A Tale of Two Meets

[InsideThePylons-MW]

Indiana Downs Has Record-Setting Meet

http://www.bloodhorse.com/horse-racing/articles/51757/indiana-downs-has-record-setting-meet

Handle declines at shortened Hollywood meet

http://www.drf.com/news/article/105664.html


How can Indiana be up when everybody else is down double digits? Very simple......

Competitive racing and decent field sizes

Dirt instead of polycrap

and the most important thing which nobody ever mentions or seems to think matters.......Indiana charges 3% for their signal while tracks with an inferior gambling product charge 8% for their signal.

Let's see.....a dirt track with a good gambling product charging 3% or a polycrap track with a horrendous gambling product charging 8%.....which one do you think will outperform the other?

[DeanT]

Thanks for posting that. Good comparison study there.

It can make a big difference when your signal is open as well. IND added Canada and has always been well represented in ADW's that rebate to everyone like PTC and Betamerica. Their effective takeout for players that seek out lower rake is lower than HOL by quite a bit.

Buffalo Raceway, he small harness track actually went so far to offer out their signal at 1% because they had no handle to speak of. Handle ended up going up 25% when they did that.

[InsideThePylons-MW]

Buffalo Raceway, he small harness track actually went so far to offer out their signal at 1% because they had no handle to speak of. Handle ended up going up 25% when they did that.

A long time member of Team ITP is in charge there ;)

[DeanT]

First time for an ITP hat tip I think?

http://blog.horseplayersassociation.org/2009/07/two-meets-report-handle-could-they-be.html

Keep em coming. I am writing things for other HANA projects and I have been negligent on the blog with items!

[ddog]

Indiana Downs Has Record-Setting Meet

http://www.bloodhorse.com/horse-racing/articles/51757/indiana-downs-has-record-setting-meet

Handle declines at shortened Hollywood meet

http://www.drf.com/news/article/105664.html


How can Indiana be up when everybody else is down double digits? Very simple......

Competitive racing and decent field sizes

Dirt instead of polycrap

and the most important thing which nobody ever mentions or seems to think matters.......Indiana charges 3% for their signal while tracks with an inferior gambling product charge 8% for their signal.

Let's see.....a dirt track with a good gambling product charging 3% or a polycrap track with a horrendous gambling product charging 8%.....which one do you think will outperform the other?


a darn shame we can't just send the (few) horses from Delmar to IND and keep the meet running there!!!!!!

I eagerly await the downfall of all the major Cal tracks.

[DanG]

Indiana Downs Has Record-Setting Meet

http://www.bloodhorse.com/horse-racing/articles/51757/indiana-downs-has-record-setting-meet

Handle declines at shortened Hollywood meet

http://www.drf.com/news/article/105664.html


How can Indiana be up when everybody else is down double digits? Very simple......

Dirt instead of polycrap
How do you balance your argument with Ellis Park (dirt) getting crunched by the slot revenue from Indiana Downs / Hoosier etc?

Let’s not forget closing night at Indiana downs they passed a hat and collected a whopping 57k in on track handle; so let’s keep things in a little perspective.

BTW: I have nothing against Indiana Downs or the good Hoosier people, but someone has to represent a counterpoint or its internet yodeling in a dirt canyon. It takes a John Deere tractor quite some time from Indiana to Inglewood to connect these stories imo.

[DeanT]

Oh, oh ...... dirt vs poly debate........... I am running for cover :D

From the metrics Dan I think the biggest thing was the signal and signal price. Mountaineer went from 19M handle on a very small distribution to $300M in handle on offering it everywhere at something like 3%. Maybe the handle would have been $280M with poly there, or maybe $250M, or whatever and we can debate that til the cows come home and never come to a consensus. But it still would have been up by around 15,000% by any measure we look at because of sound business principles and lower effective takeout for players.

[ddog]

cal must die, they can't lower the take, they would die if they did.

the biz is not going to increase that much even with lower take.

Cal as a state for major racing at this time must die and start over or not.

pure econ101.

[InsideThePylons-MW]

How do you balance your argument with Ellis Park

Obviously you don't understand the argument.

Lets use Ellis and Ind as a comparison concerning gambling products.

For some reason, Ellis charges about 8% for their signal and Indiana 3%. Both takeouts are close (Ind is a lower by 1.5% on gimmicks and higher by .5% oh WPS).

Even if they are both equal in field size, track surface etc........Which track is a horseplayer that gets a rebate going to play? Basically, Ellis, by charging 5% more for their signal, is telling myself, and others, that we don't your wagering dollars.

[DeanT]

Ellis Park's deal via an opinion piece on the HANA blog written last summer. Ron Geary was not the culprit in this. He was being held up to a strike and withholding of entries. He is a horseplayer and always has understood horseplaying. He was placed in a terrible spot.

Of particular note to the thread - this is the precedent that Hollywood followed in November of 2008.

Monday, July 21, 2008

ADW Opinion: Bad Precedent (http://blog.horseplayersassociation.org/2008/07/adw-opinion-bad-precedent.html)

It was announced a few weeks ago that Ellis Park in Henderson, Kentucky struck a last hour compromise between Ellis and the KHBPA, allowing for racing to begin in 2008. With it, close to 6% of ADW handle will be going to purses this summer. It appears that Ellis is charging ADW’s up to 8% signal fees for the right to broadcast Ellis races.

The Thoroughbred Horseman Group’s Bob Reeves said this recently (http://www.paulickreport.com/blog/bold-negotiations/) about the deal as reported by Ray Paulick of The Paulick Report: "We are trying to save racing."

We think deals like this will do the exact opposite. And we’ll tell you why.

An ADW normally pays about 5% (which is about what the current free market dictates) for the right to broadcast a signal and sell it to their customers. It is like a web-affiliate bookseller selling a book and keeping a commission. Then the ADW pays expenses, keeps some of the generated handle for themselves to run their businesses, and returns the rest to the player in a few ways:

1) Player Rewards – A video game, maybe a hat, trinkets of some sort, what have you. We all have received these perks.

2) Innovations and Customer-centric Benefits – An improved betting interface, R and D (like Twin Spires TV), free handicapping information (like Ian Meyers’ paddock reports at Premier Turf Club, his deal with Woodsideassociates.com, or partnerships with Thorograph at betfair), free past performances, free video. Things to encourage the player to up their handles.

3) Cash Rewards Through Rebating – Churn baby churn.

This model of giving something back to the player and delivering it in a customer-centric way has resulted in a rise in handles for ADW. Up over 17% last year – our only true blue growth segment.

If ADW’s are charged a higher fee, things like free rewards, hats and shirts; or the interesting innovations we have seen like race replays, and conditional wagering and paddock reports can all be cut. This hurts us in attracting new fans to our Internet platform, as well it alienates our existing customers (ask Vegas how they'd do without comps or adding a concert as an attraction; and ask them now what would happen if they took them away!). All those rewards and incentives are very important, but the most important point however to us as a business: It effectively increases takeouts. If 3% more is charged for a signal, 0.5% might be absorbed by the ADW. Where does the other 2.5% come from? Yes, the customers pocket - the customer that already pays for purses to the tune of 21% blended rakes.

When the signal fee is raised 3%, more than likely 2-2.5% will be taken from the cash rewards from certain ADW’s. If you were receiving a rebate of 5% on win wagers at track ‘A’ and they are cut in half you know, we all know what happens, you bet less. With these price sensitive players, where 2.5% can mean a huge difference, it can kill their handle. As Dan, a professional player, said recently to us “Even miniscule reductions of 2 points can make a HUGE impact on a player’s bottom line. The intelligence of the modern player is frankly overlooked by those in positions of decision.”

This is of course not only a pro-player phenomenon. Every player I know enjoys getting a boost, and guess what? They rebet it, and rebet it hard.

With a conservative elasticity of demand of 4 for rebated players, this takeout increase could result in a 10% drop in handle (many would argue it would be much more). Not to mention any new players (or current ones too), especially the younger demographic we covet, that are attracted to some of the perks like free past performances, or innovations, will find they are not there any longer, and it makes the customer experience deficient in a demanding 21st century business model. Online poker anyone?

It’s like going to McDonald’s and finding out that yes, the price of a Big Mac was raised 30 cents, so you might eat one less a month now; or maybe go to Wendy’s instead, but not only that: Now your more expensive Big Mac is served not complete in a nice wrapper, but in a do it yourself kit. When sales of Big Mac’s go into the tank, it would not surprise any executive at McDonald’s, they would know they cut their own throat.

Increasing takeouts, poor customer service and an absence of both soft and hard innovation through reinvestment is something we should have learned has helped kill this business by now. Year after year the evidence is overwhelming. In fact, this study written several years ago by a gambling expert and reported to racing, stressed the takeout point and making sure horseplayers are taken care of.

Racing has lived with rising rates of takeout for so long that they have become a way of life. They are the line of least resistance whenever the industry needs money. It is all too easy for the industry to see that if we have a constant $100 in handle, and we raise the takeout by one percent, we’ll make a dollar more. It is much less easy to see that handle is not constant and, over the longer term if not the short, we won’t have that $100 any more.

If we don’t offer a low takeout (via rebate) to customers, we’re going to lose them, or at least a significant portion of their money. Hence the efficacy of rebates: they target reductions in the takeout to the customers who would respond the most to them.. (Analysis of the Data and Fundamental Economics Behind Recent Trends in the Thoroughbred Racing Industry, 2004)

Sometimes I wonder. I really do. Do we actually want racing to lose market share? If we do, we are certainly doing a good job at it, handles were off last year.

Everyone needs to work together in the current ADW impasse and the business must know where players stand. If players are not heard from and respected, we will not grow the pie, we will simply end up having less of a pie to split.

[DanG]

Obviously you don't understand the argument.

Obviously; I never disagreed with that portion of the argument (left out of the quotation); just the leap from one state / surface / argument to another.

Your right Dean…moving on before its 237 posts of 'carpet bombing. :D

[DeanT]

Obviously; I never disagreed with that portion of the argument (left out of the quotation); just the leap from one state / surface / argument to another.

Your right Dean…moving on before its 237 posts of 'carpet bombing. :D

Dan: It is ironic that you show up in the thread and that piece quotes you! :D

I have kept to my no poly/dirt debate axiom for some time now and I am happy I did. It has allowed me more time to study handicapping, sit on a patio, have a beer and enjoy life :)

[InsideThePylons-MW]

Obviously; I never disagreed with that portion of the argument (left out of the quotation); just the leap from one state / surface / argument to another.

Sorry.

I just thought that a meet with dirt/turf, full fields and a 3% host fee would be preferred over a meet with polycrap/turf, short fields and a 8% host fee.

I didn't think comparing those would cause an argument amongst horseplayers, but I guess I was wrong.

[rrbauer]

It takes a John Deere tractor quite some time from Indiana to Inglewood to connect these stories imo.

Other than Hawthorne and Sportsmans (which is no more) what two tracks are connectable via John Deere tractor?

As to Ellis Park, Ron Geary made a bad business decision with his money. He gambled on Kentucky getting slots to offset the obvious secondary nature of eveything associated with the Ellis product. Why would anyone buy anything from Churchill unless they have a stong plan-B?

[DanG]

Other than Hawthorne and Sportsmans (which is no more) what two tracks are connectable via John Deere tractor?

Please tell me I don’t need to explain it was a figure of speech.

Dean ~ I have kept to my no poly/dirt debate axiom for some time now and I am happy I did. It has allowed me more time to study handicapping, sit on a patio, have a beer and enjoy life.
Good call Dean; your more wise then myself. You always have things in the proper perspective.

BTW: Sorry if I derailed the thread InsideThePylons-MW; my apologies. :blush:

[DeanT]

Thanks to Ray P for linking the comparison post on the blog today, via ITP's headsup. Good traffic for HANA.