Good Crist article re: takeout

[RXB]

http://www.drf.com/news/steven-crist-pick-five-good-example-how-reduced-takeout-sparks-handle

Dear Mr. Scherf: wake up. Intelligent people are not saying that reduced takeout is a panacea; they're saying that it's one important element.

Also, I suspect that politicians would be more inclined to allow lower takeouts if the industry itself was pushing harder for them. (I think the horsemen's groups, who are hopelessly backwards in so many ways, are a big part of the problem.)

[cj]

http://www.drf.com/news/steven-crist-pick-five-good-example-how-reduced-takeout-sparks-handle


Also, I suspect that politicians would be more inclined to allow lower takeouts if the industry itself was pushing harder for them. (I think the horsemen's groups, who are hopelessly backwards in so many ways, are a big part of the problem.)

Yep, never seems overly difficult to get a takeout increase.

[Seabiscuit@AR]

The problem with any argument about takeout reductions is that it is complicated by the rebates

The fact is that racing has dramatically lowered takeout for some players over the last 15 years via rebates. And racing's betting handle went up at first but has since gone backwards much more than it went up in the period 1998 to 2003. These targeted takeout reductions have been a failure for racing. So I can see the racing officials who were dumb enough to sign off on rebates as taking the failure of rebates as a reason not to lower takeout now

The other point is that racing perhaps cannot lower the takeout now that they have paid out the rebates. The biggest turnover customers get the biggest rebates. If your takeout is 20% and 20% of your turnover is on only 10% takeout (thanks to 10% rebate) then your takeout has been reduced down to 18%. The 2% or 3% takeout reduction a track could make cannot be paid unless the rebate players lose their rebates as they have already taken the takeout reduction

So you have to acknowledge that big takeout reductions have happened for some players over the last 15 years and they have failed to improve things for racing

Of course the key is what the takeout rate is for the player on the worst or highest takeout rate. This figure is too high and is part of the reason why racing is going backwards

[davew]

I feel many players would bet more if the odds board cycled quicker than every 30 seconds to a minute, and over half the pool shows up after the race has started.

[Robert Goren]

Let see if I have got this right. High takeouts and big rebates to large bettors have so changed the betting landscape so much that even a small drop in takeout will cause a drop in handle. How perverted is that? Horse racing has got to be the only business in the world where dropping the price for the masses will result in a decrease in sales.

[Seabiscuit@AR]

Robert Goren

Dropping the takeout for everyone would increase betting turnover. Racing's fear would be that because they collect a lower % of each dollar bet they will get less money even with increased turnover. Racing has already tried to lower takeout but seen betting turnover decline longterm via the rebates experiment. The problem is the rebate experiment was a bad idea from the start and its failure does not mean that dropping takeout for everyone will fail. But for this to happen racing would likely have to end the rebate experiment

[Stillriledup]

The problem with any argument about takeout reductions is that it is complicated by the rebates

The fact is that racing has dramatically lowered takeout for some players over the last 15 years via rebates. And racing's betting handle went up at first but has since gone backwards much more than it went up in the period 1998 to 2003. These targeted takeout reductions have been a failure for racing. So I can see the racing officials who were dumb enough to sign off on rebates as taking the failure of rebates as a reason not to lower takeout now

The other point is that racing perhaps cannot lower the takeout now that they have paid out the rebates. The biggest turnover customers get the biggest rebates. If your takeout is 20% and 20% of your turnover is on only 10% takeout (thanks to 10% rebate) then your takeout has been reduced down to 18%. The 2% or 3% takeout reduction a track could make cannot be paid unless the rebate players lose their rebates as they have already taken the takeout reduction

So you have to acknowledge that big takeout reductions have happened for some players over the last 15 years and they have failed to improve things for racing

Of course the key is what the takeout rate is for the player on the worst or highest takeout rate. This figure is too high and is part of the reason why racing is going backwards

Racing "going backwards" has nothing to do with rebates. The takeout has stayed somewhat constant between 15 and 25% for most bets, that hasnt changed in decades.....rebate players are players who are still in the game betting....the people who have left the game (or died off and werent replaced) were betting into the same takeout rates as they are in 2013, the reason they left is because the game got much tougher to beat. People who have left the game have left because they've lost their money or died.

The best and brightest racing days (Derby Day, Travers Day, Breeders Cup, etc) are still very successful, people don't seem to have a problem showing up and betting large amounts of money....the key is that those people who have the ability to show up on big days, havent carried their enthuasiam over to the non big days.

Another factor in the game going downhill is the advent of the internet, social media and whatnut...there are just many more ways that people can entertain themselves nowadays, you didnt have any of this in 1980.

There are a lot of factors why national handles are dropping, economic factors, added entertainment options and a terrible job by the racing industry at marketing and replacing dying off customers has nothing to do with rebates. In fact, the idea that you can "get something for nothing" is something that can lure a beginning handicapper to really work thru the tough times...that beginner has incentive to try and become great.

You make it sound as if only certain people can get rebates....if you show up in Vegas as Joe Blow 2 dollar bettor, you can get a rebate of 2 pct on wps and 5 pct on exotics just by having a heartbeat. Also, there are plenty of tracks and simo outlets that have "clubs" that you can sign up for and get cash rebates, they're available to everyone regardless of race, age, color, religion or sexual orientation.

[Seabiscuit@AR]

Stilriledup

anyone can get a rebate now but that was not true in the early days where the rules were you kept them a secret or you lost your rebate. By the time the cat was out of the bag the damage was done and the big rebaters had such a big headstart that those late to the rebate game were never going to catch them. And even if you collect your measly 2% rebate on WPS today you will still be getting a much smaller rebate than the big players. Everything is relative

Rebates are the same as Wall Street or Federal Reserve financial alchemy. They promised to turn lead into gold. "Give us rebates and we will grow your handle!" they cried 15 years ago. Now betting handle is lower even before you adjust for inflation which is a disastrous result on any economic measure

http://www.jockeyclub.com/factbook.asp?section=8

The maths is simple. Lower takeout and handle will go up although you cannot guarantee the tracks will have increased income due to the lower % takeout. We always hear the cry that the tracks should lower takeout. But this ignores the fact that the tracks have lowered takeout a lot over the last 15 years. The problem is the lower takeout has only been for a chosen few. Which means a higher effective takeout for those not getting rebates which is most players. So rebates raise the takeout on most players in the pool and pools go backwards. It is not difficult

The clever thing with rebates is they always drive up betting handle in the early years as the "new" money comes into the pool thanks to the rebate and outweighs the money lost from the non rebated players as time goes by. But as time goes by serious erosion takes place amongst the non rebated players and more money is lost from them dropping out than the rebaters ever brought in

Tracks need to try a lower takeout. But they first need to admit that their strategy of lowering takeout selectively via rebates has been a failure. At the moment one player is on 10% rebate, another player is on 7%, a third is on 5%, a fourth is on 2% and a fifth is on no rebate. There is no one takeout level anymore, people are on their own personal takeout level. But let's not pretend that the tracks don't lower the takeout as they have done so. They have shot themselves in the foot though by going down the rebate path

[Stillriledup]

Stilriledup

anyone can get a rebate now but that was not true in the early days where the rules were you kept them a secret or you lost your rebate. By the time the cat was out of the bag the damage was done and the big rebaters had such a big headstart that those late to the rebate game were never going to catch them. And even if you collect your measly 2% rebate on WPS today you will still be getting a much smaller rebate than the big players. Everything is relative

Rebates are the same as Wall Street or Federal Reserve financial alchemy. They promised to turn lead into gold. "Give us rebates and we will grow your handle!" they cried 15 years ago. Now betting handle is lower even before you adjust for inflation which is a disastrous result on any economic measure

http://www.jockeyclub.com/factbook.asp?section=8

The maths is simple. Lower takeout and handle will go up although you cannot guarantee the tracks will have increased income due to the lower % takeout. We always hear the cry that the tracks should lower takeout. But this ignores the fact that the tracks have lowered takeout a lot over the last 15 years. The problem is the lower takeout has only been for a chosen few. Which means a higher effective takeout for those not getting rebates which is most players. So rebates raise the takeout on most players in the pool and pools go backwards. It is not difficult

The clever thing with rebates is they always drive up betting handle in the early years as the "new" money comes into the pool thanks to the rebate and outweighs the money lost from the non rebated players as time goes by. But as time goes by serious erosion takes place amongst the non rebated players and more money is lost from them dropping out than the rebaters ever brought in

Tracks need to try a lower takeout. But they first need to admit that their strategy of lowering takeout selectively via rebates has been a failure. At the moment one player is on 10% rebate, another player is on 7%, a third is on 5%, a fourth is on 2% and a fifth is on no rebate. There is no one takeout level anymore, people are on their own personal takeout level. But let's not pretend that the tracks don't lower the takeout as they have done so. They have shot themselves in the foot though by going down the rebate path

There is no "chosen few" everyone is on an equal playing field, everyone has the same exact chance.

Also, there is no higher effective takeout.....if you get 0% rebate and you bet into a 20% take, its 20% for you no matter who you are betting against. If an ADW profit shares with their clients, it doesnt affect you one bit...if a restaurant gives a free steak dinner to someone, that doesnt make your steak dinner go up in price, your dinner is the same no matter how many free dinners the restaurant gives out.

[lamboguy]

i think that you have to go back and understand how rebates started.

back in 1994 i was trying to buy a dogtrack in Belmont. New Hampshire that looked like an airport hanger. the place was not doing more than $10,000 a day in live handle. so was no such thing as co-mingle simulcasting in New Hampshire at that time. all i knew is that it was a sure thing to come. i wanted to buy the place in anticipation of what was to come so that i could make my own bets at a discount. i had been betting horses for almost 20 years and had been basically thrown out of ever racebook and casino in Nevada. this other family from Massachusetts wanted to buy the place and they had more money to put down than i did, so they got the place.

when they wound up buying the place, Rockingham Park was pushing for co-mingled simulcast and it became law a year later. they then called me and offered to put me up in a hotel so that i would play in their new simulcast facility. we made a deal where they gave e a 3 % rebate originally. i went up there and bet their 50 signal's. they went out and recruited another 30 large players, most of them greyhound bettors, to come up and bet, they all got the same deal as myself. this lasted about 2 years and eventually the state of New Hampshire abolished rebates due to pressure from Rockingham.

when they had to stop rebating a new player came to the forefront in Las Vegas. Kirk Brooks started a rebate program at the Holiday Inn Boardwalk hotel on the strip. they gave rebates of up to 9% for w-p-s and more for exotics, i went out there and wound up betting science fiction money on horse racing.

eventually the same thing happened to the Boardwalk in Nevada as what happened in New Hampshire. rebates on racing was now illegal in the state of Nevada.

Kirk Brooks now moved his operation offshore. he made deals with racetracks and had great rates. then a few more "rebate shops" popped up offshore, and in places like Oaklahoma, and South Dakota dog tracks. the rebate business continued to grow up to the present time. on this board there must have been 5 or 6 company's evolve in the rebate business.

since horse betting is in a state of contraction these days, some of these smaller rebate houses are falling by the wayside. the big places have picked up some of the slack, but really haven't done to much to promote the business. my guess is that today 80% of all bettors are getting some type of a reward for being loyal to the adw or place they bet at.

[sammy the sage]

Horse racing has got to be the only business in the world where dropping the price for the masses will result in a decrease in sales.

not true....but I've been warned years ago about mixing politics and horse racing....so I'll leave it at that... :lol:

[MJC922]

Appreciate Crist keeping the issue spotlighted. A few things are important from my perpective.

First is an honest game, the tracks that run the tighest operation on meds, watching their jocks for effort, and taking measures to minimize pool manipulation, these will always be my first choices of places to play.

Second the takeout must be low enough to make it worth the effort that I have to spend in order to possibly make a few bucks every year.

Third, field sizes are probably worth a mention because if we get down to four and five horse fields every other race then finding enough horses to cross out to offset some of the takeout begins to pose a problem in itself.

I suspect most serious players already see the importance of all of the above as it relates to their own investing, and the marketplace being what it is they will over time refocus their energies in the right places.

This problem will take care of itself over the next decade or two and the more complaints we hear regarding 'regulation' preventing this or that action to mitigate I can assure you falls upon deaf ears, those things are the tracks problem, they need to start planning some drastic counter measures or prepare to go under.

It's like anything else in life, people tend to spend in places where they get the best deals. I liked Borders books, but when I could buy the same book at Amazon for 30% less where do you think my money went?