Quote:
Originally Posted by dilanesp
Slots are not close to horse racing.
A slot bettor has over 100 wagering cycles an hour. A casual horseplayer has 2. So if variance were equal, it would take 50 times as long for a casual horseplayer to outrun variance. (In actuality, variance is higher in horse racing.)
And even in slot machines, there is a trend towards higher takeout machines that use bonus rounds to increase time on device. The players don't care as long as they get to stay longer.
Your churn statistics are a mixture of casual and serious players. What you need to do is back out the rebate players and the large handle players. Then take the remainder of players and calculate how much they are affected by churn. The answer is going to be "almost no effect". A bettor who plays 6 races a week would have to play for decades before the main determinant of her results isn't luck. That bettor is not takeout sensitive.
We are all governed by the laws of math.
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Because of my work schedule I am at best what you would call a casual player. I still make thousands of bets a year, and can make 100's in a day when I have time to play. My hypotheticals are about the amount of wagering (churn) someone can do within a fixed loss amount, and how that could impact future behavior if they felt they were no longer getting their perceived value for the spend.
Your slot time argument is also flawed because for the purposes of making my point, I was assuming all factors other than the machine's takeout are equal.
Unfortunately, I can't remove rebate players from my calculations, as all of our players get rebated. If I re-ran the reports by handle level, I would still see the profitable (high ROI) players at all levels will have higher churn rates than the unprofitable ones, and that all of them (regardless of ROI or bet level) would have a higher churn rate because of the rebates than they would if they had not received them.
I noticed you didn't answer my question. If reducing takeout for those players that you deem to be "the one's who care" is necessary, then why is reducing takeout for everyone else therefore not necessary?
I'll take a stab at answering it for you. Revenue.
Lowering takeout raises handle. There are enough real-world examples to prove this out, but often times it doesn't raise handle enough to off-set the loss in revenue from the takeout reduction (Canterbury in 2016 for example). Raising takeout lowers handle (again, plenty of examples), but sometimes the drop in handle is offset by the higher revenue received from the increase (Keeneland Fall 2017 for example). Finding the right mix to maximize both is the $64 question.
The other issue the industry faces regarding reducing takeout is simulcasting, which can also skew the numbers because a customer can take his added winnings from a lower takeout track and bet it on a different track. This causes the lower takeout track to not get the full revenue benefit from lowering its takeout. That's why I have frequently used the phrase "lowering takeout always works in a vacuum" in my speeches, and why Bill said on our panel that the major tracks needed to work together on this.
I totally understand the thinking that there are customers that are immune to takeout. I did too before I started dealing with rebates, and sat down and talked to Math and Economics professors and did some research on parimutuel pools and the efficiency of betting markets. Really opened my eyes.
