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Originally Posted by Show Me the Wire
No my argument is a reduction in take out does not guarantee an income stream to cover the expenses of operation.
Look at it this way. Reducing take out is similar to placing a specific product on sale. The price reduction is more than likely the result of low demand for the product. Decreasing the price will not automatically increase sales or profits, or it may increase sales but not profits, or accomplish nothing at all.
Basically, reducing price is not a very productive way to increase profit or attract new business. You attract new business and generate profits by a demand for the product or producing a substitute product to satisfy demand.
Reducing price is a way to clear out unwanted product, to make room for other profit making opportuntities. Unforunately race tracks only have one product to offer and cutting price is not the solution.
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If the optimum price lower than the price being charged, then reducing the cost will optimize profits. That is economics 101.
Race tracks only have one product to offer, and that is gambling. And they have lost out to other forms of gambling not because people don't like to gamble, but because people have found other ways to gamble where they last longer or might even have a chance at winning.
Give players more return, and they will last longer, and still in the end lose at least as much as they would have without the takeout decrease....but my contention is that they might lose collectively more as they will spend more time focusing on horse racing. Plus the longer they spend picking horses, betting horses and watching races, the more likely they are to expose others in their personal universe to horse racing.....and you wind up growing the game.
It worked with poker, it works with Betfair, it could work with horse racing too.
