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Racing's customer base being eroded

Published:Friday | March 19, 2010 | 3:00 AM
Fans at Caymanas Park on a big race day. - file

The recent increase in the takeout from the wagering dollar is a most uninformed and unconscionable act. The customer base of the racing industry is being eroded by these uninformed decisions. Every time he places a bet, the Jamaican punter is facing a higher level of taxation than his counterpart in most other racing jurisdictions.

This is hardly surprising, considering the generally high level of taxation every Jamaican faces.

Indeed, Jamaica's taxes on betting represent one of the highest in the world. These come directly from the racing promoter (derived from the betting dollar).

The punter receives:

(1) 70 per cent of his investment on win, place, quinella, exacta and trifecta bets;

(2) 65 per cent on double event, superfecta, triple and hi-five bets; and,

(3) 60 per cent on super trifecta, pick-9 and super six

When I last checked, the takeout from win and place pools was divided:

5.5 per cent government tax

Five per cent off-track station commissions

Eight per cent contribution to purses

11.5 per cent contribution to promoter's costs

The bottom line is that the return to the punter on his investment will, over time, make betting at the racetrack less attractive than other forms of gambling and may serve to lure the punter away from horseracing. It is interesting to see what the takeout is in some of the tracks in North America.

I have tried to give a mix of tracks, some of whom don't boast the level of Jamaica's turnover with some 90 race days per year.

Neither the promoters nor the Government seen to understand the churn effect that emanates from a lower takeout.

Wherever lower takeouts have been implemented, the result has been an increase in overall business and customer satisfaction, not to mention increased revenue for government and horseracing promoters.

It's no secret in the local industry that the takeout is higher than most jurisdictions in the region.

What horseracing promoters also know is that horseracing is at a critical juncture, where decisions need to be made concerning its reinvention, for further growth and sustainability.

The objective reality is that over the last 10 years, there has been increased competition from other legal forms of gambling - lotteries, betting machines, video and games of chance of all types.

A reinvention of the horseracing industry must consider factors such as:

Increasing the value per dollar wagered by the punter

Improving the quality of service to the punter

Increasing the entertainment value of the racing product

Providing and maintaining a decent and attractive environment for betting

Improving the quality of the horse as a key ingredient of the sport.

Underlying all of this, of course, is the need for increased revenue for all concerned. Government, through Caymanas Track Limited, is the promoter of horseracing in Jamaica and, therefore, has a clear onus to lead the charge in modernising the industry.

It can begin by considering a lowering of the tax structures. As has been demonstrated, far from reducing revenue, Government stands to gain far more and, rather than declining, the sport can be revived.

The promoters did a minimal adjustment in April of 2007, reducing the takeout by a miserly five per cent, moving it from 30 per cent to 25 per cent. This, against the background that 15 per cent to 20 per cent is the maximum takeout in every other racing jurisdiction. I was so convinced of the positive effects of reducing the takeout that I offered many years ago ( through the Jamaica Lottery Co), to guarantee an increase in turnover of at least 20 per cent if the promoters increased the payout to the punters from 70 to 80 per cent. My offer was never accepted.

Well, the result of this adjustment in just two months was most revealing. The turnover for the two months was:

2006

May: J$162,498,135

June: J$147,923,525

2007

May: J$191,184,339 - an

increase of 18 per cent

June: J$ 216,161,988 - an

increase of 47 per cent

Management can look at the effect over a longer period. I am sure they will find an increased turnover in those areas where the takeout was reduced. My response is that the promoters and government should reduce the takeout further, and the results will be even more dramatic.

It is with deep concern that the promoters have recently done just the opposite and have now increased the takeout, thus providing punters with little incentive to continue supporting the industry. This is a most unconscionable act and the only solution would seem to be a boycott of wagering on races. Already, the reduction in payouts is being manifested by the increasing number of win dividends that are less than $50, on an investment of $40.

I cannot believe the management who, are aware of the dynamics of wagering, should have carried out such an uninformed suggestion from a board that is totally removed from the importance of good customer relations.

Punters, the ball is in your court, show your dissatisfaction with a boycott on wagering until this injustice has been reversed.

Howard L. Hamilton is a former Chairman of Caymanas Track and is the current President of The Thoroughbred Owners & Breeders Association. He can be contacted at howham@cwjamaica.com.

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