Quote:
Originally Posted by AndyC
Completely illogical to believe that nobody involved in racing understands the economics. An economic genius would have a difficult if not impossible task of implementing the best economic decisions at a racetrack simply because decisions must win approval of both horsemen and government agencies.
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The word almost implies something greater than none. There are lots of horseplayers out there. The "almost no one understands racetrack economics" applies to most of them and most of the racing commissions. And as Class points out, if people understood the economics of betting, there should be fewer losers. The take is tough to overcome, but remember tracks redistribute 70-85% of all money bet. That leaves players with prospects at least.
A second, more important piece of evidence is that if tracks understood racetrack economics, they wouldn't make some of the dumb decisions they do. Which tracks have shown they understand the relationship between the take and betting handle? It's a pretty short list. You think the product is priced correctly to maximize revenues? You think they've nailed the simulcast signal cost? You think they've minimized operating costs at racing plants?
I'd say it would be illogical to believe racing is being well managed.
This from a 1998 study at the University of Louisville
Median own-takeout rate elasticity was found to be -2.30 [this means a 1% increase in the takeout rate results in a 2.3% loss of handle] indicating that wagering is strongly responsive to takeout rate changes. This is consistent with prior findings in the literature. Median elasticities with respect to number of races and field size were found to be 0.64 and 0.58, respectively. There are no prior studies by which to gauge the magnitudesof these elasticities but it seems wagering is moderately responsive to changes in number of races and field size. Finally, median purse elasticity was found to be 0.06 which is considerably lower than elasticity with respect to takeout rate, number of races or field size. This elasticity is quite small and it suggests, for instance, that wagering at the racetrack-racebook would increase by a very small 6% if average purses were doubled. With the exception of the median cross-race elasticity of -0.41, the remaining cross-elasticities were, in general,statistically insignificant or small relative to their corresponding own-elasticities. This suggests that competing racetrack groups are moderate substitutes for the subject racetrack group.
It might be illogical, but the proof is in the pudding. As you can read, pretty much the only thing that makes a real difference in handle is the take. It's great that you have faith in the people running racing. They'll appreciate the vote of confidence.
