundamentals are critical to profitability:

1. Divestment.

2. Reduction of pernicious 30 per cent tote takeouts.

3. Restructuring purse distribution.

4. Breeders' incentives.

5. Use of technology-driven betting options.

Europe, especially England, is the Power Pair's exemplar, but England's tote takeouts are less than 15 per cent; owners' purses not subject to deductions and breeders' incentives abound. Still, England's industry, handicapped (owww!) by bookmakers' dominance, struggles financially. Hong Kong, Australia and Japan succeed because of low tote takeouts plus tote monopolies.

For those with eyes to see, the following extracts from an article ('How high takeout ruined Italian racing') written for the Thoroughbred Racing Commentary (February 2, 2015), by attorney-at-law Carlo Zuccoli, an international consultant on fixed-odds/pari-mutuel betting are interesting:

"Until [Tuesday, June 27, 1995], Italy had been one of [Europe's] leading countries for breedin1g, racing, and betting turnover. After that 'Black Tuesday', it was never the same ... .

In those days, Italians were legally allowed to bet only on horse racing. Every racecourse ran its own pari-mutuel operation [with] many fixed-odds bookmakers on-course. Off-course, there were 329 betting shops..

Bookmakers on-course paid 15 per cent of turnover to the [promoter] ... . The betting shops paid 17%.

Each betting shop produced its own ... prices, and bettors also had the option of betting at riferimento ... [tote odds] ... .

Then, ... the ... Italian Senate passed a bill to outlaw riferimento and introduce a [tote monopoly]. It was the way that tote was run, with a huge takeout of more than 30 per cent from the win pool alone that caused the problem.

Betting shops, instead of giving 17 per cent of their turnover to [promoter], received 42.5% of the sky-high takeout ... just for selling tickets for the tote risk-free.

Betting turnover began to plummet. And so did prize money.

In most racing jurisdictions with a [tote monopoly] (e.g., France, Japan, Hong Kong, and Singapore), three crucial criteria are met:

- ... Racecourses are owned by the same organisations that run betting, control TV rights and provide [purses].

- Takeout is fair ... .

- Costs [are] low. [For example] in France, [promoters'] points of sale (cafÈs and tobacconists) get 1.67 per cent of [their] turnover ... .

None of that happens in Italy.

There ... [promoters lease racecourses from private landowners who] don't provide any prize money. [Landowners] receive €62 million from the [promoter] (which is ... a department in the agriculture ministry).

[Promoters] also pay [€53 million over six years] to have racing on TV; ... [the TV station] is also licensee for 4,000 [betting] points of sale ... through which it receives ... around 12 per cent from every bet dwarfing, for instance, French distribution cost of 1.67 per cent.

Tote pools are generally small ... .

So Black Tuesday changed the face of Italian racing beyond recognition. And it got a whole lot worse in 2000.

That was when the Ministry of Finance ... published a tender to increase the number of betting shops to 1,000 (from 329) ... .

[The result: same market shared among many more betting shops].

For 2014, betting turnover fell by 18% ... . Takeout was EU185 million ... of which [promoter] received EU66 million, from which it had to find EU97 million [purses] and EU60 million for the racecourses [plus administration costs].

... [Italy] has been unable to pay EU28 million in [purses] for the last quarter of 2012. [Promoters promise] the money will be paid in 2015, but in 2013, [they promised] the money [would] be paid in 2014 ... ."

Sound familiar? Handicapping, schmandicapping! We MUST address financial fundamentals first. Until then, only Gully Bop can increase sales.

Peace and love.

- Gordon Robinson is an attorney-at-law. Email feedback to columns@gleanerjm.com.