Pricci Gets It

[Cangamble]

http://www.horseraceinsider.com/blog.php/John-Pricci/comments/10112008-a-stimulus-package-for-lagging-thoroughbred-handle/

I wasn't sure if I should have stuck this in the HANA Discussion Threads.

[trying2win]

Cangamble:

Thanks for the link to the article. I agree with John Pricci's idea of tracks lowering takeouts, which would have an effect to increase parimutuel handles, racetrack revenues, state or provincial revenues, purses to horsemen, and higher returns to bettors. It's common sense to me.

Tampa Bay Downs is one of the few racetracks that I can recall, that have had the gumption to lower takeouts the last few years. Kudos to the management at Tampa Bay Downs for that. :ThmbUp:


T2W

[samyn on the green]

Tracks just can not arbitrarily lower takeouts like supermarkets reduce the price on cans of soup. Governments lower takeout, not tracks. Tracks are under the iron grip of government rule/regulation. The way things are going nothing is going to be lowed as the government parasite requires increased blood suction to satisfy its insatiable appetite for tax money.

[InsideThePylons-MW]

Tracks just can not arbitrarily lower takeouts like supermarkets reduce the price on cans of soup. Governments lower takeout, not tracks. Tracks are under the iron grip of government rule/regulation. The way things are going nothing is going to be lowed as the government parasite requires increased blood suction to satisfy its insatiable appetite for tax money.

What are you talking about?

Meadowlands harness lowered their superfecta and P-4 takeout to 15%. They didn't need any approval from the government or anybody. They wanted to try it so they just did it.

[cj]

Tracks just can not arbitrarily lower takeouts like supermarkets reduce the price on cans of soup. Governments lower takeout, not tracks. Tracks are under the iron grip of government rule/regulation. The way things are going nothing is going to be lowed as the government parasite requires increased blood suction to satisfy its insatiable appetite for tax money.

I see ITP beat me to it. Tracks have a LOT more control than you believe. 100%, no, and it varies by state. But if tracks want it lowered, it will happen.

[Cangamble]

Tracks just can not arbitrarily lower takeouts like supermarkets reduce the price on cans of soup. Governments lower takeout, not tracks. Tracks are under the iron grip of government rule/regulation. The way things are going nothing is going to be lowed as the government parasite requires increased blood suction to satisfy its insatiable appetite for tax money.
Woodbine can lower or up takeouts within 10 days of deciding to. The government only gets 1.3% on every wager here (and some of that goes towards industry related stuff).

[samyn on the green]

Different states vary in their grip on the tracks. In New York the government is a tremendous parasite sucking hard on all of us. NYRA is completely at their mercy, it took years to approve internet wagering, while the government will not allow video on the wagering site, lowering takeout will not happen as the powerful NY OTB's love high takeout. NYRA can not even give prefered patrons free admission as the state will not allow it, they fear it will pull patrons from OTB.

[DeanT]

Tracks can change takeout any time they like. But most dont want to, even if they believe it will help the business, as any savings their track generates is bet into other tracks. Since we are incentivized by the messy system, lowering takeouts takes an industry wide push.

This is a classic Tragedy of the Commons problem, and this business has no leadership to break through.

imo.

[Zman179]

Can somebody here please provide some hard, factual numbers that prove that a takeout reduction does indeed increase handle?

Looking at it from a cynical, governmental point of view, I would be against the lowering of takeouts. Why? Because I don't believe that, after a takeout cut, that the "increase" in handle would offset the losses in revenue caused by the cut.

For example: say that the government takes out 3% of every dollar. That equals to $3 out of every $100 wagered. Say that the their portion of the takeout is lowered to only 2%, $2 of every $100. In order to recoup the dollar lost, there would have to be a 50% increase in handle (an unrealistic expectation.)

And I don't believe either that without a takeout reduction that many fans will leave the game. Many of these people would have left anyway because:

1) Horse/dog races are very hard to win decent money at
2) Slots and lotteries require no brain power

I think that what happened at The Woodlands in Kansas is a perfect example of this.

Even with a 5% takeout, if you don't have the skills to pick winners, it all leads to the same number: zero winnings.

[Cangamble]

Since there haven't been any examples of long term takeout reduction that has occurred across the board, real data is impossible to give.
If the government reduces takeout from 3-2% but the rest of the takeout remains the same, of course the government's share will never get to 3% because a 50% increase isn't expected if overall takeout drops from 20%-19%

We do know that Betfair has had an increase in total betting since its inception. The same goes for poker and sports betting continues to grow.

We also know that people who bet with rebates (effectually, those who bet against a lower takeout), bet a lot more than they did without takeouts.

We also know that many people will bet their bankroll until it disappears, so the more they get back, the more they are likely to bet.

People have left the game because it is impossible to win betting against a 20% takeout. Sure, some have left to slots, where you don't have to think, but still, with their 10% takeout, players get a bigger bang for their buck and last longer until they go broke.
But many players have left or at least have diverted many of their gambling funds to games with lower takeouts like sports betting, poker, etc.

Growth comes in with new players. New players will only get attracted long term to horse racing if there are winners....something to strive for.
Poker took off, because we could see every day people making real money gambling.
As for Betfair, there are long term winners, so winning becomes a realistic goal, if you are good enough and lucky enough.

With a 20% takeout, not only do you have to be great at it, but you also have to be extremely lucky to win long term. And I ask, where are the winners who don't get rebates???? There might be a handful.

[Zman179]

If the government reduces takeout from 3-2% but the rest of the takeout remains the same, of course the government's share will never get to 3% because a 50% increase isn't expected if overall takeout drops from 20%-19%.

That is true, but say that the takeout was lowered from 20% to 12% (including the 1% governmental cut,) the 50% rule would still apply. However, as you well know, sometimes problems arise when takeouts are cut (i.e. NYCOTB's refusal to take Keeneland because the takeout reduction would have cut OTB's revenue.) But that's an argument for another thread.

We do know that Betfair has had an increase in total betting since its inception. The same goes for poker and sports betting continues to grow.

That is true, but there are fundamental differences between the pari-mutuel market and certain types of online gaming. Betfair's success is related to the player now having options as to how to wager on a horse race such as becoming the bookie (i.e. wagering on a horse to lose) and shopping for odds. Sports wagering's success comes in the simplicity of the game: you have a 50% chance to either win or lose. Poker's success comes from the fact that it is an easier game to win and the action is non-stop, amongst other reasons. Even though Poker's popularity has explosed within the past 6-8 years, Poker is one of those games that seems to remain in your blood once introduced. It was the same game 30 years ago as it is today, which one can't really say about racing.

We also know that people who bet with rebates (effectually, those who bet against a lower takeout), bet a lot more than they did without takeouts.

I dare say that the difference is psychological. I wouldn't be shocked at all to see, if clinical studies were performed, that bettors would rather wager on a track with a 19% takeout that offers a 6% rebate rather than a track with a 13% takeout and no rebate; people react more to visible savings and cash in hand. Don't forget that the 13% takeout only works in your favor when you win.



[QUOTE=Cangamble]People have left the game because it is impossible to win betting against a 20% takeout. Sure, some have left to slots, where you don't have to think, but still, with their 10% takeout, players get a bigger bang for their buck and last longer until they go broke.
But many players have left or at least have diverted many of their gambling funds to games with lower takeouts like sports betting, poker, etc.

My opinion is that if every single form of gambling had the exact same takeout that horse racing would still be on the lower rung. Unlike in horse racing, with slots you can get either a high return or a low return with the same amount of risk. The lottery killed racing by embracing lower wagering minimums and increasing exposure. Horse racing not only makes it difficult to obtain higher winnings by forcing players to play multiple combinations in order to have a realistic chance of hitting an exotic bet (the 10¢ super is a start, but it is still an incredibly difficult wager to win,) or by forcing bettors to play high amounts on easier wagering types in order to show a decent gain (i.e. $50 to win,) but now the horsemen are cutting exposure to its product by denying ADW's the opportunity to take their races. Nothing in this paragraph has had anything to do with takeout levels, but has had plenty to do with racing's diminished view in gambling society.

[classhandicapper]

The "lowering the take" argument is not as strong as most horseplayers think.

The handle will almost certainly go up because players will keep more money in their pockets that they can then bet back. However, will they bet it all back or use some of it for other forms of entertainment?

The only way for the tracks to generate greater income for themselves is if the lower take attracts BRAND NEW MONEY to the game. Otherwise they will simply get a smaller percentage of a bigger handle pie and net out the same or worse off.

The real debate is at what level of "take" do the tracks start siphoning money away from sports betting, lottery, poker, and other forms of gambling towards horse racing (a brand new pool of funds) without hurting themselves because horseplayers are not betting all the extra payoffs back.

There is some optimum take level for the tracks. I'm just not sure anyone really knows what it is.

This whole debate is very simialar to supply side economics and taxation issue. There is a point where taxes are too high, but if you set them too low even though it increases economic activity, you get lower tax revenue.