Panel: Racing Should Invest in Pricing Study

[andymays]

Field experimentation is far and away the most efficient way to determine optimal business decisions,” said Betts, who spoke during a panel discussion on pari-mutuel takeout. “But because the model is an abstract object, it’s always going to be wrong to some degree.”

Steve May, vice president and business manager of the Association of Racing Commissioners International, outlined some research on takeout rates he did while in the University of Arizona Race Track Industry Program. May said it was extremely difficult getting information from within the industry, but it was a starting point.

“I think there is something there,” May said. “The onus is on different groups in the industry to provide the data. It’s essential.

“It’s going to take a lot of time and a lot of money from the industry to do this, but there are a lot of problems with how we’re looking at (takeout rates) right now.”

[Robert Goren]

It is not going to happen. Any cut in the takeout rate will come from purses and the horsemen will oppose that. They believe that a study would be a waste of time because they do not believe that bettors are sensitive to takeout rates.

[Tom]

Study shmudy...we know lowering the take out works.
Lower the damn TO at a race meet and watch what happens.

[lamboguy]

cutting takeout will help, but it won't increase the amount of handle enough to compensate for the loss in purses without doing other things first. out of all the problems that racing has, high takeout is probably at the very bottom of the list of what is wrong with the game. until the major problems are dealt with properly the game will continue to disintegrate no matter how much you lower takeouts on pick 4's, 5's, 6's, 7's or whatever.

if the problems get solved the handles will double immediately without a takeout decrease. a takeout decrease will double that.

[cj]

Originally Posted by lamboguy

if the problems get solved the handles will double immediately without a takeout decrease. a takeout decrease will double that.

I'd love to hear what you think the main problems are.

[Robert Goren]

Takeout is the number one problem facing racing has by a wide margin. Horse racing will not become healthy again until it address it. Unfortunately, the people running race have the attitude as Lambo.

[Charli125]

Originally Posted by lamboguy

cutting takeout will help, but it won't increase the amount of handle enough to compensate for the loss in purses without doing other things first.

That hasn't been the case at Tampa.

[lamboguy]

tampa hasn't doubled their handles.

the 2 main problems that racing has is the rules and laws are different from state to state, and the same few owners and trainers win the majority of the races at most race tracks.

[cj]

Originally Posted by lamboguy

tampa hasn't doubled their handles.

the 2 main problems that racing has is the rules and laws are different from state to state, and the same few owners and trainers win the majority of the races at most race tracks.

Tampa hasn't cut takeout in half either.

[classhandicapper]

Determining the optimal takeout rate is a lot like determining the optimal tax rate in economics. It's complicated.

If the rate is high enough it will stifle activity enough to reduce tax receipts, but if it's too low, it could generate lower tax receipts even if activity booms.

I think the optimal rate could also change based on the competition at that time.

In a world with sports gambling and poker the optimal rate could be a lot different than in a less competitive environment.

Finally, you have to give any changes a long enough test period so the full impact can be determined. Perhaps lowering the take will reduce the track profit initially, but if it slowly attracts sport gamblers over a period of years it could reverse itself (and vice versa).

Unfortunately, governments are too screwed up to allow the tracks to experiment for a long enough period of time to determine what works best.

[Jeff P]

Originally Posted by lamboguy

tampa hasn't doubled their handles...

Actually they have. Their management team began experimenting with reduced takeout back in 2001. We've covered the story several times on the HANA blog.

In 2001, Tampa had one of the worst blended takeouts in all of racing (they would've ranked about 65th on the HANA track ratings list) but now they have one of the best. Back in 2001, they handled approximately $1.8 million per day, now they handle over $4.2 million per day. During that same time, handle overall in North America has fallen precipitously.

Read more at the link, here:
http://blog.horseplayersassociation....out-again.html

-jp

.

[lamboguy]

Originally Posted by Jeff P

Actually they have. Their management team began experimenting with reduced takeout back in 2001. We've covered the story several times on the HANA blog.

Read more at the link, here:
http://blog.horseplayersassociation....out-again.html

-jp

.

while it is true that the location at tampa did increase in the last decade, and no doubt berube and tampa did do a great job so far this century, the handle came from the closing of the thoroughbred meet in Hialeah. i don't want to detract from what they accomplished. they have had an increase in live handle, and also have increased the attendance there.
during the BERUBE era, they have increased the standards of the place. trainers are not automatic to get stalls if they had poor prior meets. unethical behavior is not acceptable in that place from jockey's and trainers. after they threw out those 5 riders who had been leading riders about 4 years ago, the handle has gone up. people betting that place trust the game more because of BERUBE than other places.

[classhandicapper]

Originally Posted by lamboguy

while it is true that the location at tampa did increase in the last decade, and no doubt berube and tampa did do a great job so far this century, the handle came from the closing of the thoroughbred meet in Hialeah.

This is related to another one of the complications.

If one track lowers its take, it will probably steal market share from some of the others and may even get better net results. But if the entire industry lowers the track take, it could produce a worse net result. The total pie might only marginally increase, but the take will be lower.

[pondman]

For those of you boycotting California, don't hold your breath. The unemployment rate in LA is 11.7%. It's now the #2 city for the worst place to find a job. There are 9.8 people searching for every job available. Companies expecting to hire an employee this year -- 1%. The city is about to spin out of control, and become a hotbed of social unrest. Nobody is going to give the track any priority when the city goes up in flames.

[1st time lasix]

take out rates not only at tracks ..... but even on individual pools at the tracks i handicap alter my play . Perhaps I in the minority but i also put well above average through the windows. I have gravitated toward to the lower take pick fours and fives I will play win wagering or whever my opinion might produce an overlay based on my opinions. I just refuse to play anywhere they take more than 20 % on anything