OK People, What is the Optimum Take out tor The Race Track & Payback to the Bettor

[Igeteven]

OK People, What is The Optimum take out for The race Track & pay back To The Player:

Lets look at it at both points, the race track and the player

we all say 10 percent, 15 percent and so on, the tracks say more and more


I putting you in the hot seat, Lets say you own a race track and as we all know the handle is down. I know, by economics , we need a change and I must do some thing to get the handle up.

Now.. what do I do.., PLEASE be realistic on this.

So people, you are the owner of the track, Now what do I do, it's in your hands now

Lets see what we can come up with to solve the situation.

We need solutions now.

[Tom]

10% max across the board.
And no breakage. We have computers now.

[Deepsix]

I believe that if you visit the HANA site they have alot of info on takeout, AND here on the General Racing Discussion its been discussed at least a few hundred times so you'd probably get some information by searching it.

[Foolish Pleasure]

The correct answer is between 7-8% this was proven by IGT the slot manufacturer-that takeout produced the highest slot yield-why would racing be any different? Why depend on completely fabricated numbers fr HANA with incredible rationalizations when the world's largest slot machine maker already answered the question?


BTW that goes for income taxes too. There is ZERO difference between track takeout and the effect on racing and income taxes and the effects on human prosperity.

[Pick6]

No breakage (i.e. payout to nearest cent on the $) would help tremendously, esp. the chalk players.

I would get rid of pari-mutuel for WPS and bring in the fixed odds guys. My guess is their hold would be in the 8-10% range, perhaps less for the big races.

And how about introducing "backing" bets, i.e. betting on a horse not to win?

[nearco]

And how about introducing "backing" bets, i.e. betting on a horse not to win?

That is "Laying".
Backing is betting to win. The only way you can lay is on an exchange, or be a lisenced bookmaker. Not sure how you could make laying work in a parimutuel set up.
Can't see exchange betting every being legalised in the US.

[BetCrazyGirl]

The correct answer is between 7-8% this was proven by IGT the slot manufacturer-that takeout produced the highest slot yield-why would racing be any different? Why depend on completely fabricated numbers fr HANA with incredible rationalizations when the world's largest slot machine maker already answered the question?


BTW that goes for income taxes too. There is ZERO difference between track takeout and the effect on racing and income taxes and the effects on human prosperity.

Slots you can go to 24/7 (from what I'm aware of) while you can't with racing, I would assume that would make a difference with the take out between the two?

[Horseplayersbet.com]

Lets remember what optimum takeout is. It is the takeout level that will cause gamblers to lose the most money collectively over a long term period, actually one step further, it is the takeout level that will bring in the most net money to the tracks and horsemen to split up in a long term period.

With that in mind, from a track and horsemen standpoint, takeout levels can be different, depending on circumstances. For example, on big days like the Derby, etc. when much of the crowd is there just for the day, it won't matter to them if they cashed $50 or $55 on an exactor. The money will not get churned back the next day, or next month for that matter. For them, it is the experience that might bring them back sooner.


But for the regulars and even those people that play at least 10 times a year. Takeout matters.

Also, pick 6 cashes may not be churned back so quickly, and may be taken out of the game, same with other big scores...since you can bet a dime super, it is now almost in the exactor category. But triactors can also take away churn money from the game. What I'm trying to say is these bets may need a slightly larger takeout when it comes to being optimal.

Anyway, I see optimum takeout as needing a two tiered solution. One for account holders (whether it is at a track, an ADW or track ADW/simulcast center), and one for those who choose not to have an account (these are most likely going to be those who show up just for a day here and there, and it would be prudent for the industry to give them a higher rate).

As for the numbers. I'm thinking 8-10% for account holders, 10-12% for pick 4's-6's and triactors. And for non account holders, 16% WPS, 20% for most exotics, and 25% for pick4's-6's and triactors. But again, the non account holder has the option to open up an account, and it should be advertised that it is to their best interest to do so.

[Pick6]

That is "Laying".
Backing is betting to win. The only way you can lay is on an exchange, or be a lisenced bookmaker. Not sure how you could make laying work in a parimutuel set up.
Can't see exchange betting every being legalised in the US.

Missed my post - I am advocating fixed odds.

Either way, betting horses to lose in pari mutuel world would simply be separate pools for each horse.

[chickenhead]

I would go 9% flat across the board, I just want scale and handle and mindshare, I wouldnt even care if that was underpricing.

The issue with that is getting distribution.

Unlike some, I'm all for consolidation so far as ADWs go, they can transact for less if they can get some scale. With a low takeout scale should follow, so my goal would be only around a 3% keep at the ADW and other tracks, i.e. 6% or so comes back to me and the purses. If I couldn't get an ADW with proper scale to take my signal for 3%, I'd start my own, that would allow for integrated on track off track experience anyway. Your betting card would be linked to your ADW account, sharing the same funds and same rewards. Makes no difference to me if you bet on track or off, or both at the same time. It's all the same to me.

I'd only ask to keep 3% of any on-site simulcast, send 6% back to the host, and return the rest as rebates to my on track customers -- and I'd offer them the same deal, pay me 6%, they can keep 3%.

At my track you'd pay 9% on every bet, no matter what track or pool you were betting on.

I would have the least distributed track in the world, but I still think I'd win eventually.

[Wickel]

10% max across the board.
And no breakage. We have computers now.

Gets my vote. Very equitable. :ThmbUp:

[Mr. ECB]

The optimum takeout is 10% across the board, which puts horse racing more in line with Vegas.

However, I want the 18% rebates that the Lewiston Maine peeps get. I believe that is where all the pick sixes are hit and it must be because the whales who play $10,000 tickets play in Maine to get the 18% rebate. They hit the million dollar pick sixes at Santa Anita by quick picking and wheeling on these plastic tracks.

[gm10]

5%
but the tote is too inefficient (operationally) to ever achieve that - you need betting exchanges

[Horseplayersbet.com]

The optimum takeout is 10% across the board, which puts horse racing more in line with Vegas.

However, I want the 18% rebates that the Lewiston Maine peeps get. I believe that is where all the pick sixes are hit and it must be because the whales who play $10,000 tickets play in Maine to get the 18% rebate. They hit the million dollar pick sixes at Santa Anita by quick picking and wheeling on these plastic tracks.
A whale doesn't quick pick. And nobody gets an 18% rebate on Santa Anita.

[thespaah]

OK People, What is The Optimum take out for The race Track & pay back To The Player:

Lets look at it at both points, the race track and the player

we all say 10 percent, 15 percent and so on, the tracks say more and more


I putting you in the hot seat, Lets say you own a race track and as we all know the handle is down. I know, by economics , we need a change and I must do some thing to get the handle up.

Now.. what do I do.., PLEASE be realistic on this.

So people, you are the owner of the track, Now what do I do, it's in your hands now

Lets see what we can come up with to solve the situation.

We need solutions now.
10%.....And eliminate "rounding down" breakage. In dime breakage a payoff of $5.19 would be rounded down to $5.00...Based on a $2 bet, that is a win of $3.19. So a 19 cent loss to the breakage computes to 6%...add that to the 15 to 20% takeout...Nice little bonus for the track. And a shot to the chops after the kick in the ass to the bettor.
There has to be breakage because none of us wants to see racetracks bear the addtional costs of handling pennies.

[thespaah]

Missed my post - I am advocating fixed odds.

Either way, betting horses to lose in pari mutuel world would simply be separate pools for each horse.If pai-mutuel is not the system, then the alternative would have the track act as "the house".
HOw would odds be determined? BY which system?
Should a track handicapper or racing secretary set the odds?
If the bettors fund the pools, how are the odds calculated during the wagering period? Suppose the person or people responsible for making the odds does so in error which results in a huge payoff to a horse which was heavily bet, then how does the track pay off the winning bets without dipping into it's own funds?
Yes, I know what a minus pool is.

[Horseplayersbet.com]

10%.....And eliminate "rounding down" breakage. In dime breakage a payoff of $5.19 would be rounded down to $5.00...Based on a $2 bet, that is a win of $3.19. So a 19 cent loss to the breakage computes to 6%...add that to the 15 to 20% takeout...Nice little bonus for the track. And a shot to the chops after the kick in the ass to the bettor.
There has to be breakage because none of us wants to see racetracks bear the addtional costs of handling pennies.
No need to have any breakage, as Tom stated, we have computers now.

But your example of breakage is an extreme one. The average breakage is around .2 to .4% depending if a track breaks to a dime or a a nickel.

It is just as probable for a horse to theoretically pay $5.01 too, where the breakage amount would be .33%. And when you get up to payoffs like $100, $1000, etc. breakage becomes less and less a matter.

Still, there is no reason not to eliminate it completely. It is 2010, not 0102.

[Horseplayersbet.com]

If pai-mutuel is not the system, then the alternative would have the track act as "the house".
HOw would odds be determined? BY which system?
Should a track handicapper or racing secretary set the odds?
If the bettors fund the pools, how are the odds calculated during the wagering period? Suppose the person or people responsible for making the odds does so in error which results in a huge payoff to a horse which was heavily bet, then how does the track pay off the winning bets without dipping into it's own funds?
Yes, I know what a minus pool is.
Fixed odds can be found at exchanges. Players match odds and your bet sticks. The house simply takes a cut of the profits of whoever wins.

[gm10]

If pai-mutuel is not the system, then the alternative would have the track act as "the house".
HOw would odds be determined? BY which system?
Should a track handicapper or racing secretary set the odds?
If the bettors fund the pools, how are the odds calculated during the wagering period? Suppose the person or people responsible for making the odds does so in error which results in a huge payoff to a horse which was heavily bet, then how does the track pay off the winning bets without dipping into it's own funds?
Yes, I know what a minus pool is.

Peer-to-peer betting, as the betting exchanges do. They just match the bets online, and that's the end of it.

[gm10]

If pai-mutuel is not the system, then the alternative would have the track act as "the house".
HOw would odds be determined? BY which system?
Should a track handicapper or racing secretary set the odds?
If the bettors fund the pools, how are the odds calculated during the wagering period? Suppose the person or people responsible for making the odds does so in error which results in a huge payoff to a horse which was heavily bet, then how does the track pay off the winning bets without dipping into it's own funds?
Yes, I know what a minus pool is.

To give you an example, Dancing Kristal @ HAW race 5 was matched @ 8/1 on Betfair but went off @ 5/2. If you are a value bettor, this is the only way to go. Fixed odds, and a 5% commission.

[Robert Goren]

Where can you get fixed exchanged betting in USA? I think in most states it is illegal. It maybe legal in Nevada. I highly doubt is legal here Nebraska. JMO

[gm10]

Where can you get fixed exchanged betting in USA? I think in most states it is illegal. It maybe legal in Nevada. I highly doubt is legal here Nebraska. JMO

There's this exchange called betmaker.com. I don't know about the legal issues but it's definitely geared towards American punters. They're based in Costa Rica or some place similar.

[Stillriledup]

The optimum takeout is 10% across the board, which puts horse racing more in line with Vegas.

However, I want the 18% rebates that the Lewiston Maine peeps get. I believe that is where all the pick sixes are hit and it must be because the whales who play $10,000 tickets play in Maine to get the 18% rebate. They hit the million dollar pick sixes at Santa Anita by quick picking and wheeling on these plastic tracks.

18% rebates are only on Trifectas from small harness tracks with trifecta takeouts hovering in the 35% range. You're not going to get anything close to 18% at a track like Santa Anita when the exotic takeout is 20.

Btw, the pick 6s are hit there because the players are great handicappers for the most part.

[gm10]

Where can you get fixed exchanged betting in USA? I think in most states it is illegal. It maybe legal in Nevada. I highly doubt is legal here Nebraska. JMO

Isn't Omaha in Nebraska? So you can blow up the world from Nebraska, but you can't bet our furry friends. These army guys got their priorities wrong if you ask me.

[thespaah]

Continuning on fixed odds..
Ok. so we have the win bets issue fixed. How would exotics figure into the equation?
In a field with 10 betting interests the number of combinations in Tri and Sup would cause quite a bit of work to be done in order to post odds.

[InsideThePylons-MW]

30% takeout rate on all off track bets (10% for the track, 10% for horsemen and 10% for the bet taker)

20% takeout rate on all on track bets (10% for track and 10% for horsemen)

That will make people go back to the track for the reduced rate and big players will bet off track and still get a 6-7% rebate that discounts the 30% takeout.

Handle will double....maybe triple within a year.

[Horseplayersbet.com]

30% takeout rate on all off track bets (10% for the track, 10% for horsemen and 10% for the bet taker)

20% takeout rate on all on track bets (10% for track and 10% for horsemen)

That will make people go back to the track for the reduced rate and big players will bet off track and still get a 6-7% rebate that discounts the 30% takeout.

Handle will double....maybe triple within a year.
There are some people here who might take your post seriously.

[Igeteven]

anyone wants to take the tracks side???

[Alex D]

Are these real suggestions for the racing industry today? Or is this just more of a 'wouldn't it be great if we could gamble at these percentages' thread?

Because in many jurisdictions, racetracks would be out of business with national 10% takeouts. Some states require fixed percentage contributions to purses in the 6 to 7% range. Add in a host fee from the originating track currently starting at 3% and possibly going a couple points higher. You end up with a situation where simulcasting would be a net losing operation for the racetrack. And if a track can't make money simulcasting, they are out of business.

Now if we want to say well purse contributions should be changed and host fees should be changed, that's fine. But to discuss takeout in a vacuum without talking about these other factors really doesn't serve much purpose in moving the industry forward.

[lamboguy]

what good are betting exchanges if you can't get your bets matched. i had a friend that got matched on a bet for $1500 on a horse in belmont. the horse went off on the track at 5-1. he took 7/2 onbetfair. i had bet the horse right into the win pool in belmont for about 20% of the whole pool and i got back $12.20.

if track take is within some type of reason i don't mind playing the paramutual pool as long as they have big pools. unfortunatly the way racing is today, it is very spread out and often you have to play horses in small pools and bet smaller amounts of money on them. that happens to me quite frequently now. just an example, i might play a horse in tampa, the horse loses and now i want to chase him.he goes from tampa and winds up at presque isles. i am now screwed, the horse left a place that had an $100k win pool and left for a place that has a $15k win pool if you are lucky. that only happened to me about 5 times at presque isles. another 3 times at colonial. and about a dozen times at sulfolk.

so now i know what i am up against this year, so i have cut back my bets at tampa, knowing that i can never recover my money when the horses move on.

[Horseplayersbet.com]

what good are betting exchanges if you can't get your bets matched. i had a friend that got matched on a bet for $1500 on a horse in belmont. the horse went off on the track at 5-1. he took 7/2 onbetfair. i had bet the horse right into the win pool in belmont for about 20% of the whole pool and i got back $12.20.


This happens occasionally, but most of the time you get a premium price on Betfair (which makes sense thanks to the lower takeout). But liquidity is sometimes an issue. If two races go off too close together, one track may get a lot more action than another.
Liquidity for a $1500 bet too, is a problem the higher the odds on your horse. This is why many Betfair players play both the exchange and the tote.

[Horseplayersbet.com]

Are these real suggestions for the racing industry today? Or is this just more of a 'wouldn't it be great if we could gamble at these percentages' thread?

Because in many jurisdictions, racetracks would be out of business with national 10% takeouts. Some states require fixed percentage contributions to purses in the 6 to 7% range. Add in a host fee from the originating track currently starting at 3% and possibly going a couple points higher. You end up with a situation where simulcasting would be a net losing operation for the racetrack. And if a track can't make money simulcasting, they are out of business.

Now if we want to say well purse contributions should be changed and host fees should be changed, that's fine. But to discuss takeout in a vacuum without talking about these other factors really doesn't serve much purpose in moving the industry forward.
I think it has to be assumed that if takeout drops, signal fees must drop close to proportionally, as must state taxes and arrangements with purses either with the horsemen or the state.

[Robert Goren]

If the purpose is to get the most dollars out the handle, then on anything, but perhaps the pick 6, I would think it is probably in the neighborhood of 8%. It maybe lower. I know in poker if the rake gets much above 4% the action begins to die. The trouble is that it going take time to bring back money that they have chased away.JMO

[speculus]

This may sound bizarre, but some years ago I had worked out some complicated logic and esoteric math which had hinted the best way would be to do it in two steps:

Step 1: Start with only 5% takeout on WPS, 7.5% on exotics & 10% on multi-race pools. This should continue until the turnover and customer base both go up substantially. (May be for a couple of years or more)

Step 2: Change the figures to 7.5%, 10% & 12.5% respectively after phase one is over, and NEVER touch it again.

And of course, as Tom says, no breakage please.

The only racecourse that tried this formula found their turnover jumping to 8500% (YES, 85 times!) in just five years!

[Robert Goren]

They had better be prepared to lose a lot of money in getting the handle up. I don't think there are any tracks that can take those kind of losses while the build their handle. JMO

[Igeteven]

Are these real suggestions for the racing industry today? Or is this just more of a 'wouldn't it be great if we could gamble at these percentages' thread?

Because in many jurisdictions, racetracks would be out of business with national 10% takeouts. Some states require fixed percentage contributions to purses in the 6 to 7% range. Add in a host fee from the originating track currently starting at 3% and possibly going a couple points higher. You end up with a situation where simulcasting would be a net losing operation for the racetrack. And if a track can't make money simulcasting, they are out of business.

Now if we want to say well purse contributions should be changed and host fees should be changed, that's fine. But to discuss takeout in a vacuum without talking about these other factors really doesn't serve much purpose in moving the industry forward.

Excellent Post
:ThmbUp:

[startngate]

Alex D made a very good point in his earlier post. Lowering takeout has many effects on the entire system, not just the players.

In order for a reduction in takeout to work for the entire industry (not just the player), you need the following:

1) All tracks everywhere have to do it, and all must reduce takeout to the same level.

If all tracks don't participate equally, then players can take profits from the track that lowered the takeout and wager elsewhere with higher takeouts, thus negating the benefit of them returning the additional money to the players. Also, if takeout is consistant across the board, then everyone playing into the pools knows what it is, and knows there are not better deals elsewhere.

2) Everyone that gets a piece of the takeout (State, Track, Horsemen, vendors) now has to agree to receive a percentage of the takeout, not a percentage of the gross handle.

As Alex D mentioned, in some cases contracts and State Laws are written to allocate/tax/charge revenue as a percentage of gross handle. That revenue sharing mechanism would have to change to be based on a percentage of takeout so as the overall takeout percentage is adjusted, everyone's revenue rises and falls together. A good example of this was when Keeneland wanted to lower takeout a few years ago and the Mid-Atlantic Co-op declined to take the signal until Keeneland lowered the host fee rate. The industry has to change those formulas before takeout can be meaningfully lowered.

3) All tracks and all outlets must offer all the available product and must be charged the same host fee rates for it.

The lowered takeout will not work for smaller tracks if they are charged a higher fee for purchasing signals than they receive for taking them. While it is going on to a certain extent now, the takeout is high enough to mitigate the host fee differences. Compress the takeout and even by adjusting the distribution as mentioned in #2, you have smaller tracks in a worse position as far revenue goes since many of them are only able to currently survive by simulcasting. Also, you need to have all signals available everywhere to help in this regard. As an example, it's not fair for CA to poach handle from outlets all over the country without betting back into those tracks in return. For non-track outlets, they could in theory be charged more than the going rate for tracks, but similar outlets should be charged the same thing to keep the playing field level.

4) Some mechanism must be created to deal with the lost revenue for the tracks and horsemen until handle rebounds enough to off-set it.

I think alternative gaming is certainly one way to accomplish this. Developing a mechanism to encourage national sponsorships might be another. Certainly phasing in the reduction would be a part of it, and getting some tax deductions from the various governments would help.


It's a tall order to accomplish all of those things in the age of simulcasting. Lowering takeout would have been much easier in the on-track wagering only days.

[Robert Goren]

Isn't Omaha in Nebraska? So you can blow up the world from Nebraska, but you can't bet our furry friends. These army guys got their priorities wrong if you ask me.It is not the army guys who are the problem, it is the hicks that live in western Nebraska. JMO

[Pick6]

Associations need to cover fixed costs, and variable costs.

IMO variable costs (e.g. purses) should be covered by some % of the wagering $. But why should the state tax based on the size of the pool? They should tax on the earnings of the association, just like any other corporate entity.

The assumption that the state deserves the "piece of the betting pie" needs to be overcome.

[nearco]

Missed my post - I am advocating fixed odds.

Either way, betting horses to lose in pari mutuel world would simply be separate pools for each horse.

Could you explain how that would work, i.e a separate pool for every horse?

[Horseplayersbet.com]

Could you explain how that would work, i.e a separate pool for every horse?
You could have a separate booking pool. In other words, booking a 9-1 shot, you would be betting 1-9 instead. It can still remain parimutuel as well.

[nearco]

You could have a separate booking pool. In other words, booking a 9-1 shot, you would be betting 1-9 instead. It can still remain parimutuel as well.

So that would be all horses in the same pool though, right?
Wouldn't that stand the chance of more often than not being a negative pool once takeout is deducted? Kind of like when a really short priced favourite wins, and you get the minimum payout.
Seems like that would happen a lot.

[Horseplayersbet.com]

So that would be all horses in the same pool though, right?
Wouldn't that stand the chance of more often than not being a negative pool once takeout is deducted? Kind of like when a really short priced favourite wins, and you get the minimum payout.
Seems like that would happen a lot.
It would be interesting to see what happens, but the way I see it is that you would have to allow for horses to pay $2.01.
This is what happens on exchange betting, and this is why it is unlikely to happen as a parimutuel pool, but rather an exchange.

In an exchange, you get the odd person that will give 140-1 for $20 on certain horses they think have no chance. The thing is that this person would need at least $2800 in their account to cover the bet in case someone takes it. But that bettor is risking $2800 to make less than $20 after deductions.

Also, if it was parimutuel and you had a 14 horse race, the track would have to show the payoffs for 13 winners.

[permenbg]

i have seen it done on 17% of W.P. S. (11% to the track and 6% to the state) not sure about present time. back then the track had to do every thing out of there 11%. i would think most states if not all want there share.

[Horseplayersbet.com]

i have seen it done on 17% of W.P. S. (11% to the track and 6% to the state) not sure about present time. back then the track had to do every thing out of there 11%. i would think most states if not all want there share.
In Ontario, the government gets 1.3% on every wager. In some jurisdictions the amount is 0%. Many are around 1-2%. I don't know who gets 5 or 6% anymore.

[startngate]

gm10][/b]
Isn't Omaha in Nebraska? So you can blow up the world from Nebraska, but you can't bet our furry friends. These army guys got their priorities wrong if you ask me.It is not the army guys who are the problem, it is the hicks that live in western Nebraska. JMOTechnically speaking the Strategic Air Command (SAC) and its successor the US Strategic Command (USSTRATCOM), were/are headquartered at Offut Air Force Base in Bellevue, NE ... a suburb just south of Omaha proper. It's (obviously) an Air Force Facility, not Army.

'W' actually touched down there on 9/11 for a bit, and the B-29's that dropped the nukes on Japan were built on the base as well.

I first saw the SR-71 at an airshow there, and the air museum was great. It has since been moved off the property to a new facility in Ashland, NE, and is a must-see if you are into military aircraft.

To bet on dogs, you have to cross the river into Council Bluffs, IA, and go to Bluff's Run (or whatever Harrah's calls the place now that it has slots). No dog racing in the Cornhusker State ... :)