Following Parx lead?

[jay68802]

Never stops.

http://www.thoroughbreddailynews.com/a-missed-opportunity-for-churchill-downs/

[metro]

It's probably in the contract with the horsemen that Churchill has to increase their race purses based on profits from instant racing machines.

If they were to reduce takeout it wouldn't come before their biggest week of the year which is less than two months away.

[dilanesp]

If I ran Churchill and I had full control of the takeout, I would raise takeout, probably by a substantial amount, on Derby and Oaks day, with the biggest increase on the Derby itself, keep it where it is for the rest of that week, and lower it, probably by a substantial amount, for the remainder of the season.


And if I ran any racetrack I would lower takeout substantially on (1) any race with a short field and (2) the first two races on any betting card, plus any horizontals that start with the first or second race (California's Player's Pick Five is an indicator of this).



That's based on my estimation of the elasticity of demand with respect to various wagering offerings.

[cj]

If I ran Churchill and I had full control of the takeout, I would raise takeout, probably by a substantial amount, on Derby and Oaks day, with the biggest increase on the Derby itself, keep it where it is for the rest of that week, and lower it, probably by a substantial amount, for the remainder of the season.


And if I ran any racetrack I would lower takeout substantially on (1) any race with a short field and (2) the first two races on any betting card, plus any horizontals that start with the first or second race (California's Player's Pick Five is an indicator of this).



That's based on my estimation of the elasticity of demand with respect to various wagering offerings.

You would probably lose the biggest bettors on the race, even being the Derby. You'd also disenfranchise them for the rest of the year. I think it would be a net loss.

[dilanesp]

You would probably lose the biggest bettors on the race, even being the Derby. You'd also disenfranchise them for the rest of the year. I think it would be a net loss.


If that is even a problem, it's an avoidable one through rebates. :)


A couple of years ago, I was back in Las Vegas and saw some interesting things going on with sports books, as a result I have been able to talk to a couple of insiders that someone I know from the legal world was able to get me in touch with.


Basically, the sports betting industry is using various mechanisms to engage in price discrimination, which is where you charge consumers on different parts of the demand curve different amounts. This is what airlines do with their fare structures-- business travelers pay substantially higher fares than leisure travelers.


The same thing is happening in sports betting. If you are a whale, there are mechanisms to bet lots of money on terms that are not offered to the general public going into a Vegas sports book. Meanwhile, they are adjusting the takeout on bets that are being offered to the public in ways that net additional revenue. Sometimes these mechanisms are pretty crude, such as offering 6 to 5 rather than 11 to 10 on the most esoteric Super Bowl propositions. Because who bets esoteric Super Bowl Propositions?


I mean, it's a matter of how crude do you want to get. If I could take a higher takeout in the Derby and Preakness infield than on twinspires.com, that would probably be a very profitable thing to do. :)

[castaway01]

If that is even a problem, it's an avoidable one through rebates. :)


A couple of years ago, I was back in Las Vegas and saw some interesting things going on with sports books, as a result I have been able to talk to a couple of insiders that someone I know from the legal world was able to get me in touch with.


Basically, the sports betting industry is using various mechanisms to engage in price discrimination, which is where you charge consumers on different parts of the demand curve different amounts. This is what airlines do with their fare structures-- business travelers pay substantially higher fares than leisure travelers.


The same thing is happening in sports betting. If you are a whale, there are mechanisms to bet lots of money on terms that are not offered to the general public going into a Vegas sports book. Meanwhile, they are adjusting the takeout on bets that are being offered to the public in ways that net additional revenue. Sometimes these mechanisms are pretty crude, such as offering 6 to 5 rather than 11 to 10 on the most esoteric Super Bowl propositions. Because who bets esoteric Super Bowl Propositions?


I mean, it's a matter of how crude do you want to get. If I could take a higher takeout in the Derby and Preakness infield than on twinspires.com, that would probably be a very profitable thing to do. :)

A dying industry going out of its way to screw casual fans over will be dead even faster. Your short-sighted way of thinking is basically what we have already in racing, if not dumber, and you see where that has gotten us.

[cj]

I mean, it's a matter of how crude do you want to get. If I could take a higher takeout in the Derby and Preakness infield than on twinspires.com, that would probably be a very profitable thing to do. :)

You'd get raked over the coals publicity wise for stunts like that. It might have worked 10 years ago, but it wouldn't fly today.

[dilanesp]

You'd get raked over the coals publicity wise for stunts like that. It might have worked 10 years ago, but it wouldn't fly today.


Only a subset of players care about takeout. That's the point.


Why don't California tracks get raked over the coals for offering a low takeout Early Pick 5 and a high takeout Late Pick 5? Why does Stronach not get raked over the coals for offering his Stronach 5 with a 12 percent takeout while takeouts on horizontals at his tracks are much higher?


Why are tracks not roundly criticized for doing business with rebate shops, which are a blatant way to discriminate between different bettors as to takeout?



The entire challenge here is segmenting the market. You make more money that way. And note, many of my proposals involve cutting takeout. Indeed, I imagine I would cut takeout on far more races than I would raise takeout on. By doing so, I think there would be a significantly larger number of winning players.



But there are some races that the industry offers that get huge handles simply because of their bigness. And you do not want to cut takeout on those races. You want to find a way to segment the market and charge what the market will bear.

[dilanesp]

One other thing here that should be obvious but perhaps isn't. The point is to maximize revenue, not handle.


If your handle is $1,000,000, and your takeout is 20 percent, and you can raise it to $1,100,000 by cutting takeout to 15 percent, should you do it? Probably not. (I say "probably" because there is some "churn effect" from lower takeout to the extent that money is put back into the pools.) You are going from making $200,000 to making $165,000.


Similarly, a takeout increase on the Derby MIGHT decrease total handle. Indeed, some folks (the smarter ones) might realize betting the Derby isn't such a great deal anymore and stay away.


But my hunch is that the vast majority of Derby betting is compulsive, just like the Super Bowl. People love to bet this race because of its status, because of its history, because they are attending the race, because it is the only horse race they bet every year, because it draws 20 starters, because it can produce a huge exotic payoff, etc. And those people are just not going to stop betting the Derby if they are charged more. And much of that money is not churned back into the sport anyway.

[Tom]

Only a subset of players care about takeout. That's the point.


You sound like a track manager.That is not a good thing.
There s a name for that attitude - the "problem." :ThmbDown::ThmbDown::ThmbDown:

[thaskalos]

The 5th race just concluded at Turf Paradise...a typical short field where the trifecta paid a thoroughly unappetizing $13.50 for 50 cents. And yet, the trifecta pool held the robust amount of over $54,000...even though the trifecta takeout at Turf Paradise is what...31%? And the trifecta pools at Parx are even higher...with the same takeout in affect. I see things like these...and I conclude that we horseplayers get exactly what we deserve in this game. :ThmbDown:

[thaskalos]

The 6th race TuP update:

Another thoroughly unappetizing, uncompetitive field...where the super-predictable trifecta paid a ridiculous $4.60 for 50 cents. But this sad state of affairs did not prevent the public from wagering over $50,000 on the trifecta...scandalous takeout notwithstanding.

Sad...but true.

[cj]

The 6th race TuP update:

Another thoroughly unappetizing, uncompetitive field...where the super-predictable trifecta paid a ridiculous $4.60 for 50 cents. But this sad state of affairs did not prevent the public from wagering over $50,000 on the trifecta...scandalous takeout notwithstanding.

Sad...but true.

The public in this case is probably a few whales/syndicates getting huge rebates at that track...just my opinion.

When the takeout is that high, the rebates follow suit. I wouldn't be surprised if they reach as high as 20%.

[rastajenk]

Those numbers sound to me like a few guys in each of lots of places spending a Monday late afternoon after Mahoning ednded. Who is anyone to say they shouldn't be doing that?

[thaskalos]

Those numbers sound to me like a few guys in each of lots of places spending a Monday late afternoon after Mahoning ednded. Who is anyone to say they shouldn't be doing that?

Well...no one can say that a few guys in a lot of places shouldn't spend a Monday late afternoon throwing their money at some scratch-off lottery tickets either...but it's still a foolhardy thing to do. There are good bets, and there are bad bets...and betting into a short field with a 31% takeout is the equivalent of throwing your money away. We are not instituting laws here...we are just expressing opinions. And, since this thread is about tracks and takeouts...I thought it was "on topic" to point a finger at the blatant disregard that some bettors have for some of the takeout levels out there. Who is anyone to say that I shouldn't be doing that?

[thaskalos]

The public in this case is probably a few whales/syndicates getting huge rebates at that track...just my opinion.

When the takeout is that high, the rebates follow suit. I wouldn't be surprised if they reach as high as 20%.

Even with a 20% rebate, I doubt that it's worthwhile for the whales to go feasting strictly on one-another. They need the average player in order to get the overlaid situations that they need...and the average player should be avoiding the 31% takeouts, IMO.

[rastajenk]

I knew you'd have some kind of elitist comeback.

I'd say "pointing a finger" at guys settling for some entertainment is bad form. Maybe they don't want to go home and watch Steve Harvey and Dr. Oz.

They probably threw a few bucks at Dover and Miami Valley as well. Does that get you fired up for any reason?

[thaskalos]

I knew you'd have some kind of elitist comeback.


I knew that you knew...and I wanted to prove you right. :ThmbUp:

[Zman179]

According to the DRF, Turf Paradise has a 25% takeouts on super exotics such as the trifecta.

The highest takeouts I believe are at Parx (30% for trifectas).