What is the NTRA Takeout Percentage from NHC Spots Sold and Horseplayers.com Entry Fees?
We sometimes are asked to explain how the National Horseplayers Championship (NHC) is funded and how the various funding streams impact horseplayers like you. The pricing structure is a bit complicated and involves differing on-site and online pricing models. The NTRA sells berths (i.e. we call them “spots”) to the NHC to on-site and online partners, who in turn must provide the spots as prizes in officially sanctioned NHC qualifiers held throughout the year. On-site spots carry significantly lesser spot fees than those sold online, which has led to misconceptions about the overall takeout level and estimated value of an NHC spot when in fact the total amount generated in spot fees represents a blend of on-site and online spots sold. While the spot fees for online qualifiers are higher than their on-site counterparts, the overall rate of takeout from overall spot fees remains the same year to year and is nowhere near those rates purported by some on social media and other outlets.
Using the most recent NHC, the following is a breakout of how the promotion is funded.
How do we arrive at 12.12%?
Horseplayers.com net revenue / Total entry fees on Horseplayers.com = 8.81%
Spot revenue retained by NTRA/Total NHC spot revenue = 15%
Horseplayers.com net revenue + Spot revenue retained by NTRA /Total entry fees on Horseplayers.com + Total NHC spot revenue = 12.12%
See details below.
2019 NHC and 2018 NHC Tour Prize Pool Funding
|Contest||Avg. Price||Spots Awarded||Spot Revenue||Towards Prizes||Takeout|
*Paid by host site
The $2,862,972 in prize money for the 2019 NHC was allocated as follows:
- $2,413,000 went to the NHC prize pool
- $400,000 went to the NHC Tour prize pool
- $50,000 went to the NHC consolation contest prize pool
- Both the on-site and online providers are also responsible for paying for hotel ($722 for 4 nights stay and the NHC host hotel) and travel awards (averaged $500 but varied slightly for some providers) to each player winning a spot. We estimate this to be $816,000 in travel awards provided to NHC Qualifiers by host sites.
- The NTRA collects $50 per person in Tour membership fees that provided each tour member with additional benefits (see below for more details). All membership fees were retained by the NTRA.
- The NTRA collected about $100K in promotional revenue by sponsors (such as RTN and STATS Race LensTM). All sponsorship revenue was retained by the NTRA.
Racetracks or off-track betting sites (Santa Anita, Monmouth, Keeneland, etc.) hosted contests that awarded a total of 270 spots leading to the 2019 NHC. The average cost of each of these spots was $3,406 for a total of $919,589. In addition, onsite hosts were responsible for paying hotel ($722 for four nights stay at the NHC host hotel) and travel awards (averaging $500, depending on the outlet) for their winning participants.
From these onsite spots sold, NTRA retained a 15% takeout fee totaling $137,938. The total amount contributed to the NHC prize pool from these onsite spot sales was $781,651.
Horseplayers.com is the official online qualifying site of the NHC. Prior to 2017, the official online platform of the NHC (NHCQualify.com) was operated by a for profit third party which charged a takeout rate just north of 20%. Horseplayers.com is a joint venture with the Breeders’ Cup that contracts with a third party entity for the day-to-day operation of the contest platform.
A total of 200 spots were sold on Horseplayers.com leading to the 2019 NHC. The value of each of these spots was $8,000 for a total of $1,600,000. In addition, Horseplayers.com was responsible for paying hotel ($722 for four nights stay at the NHC host hotel) and travel awards ($500) for the winning participants.
From the spots awarded, NTRA had a 15% takeout fee totaling $240,000. The total amount contributed to the NHC prize pool from these spots awarded was $1,360,000.
After breakage refunds, prize packages and overlays, the takeout on Horseplayers.com was 8.81% in 2018. Takeout on Horseplayers.com varies contest to contest due to the differing combination of feeder and buy-in entries per tournament and potential overlays. See the examples below.
- Contest 1 and Contest 2 show how the takeout can vary based on number of qualifying entries through feeders.
- Contest 3 shows how an overlay can affect the takeout.
Other Online Outlets
A total of 96 spots were sold on online platforms other than Horseplayers.com leading to the 2019 NHC. The average cost of an online seat was $7,403 for a total of $710,673. The price of a spot for an online host is $8,000. This amount can be reduced by overlays on the occasion that host sites fail to reach minimum entries on contests that award Tour points. In addition, online sites were responsible for paying hotel ($722 for four nights stay at the NHC host hotel) and travel awards ($500). From the spots sold, NTRA had a 15% take out fee totaling $106,601. The total amount contributed to the NHC prize pool from these online spot sales was $604,072.
The total amount provided to NHC prize pool from all online spots sold was $1,964,072.
NHC Last Chance
A total of 15 spots to the 2019 NHC were awarded during the 2019 Last Chance Contest at the NHC host hotel. There were 335 entries purchased at $500, which generated $167,500 in revenue. Of this amount, 30% ($50,250) was paid in cash prizes at the contest while the remaining 70% ($117,250) went directly to the 2019 NHC Prize Pool. Neither NTRA, nor the host site took any percentage of this amount.
Of the 93 promotional spots awarded, a total of 50 spots, plus hotel and travel, were awarded to Tour Points Leaders who had not already qualified to the 2019 NHC, but had played in enough tournaments to accumulate a significant amount of Tour points. These 50 Tour members were among the NHC’s most engaged players. Data shows that their consistent play generates money throughout the year that increases the overall number of spots sold while contributing significantly to the NHC prize pool.
A total of 25 spots, plus hotel and travel, were awarded as part of the NHC Free-to-Play contests conducted throughout the Tour season on Horseplayers.com. These tournaments help promote Tour membership and increase participation on other events that fund the NHC.
A total of six (6) promotional spots, plus hotel and travel, were awarded in the following way: Three of these spots were awarded to the previous year’s NHC Winner, NHC Tour Winner and NHC Tour bonus winner, respectively. The other three spots were provided to promotional partners and vary year to year.
A total of 12 spots, plus hotel and travel paid by the NHC host hotel, were provided to the host hotel as part of their contract for hosting the NHC. These spots traditionally have been provided as prizes at handicapping contests held at the host hotel over the course of the year.
Questions and Answers
Why is the cost of a spot so much lower for on-site spots as compared to online spots?
Among the many goals of the NHC are to promote Thoroughbred racing and drive interest in pari-mutuel wagering. One of the best ways for us to accomplish these goals is through the promotion of on-site contests. The price for a spot is offered at a lower cost to on-site providers to encourage them to offer contests to players, thus creating more opportunities for players to qualify for the NHC and win additional prizes. Of course, most players also have the option to play online to avoid the additional time and cost of travel. Each player can decide which option provides them the most value based on their own personal situation and circumstances.
What is included in the operation and management of Horseplayers.com?
Management fees cover staffing, website administration, security, customer service, data fees, etc.
What happens when a contest fails to meet a minimum on Horseplayers.com?
The NTRA funds the NHC prize pool at the entire $8,000 per spot level through Horseplayers.com revenues.
What happens when a contest exceeds the guarantee in terms of the number of participants entered but not by enough to add an additional seat? Does NTRA pocket the difference?
Any additional entry fees beyond the guarantee are returned to the contest participants in the form of breakage. This is done before any takeout from revenue occurs. In 2018, a total of $313,508 returned to players via breakage.
What about NHC Tour Membership fees? Where does that money go?
A $50 membership gives players the opportunity to earn an NHC Player Rating and eligibility to earn an NHC berth in online and on-site contests. NHC Members have special access to discounted NTRA partner programs. Membership fees also have led to a seat on the NTRA Board of Directors through a designated Horseplayer representative. NHC Tour fees support the NTRA’s legislative activities in Washington, DC. This includes a number of horseplayer-centric issues. For example, the NTRA successfully lobbied to defeat a proposed amendment to the 2017 Tax Cuts and Jobs Act that would have eliminated the itemized miscellaneous deduction for gambling losses. Consequently, horseplayers continue to be allowed to deduct their losses from wagering transactions (i.e. losing tickets) up to the amount of their winnings. Also in 2017, IRS regulations that redefined the “amount of a wager” took effect and ushered in a new era for horseplayers by eliminating some 95% of W2-G filings.
Currently, the NTRA is working with allies in Washington and financial institutions to reduce barriers to legal credit card transactions involving the establishment of advance deposit wagering (ADW) accounts.
What does the NTRA do with the money it makes related to the NHC?
The NTRA is a 501-(c) 6 corporation, a non-profit membership organization whose purpose is to support the Thoroughbred racing and breeding industry.
NHC revenue goes towards:
- Support of NTRA programs and initiatives like federal legislative advocacy in Washington, D.C. and the Safety & Integrity Alliance.
- Operating expenses around the NHC event in Las Vegas
- Operating expenses related to Horseplayers.com
- Staff dedicated to the NHC and NHC Tour including two (2) full-time staff members, five (5) staff members who support the NHC accounting and technology needs weekly and 18 staff members who execute the NHC in Las Vegas
- Website hosting, security upgrades, and NHC and NHC Tour database management
- NHC Tour Leaderboard database hosting and management
- Mass communication tools for promoting weekly NHC contests, NHC Tour and NHC member benefits
- NHC and NHC Tour branding, creative, and marketing services
Any additional questions may be directed to any of the following:
Keith Chamblin, Chief Operating Officer – email@example.com
Michele Ravencraft, Sr. Director of Events – firstname.lastname@example.org
Holly Short, Digital Media Manager – email@example.com
Amber Florence, Chief Financial Officer – firstname.lastname@example.org