The seven-figure purse deficits Del Mar and Santa Anita have amassed in recent years will take considerable time to eliminate and are likely to rise in the short-term, several racing and track executives said in the last week. According to discussions at the California Horse Racing Board meeting on June 18 in Sacramento, Santa Anita has a current purse overpayment of approximately $4 million, while Del Mar has overpaid purses by $2.1 million. Both tracks have taken measures in the last year to reverse the trend by cutting prize money, a trend widely expected to continue. Santa Anita officials said over the weekend that business at the current meeting will be assessed over the next month to determine whether a purse decrease will occur for the track’s spring meeting, which runs from April 19-June 16. Track general manager Nate Newby said business in the first month of the meeting has been lower than projected. Newby did not disclose specific business figures for the current season. “We need to make up some ground,” he said. Purse levels at California tracks are part of negotiations between track officials and the Thoroughbred Owners of California. “We’ll run a report in another month and make a decision on the spring,” Newby said. “I think we still need to have those conversations with TOC.” Last year, Santa Anita reduced overnight purses for its spring meeting. Maiden races, for example, were cut from $67,000 in the spring of 2022 to $61,000 at the same time in 2023. At the time, track officials said the purse deficit had reached more than $2 million. For the current winter-spring meeting, which began Dec. 26, the track reduced purses for stakes by $2.275 million and made smaller reductions to overnight purses. Maiden races are worth $65,000 this winter compared to $67,000 in early 2023. Last fall, Del Mar reduced stakes purses at its four-week autumn meeting by $400,000, and reduced overnight purses by 7.6 percent to 12.8 percent. At the racing board meeting last week, Del Mar president Josh Rubinstein said a purse cut is likely for the track’s prestigious summer meeting later this year. Rubinstein said some monies that would be devoted to purses must be redirected to pay annual contributions to the budgets of regulatory agencies such as the racing board or the national Horseracing Integrity and Safety Authority. “The reality is the current economic model is not sustainable,” Rubinstein told the racing board. “The last thing we want to do is cut purses. Unless there is an immediate economic change, we will be forced to do that.” Racing board executive director Scott Chaney asked Rubenstein for an estimate of the purse decrease, specifically questioning whether the cut would be 5 percent or 25 percent. “Probably somewhere in the middle,” Rubinstein said. Southern California tracks have sought to fund regulatory obligations by using revenue generated from simulcasting in Northern California when no live racing is held in that part of the state. Legislation was passed last fall allowing that revenue to be redirected to tracks in the south. Golden Gate Fields is scheduled to close in June. At the conclusion of the county fair circuit in the autumn, simulcast revenue from Northern California could become available to Southern California tracks unless northern interests launch a race meeting at Pleasanton or Sacramento as soon as late September, which is currently being discussed. Southern California operators told the racing board last week that they want to consolidate most racing in the state to southern tracks at the expense of potential meetings at Pleasanton and Sacramento. The idea has been rejected by the Northern California racing community, who wants to sustain racing in that part of the state and keep revenue generated from simulcasting for purses at northern tracks. Bill Nader, president and chief executive officer of the Thoroughbred Owners of California, said over the weekend that California racing as an industry faces difficult questions about how to proceed after the closure of Golden Gate Fields. “We all recognize that racing in the northern part of the state is in a difficult period,” he said. “No one likes to see that. “Going forward, how do we best position California to be sustainable and make sure Southern California does not fall into a more precarious situation? I label Southern California as being vulnerable and near desperate.” The TOC sent a letter to the racing board earlier this month, co-signed by top executives from Del Mar, Los Alamitos, and Santa Anita, calling for the sport to consolidate in Southern California. The racing board has yet to take action on racing dates for the final months of 2024 in Northern California. Even if simulcast money in Northern California is redirected to southern tracks, the immediate benefits will be limited, Nader warned. “If there is a redirect, people should not be led to think there will be a purse increase,” he said. “We have to balance the budget. We’ve got to be responsible and prudent.” Nader said over the weekend that the absence of a secondary source of revenue for purses – such as casinos, sports betting, or slot machines available in a majority of other racing states – severely hinders California racing. “We’re fighting the fight in an old-fashioned way with parimutuel wagering only,” he said. “It’s a difficult landscape on us.” Nader said regulatory costs paid for equine “safety, welfare, and integrity” in California are $19 million a year. Part of that money would otherwise go to purses. “It’s a big number,” Nader said. “Those are fixed costs you cannot escape.” The decline in purses in California comes at a time when Oaklawn Park in Arkansas and tracks in Kentucky are offering booming purses greater than what is available in California. Tracks in those states benefit from revenue from casinos or slot machines. Until last spring, purse levels had been on a favorable trend in California in recent years. The tracks and TOC reached an agreement with the account-wagering firm TVG, now known as FanDuel, in early 2021 for as much as $15 million in funding for purses that year and in 2022. “That money has dried up,” Nader said Del Mar announced a record daily purse distribution of $800,000 for its 2022 summer meeting. Prior to the 2023 meeting, the track increased purses in maiden races and some allowance races. All-sources handle at the 2022 Del Mar summer meeting reached $579.8 million, the fifth-highest in track history, according to figures released by the track that year. All-sources handle declined to $526.1 million last summer, the track said in September. At the time, officials warned that a purse cut for the autumn meeting was likely. Nader expressed concern over the weekend about current handle in the first weeks of the year. “The trend even at the start of 2024 is declining handle, and that’s our only source for purses,” he said. “It doesn’t get any easier.” :: Want to learn more about handicapping and wagering? Check out DRF's Handicapping 101 and Wagering 101 pages.