Canterbury to cut takeout across the board

[PressThePace]

Originally Posted by Poindexter

Pick 5 is just one wager and a low probability wager at that(very hard to churn money on a bet that is so hard to hit). With Canterbury they are reducing takeout in all the pools(18 % to 15% in WPS and 23% to 18% in the other pools). This is quite significant. This is the the type of experiment that every horseplayer should want to see and should want to support. Is it enough? Of course not, but if we do not support a track going to first base, how are we going to get to 2nd base, 3rd base and eventually home.

When a Track raises takeout 2% there are cries for boycotting, so now that one is lowering it 3 to 5 % there should be equally as loud cries for support.

My thoughts exactly..

[dilanesp]

Originally Posted by PaceAdvantage

Tracks HAVE lowered takeout before. And instituted new lower takeout wagers (Pick 5 in SoCal comes to mind) over the years.

Is there not enough evidence at this point that a properly promoted, lower takeout wager is going to attract significantly more handle?

There's plenty of evidence it increases handle.

But it is a much more complicated question as to whether it makes a track more money.

[Track Phantom]

Canterbury is my home track. In the mid '80's, they were on par with Arlington Park as far as quality.

They shut down in 1993 and reopned in 1995. They've been a 2nd tier track for most of the time since. However, as they locked in a deal with Mystic Lake (Indian Tribe down the road), they've slowly been improving the product year by year. Right now, I would put them very near Remington Park and ahead, by a long way, of Arlington Park.

As far as this reduction goes: I think the best way players can support it is to play the track as often as it is convenient to do so. If you're planning on playing at night, and have options like PRM, MNR, PEN, etc, you should be choosing Canterbury as your main focus point. If everyone approached it that way, Canterbury would see a hit from this move and it would send a message.

[Jeff P]

Originally Posted by PaceAdvantage

Tracks HAVE lowered takeout before. And instituted new lower takeout wagers (Pick 5 in SoCal comes to mind) over the years.

Is there not enough evidence at this point that a properly promoted, lower takeout wager is going to attract significantly more handle?

Tons of evidence...

Tampa Bay Downs 2001-2009/2010:
http://blog.horseplayersassociation....out-again.html

Since 2001, Tampa Bay Downs has been quietly lowering takeout each season or thereabouts (see: HANA 2009 Tampa Report here with Peter Berube interview). This meet they have struck again - takeout has been lowered on several vertical and horizontal wagers.

In 2001 handle per day at Tampa was below $2.0M per day. For the 2009/2010 Meet, Tampa set a per day handle record of almost $4.2M per day, proving that pricing, foresight and customer respect trumps a bad economy any day of the week.

California 14% takeout Pick5:
http://blog.horseplayersassociation....ng-update.html

For the calendar quarter just ended March 31, 2013 - the year over year handle numbers at Santa Anita tell the story.

Not only are Santa Anita's year over year handle numbers for the 14% takeout pick five up $5.35 million and 46.9 percent respectively - but, apparently, the low takeout bet is sparking handle growth in the pools of the other wagers on the wagering menu for the races in the pick five sequence.

Kentucky Downs Slashes Takeout Rates:
http://blog.horseplayersassociation....out-rates.html

Kentucky Downs Meet Concludes with More Record Numbers:
http://www.thedowneyprofile.com/More...numbers.684476

Franklin, KY -- Kentucky Downs established purse and handle numbers that set new records for the second straight year at the unique track.

The projected initial purse structure for the meet totaled more than $4 million over five days, compared to a goal of $2.5 million for six days in 2012.

With one day of last year's meet canceled following overnight and morning rains, $2,066,344 was paid out for 43 races, which was a record. This year, Kentucky Downs paid out $4,121,142 in purses and Kentucky Thoroughbred Development Fund money for 50 races. That established a new record and represented an increase of 103.9% percent from a year ago. The purses were augmented by revenue derived from pari-mutuel wagering on historical horse races, which accounted for more than 70% of the total.

Last year, handle from all sources for five days of racing was a record $7,570,730, about double the 2011 total, when there were four race days -- resulting in a 61.3% increase in daily average handle.

This year's handle far surpassed that of 2012. The total over five days was $12,814,966, a year-over-year increase of 69%. The track set new records for daily handle on the first, fourth and fifth days of the meeting. The latter two days fell on Wednesdays.

On-track handle, $550,757 in 2012, jumped to $645,343, which is 19% higher than last year. In 2011, the meet total was $313,561.

The Flawed Logic Behind Higher Takeout:
http://blog.horseplayersassociation....r-takeout.html

This was the same flawed logic used by Los Al to justify their takeout increase back in 2010.

This was the same flawed logic used by the CHRB, TOC, and Track Management at Santa Anita-Golden Gate to justify SB1072 and the takeout increase that went into effect at Santa Anita, Golden Gate, Hollywood Park, and Del Mar on January 1, 2011.

This is the same flawed logic used by Churchill Downs this past April to justify their takeout increase.

The logic?

We make more money with higher takeout because our latest handle numbers multiplied by new higher takeout rates is bigger than our latest handle numbers multiplied by older lower takeout rates.

But in the real world it never works out that way.

Why not?

The logic is flawed because it fails to account for the fall off in handle caused by higher takeout rates.

Betting handle and takeout rates share an elastic relationship.

The fact is handle is created by bettors who are price sensitive. This is something that has been studied at length and is very well documented in the economic studies paid for by the thoroughbred racing industry.

We found a link to one such study on the website of the National HBPA: here.

We put a link to a second such study on the HANA website: here .

Sadly, this fact has been continually ignored by decision makers within the thoroughbred racing industry.

Fact: Los Al's on track handle was down 27% during the first six months immediately following their takeout increase in 2010.

Fact: Handle at Santa Anita, Golden Gate, Del Mar, and Hollywood Park fell almost $250 million (a quarter of a billion dollars) during the first year of their takeout increase.

Fact: Santa Anita cut one third of its staff as a direct result of the flawed logic used to justify SB1072.

Fact: On page 4 of the 2011 CHRB Annual Report then CHRB Chairman Keith Brackpool cited "the economy" as the reason for California's handle woes.

But SB1072 wasn't the only gambling bill to be passed by the California Legislature in 2010. AB142 authorized the CA Lottery to leverage higher prize payout percentage (lower takeout) to drive an increase in total dollars going to education.

Q. If the economy was so bad, how then did the CA Lottery achieve a completely different result through AB142 and lower takeout than CA Racing did with SB1072 and higher takeout?

Fact: Handle at Churchill Downs was down $49 million vs. the prior year's spring meet in the wake of their takeout increase this past April. Further, Maggi Moss preorted on Twitter that Chruchill will have a 20% purse cut for their upcoming September meet.

Fact: Handle at the current Del Mar meet is down approximately $30 million vs. the prior year - IN PART - because of player reaction to seeing Santa Anita Track Management use this same flawed logic to blame 18% double takeout as causing a net loss to purses of $500k.

My questions to the CHRB:

Have you not learned anything from all from this?

Can you not see how your continued belief in the flawed logic behind SB1072 is causing you to harm the very industry you are sworn to protect?

-jp


.

[barahona44]

Originally Posted by ronsmac

I wouldn't say they deserve it. If it's not a track you normally play, a few points in takeout may not help you if you're unfamiliar with the trainers and other idiosyncrasies of the track. Plus they're a night track which is good for some and bad for others. The players who play Canterbury regularly will increase the size of their wagers hopefully. Unfortunately it's always 3rd tier tracks who try reductions and rarely the major tracks

Simple supply and demand.On those occasions I'm at a racebook or OTB, when the NYRA tracks, or to a lesser extent SA, Del Mar, Gulfstream or Keeneland are on, bettors are flocking to the cages and self bet machines for those tracks and there's a great deal of shouting, cursing and people jumping out of their seats as the race progresses.

I rarely hear such hootin' and hollerin' when Ellis Park or Charlestown is running.Nor would I expect to.

Resistence to takeout isn't as strong at the major tracks .

[PaceAdvantage]

Originally Posted by Jeff P

Tons of evidence...

Yes, I kind of figured there was abundant evidence. It was in some ways a rhetorical question.

Which is why I was commenting on the "horseplayers better embrace this or they deserve whatever comes to them in the future"-type replies we saw here today.

Horseplayers don't need to be threatened by other players to embrace a takeout reduction. Takeout reduction, by its very nature, is almost guaranteed to be embraced, as your evidence shows.

So why don't we see it more often?

[Stillriledup]

personally I won't be betting a penny on Canterbury because I'm not familiar w the track and don't follow it, I'm set in my ways and not going to pick up a new circuit. So you have people who don't care about lower take at CBY because they don't know the track and the current customers aren't going to bet more, if you're 20 dollar a race Bettor that's where you'll stay. This is why it's hard to see a lot of increased handle, are current customers going to bet more? No. Are new customers going to start betting a track they know nothing about? No

Also I don't see too many Canterbury shippers at the tracks I follow so spending time on them won't beget any fruits when a CBY shipper visits the tracks I regularly play.

This doesn't mean fans don't care about lower take, but people aren't going to uproot their lives and 'way of doing things' they're used to just for this.

[cj]

Originally Posted by Stillriledup

personally I won't be betting a penny on Canterbury because I'm not familiar w the track and don't follow it, I'm set in my ways and not going to pick up a new circuit. So you have people who don't care about lower take at CBY because they don't know the track and the current customers aren't going to bet more, if you're 20 dollar a race Bettor that's where you'll stay. This is why it's hard to see a lot of increased handle, are current customers going to bet more? No. Are new customers going to start betting a track they know nothing about? No

Also I don't see too many Canterbury shippers at the tracks I follow so spending time on them won't beget any fruits when a CBY shipper visits the tracks I regularly play.

This doesn't mean fans don't care about lower take, but people aren't going to uproot their lives and 'way of doing things' they're used to just for this.

You could apply for a track executive position with this thinking. Or, run a horsemen's group!

[dilanesp]

Originally Posted by Stillriledup

personally I won't be betting a penny on Canterbury because I'm not familiar w the track and don't follow it, I'm set in my ways and not going to pick up a new circuit. So you have people who don't care about lower take at CBY because they don't know the track and the current customers aren't going to bet more, if you're 20 dollar a race Bettor that's where you'll stay.

And this is ultimately the issue with takeout reduction.

Here's a few of banal but basically accurate observations about this:

1. Takeout reduction is going to work best at tracks that currently have high takeouts, for two reasons: (a) they have more room to come down from, and (b) the demand stimulus of reducing, say, a 25 percent takeout to 20 percent is going to be much greater than reducing a 12.5 percent takeout to 10 percent, even though both will reduce revenues per wager by the same percentage from the track's standpoint.

2. Takeout reduction is going to work best at tracks that otherwise have a product that will attract off-track betting. I don't think the Ferndale Fair is going to attract significant handle from cutting its takeout, for instance. On the other hand, major and mid-major circuits, such as Southern California and Northern California, will do better.

Similarly, if the product is not attractive to bet on in the first place, a takeout reduction is not going to make it attractive. A 5 horse field with a 2 to 5 favorite ridden by Russell Baze and trained by Jerry Hollendorfer at Golden Gate isn't suddenly going to turn into a great betting race if Golden Gate drops the WPS takeout from 15 percent to 13 percent.

3. Takeout reduction is going to work best when concentrated on bets that large volume bettors make. Small volume bettors don't care about takeout-- it doesn't hit them nearly as hard. So a takeout reduction in the pick 6 or the superfecta is going to have a much bigger impact than a takeout reduction in the place pick all or the show pool.

4. Takeout reduction is probably going to have little effect on races people want to heavily bet anyway. The Triple Crown and the Breeders' Cup can probably get away with very high takeouts. People are going to bet the Kentucky Derby almost no matter what the track is taking out.

5. Successful tracks which already make money can probably get away with some takeout reduction as a customer service matter, but it probably won't increase their profits much. Thus, Del Mar, for instance, could cut takeout and it's not going to hurt them any-- there will be some increase in the handle, and even if it doesn't completely make up the difference, it's something they can advertise and promote and can build their business goodwill. There's an argument for them doing that sort of thing.

6. Takeout reduction isn't a panacea and is not a substitute for running your track well. You still need to deliver a good racing product, you still need to have good facilities for your live patrons, etc. Low cost crap is still crap.

[johnhannibalsmith]

Canterbury is one of the only tracks trying instead of whining. They've acknowledged the problem of attendance and attracting bodies and have done a great job dealing with it. Now, in a rare move in the industry, they're tackling another glaring problem instead of patting themselves on the back for getting one thing right. My betting drops off in the summer usually, but since I'm happy to admit that a lot of my betting anymore is strictly for fun, I will gladly do go out of my way to have that fun supporting a track that is at least trying to support me and the actual racing industry instead of the playing card manufacturing industry.

[castaway01]

Originally Posted by PaceAdvantage

Yes, I kind of figured there was abundant evidence. It was in some ways a rhetorical question.

Which is why I was commenting on the "horseplayers better embrace this or they deserve whatever comes to them in the future"-type replies we saw here today.

Horseplayers don't need to be threatened by other players to embrace a takeout reduction. Takeout reduction, by its very nature, is almost guaranteed to be embraced, as your evidence shows.

So why don't we see it more often?

Because with 90% of the money being bet off track, the host track gets only their signal fee for all money not bet on track. If they cut the takeout by 3% on a bet, it takes money out of the pocket of the companies/tracks who take their signal (any ADW), who then bitch and moan at the host track for cutting into their profits. Sure, if wagering went up 50%, then even a signal fee of 5% of win pool handle would make a lot more money, but that's mostly a fantasy in this day and age.

Yes, I know it's oversimplified, but the fact that the track fighting for the takeout reduction doesn't see much direct benefit is why there isn't more incentive for them to do so.

[EMD4ME]

Originally Posted by johnhannibalsmith

Canterbury is one of the only tracks trying instead of whining. They've acknowledged the problem of attendance and attracting bodies and have done a great job dealing with it. Now, in a rare move in the industry, they're tackling another glaring problem instead of patting themselves on the back for getting one thing right. My betting drops off in the summer usually, but since I'm happy to admit that a lot of my betting anymore is strictly for fun, I will gladly do go out of my way to have that fun supporting a track that is at least trying to support me and the actual racing industry instead of the playing card manufacturing industry.

When Hastings dropped their takeout, I made them my B track. Emerald of course being #1.

We SHOULD go out of our way (SRU-i knew nothing about Hastings till their takeout decrease) to play them.

Stay away from ALL PA tracks. They are a disease and support CBY. I'm proud of them.

[Jeff P]

Originally Posted by PaceAdvantage

Yes, I kind of figured there was abundant evidence. It was in some ways a rhetorical question.

Which is why I was commenting on the "horseplayers better embrace this or they deserve whatever comes to them in the future"-type replies we saw here today.

Horseplayers don't need to be threatened by other players to embrace a takeout reduction. Takeout reduction, by its very nature, is almost guaranteed to be embraced, as your evidence shows.

So why don't we see it more often?

The HANA Blog piece titled "The Flawed Logic behind higher takeout " in my above post touches on the bolded question at the bottom of your post.

From the article:

I think horseplayers everywhere deserve to understand how Ludt, as a representative of track management for Santa Anita, came up with that $500,000 number as the net loss to purses he claims resulted from 18% takeout on doubles.

HANA has obtained a spreadsheet from the CHRB which you can download here .

Believe it or not, the spreadsheet contains the following columns:

1. A column listing handle on doubles.

2. A column listing handle on doubles multiplied by 22.68%.

3. A column listing handle on doubles multiplied by 18.00%.

Incredibly, the $500,000 number given out by Ludt as the supposed net loss to purses because of 18% takeout on doubles was arrived at by subtracting handle on doubles multiplied by 18.00% from handle on doubles multiplied by 22.68%.

Incredibly, the CHRB swallowed the $500,000 number given out by Ludt hook, line, and sinker - because they approved Del Mar's application to go to 20% double takeout for their current meet.

This was the same flawed logic used by Los Al to justify their takeout increase back in 2010.

This was the same flawed logic used by the CHRB, TOC, and Track Management at Santa Anita-Golden Gate to justify SB1072 and the takeout increase that went into effect at Santa Anita, Golden Gate, Hollywood Park, and Del Mar on January 1, 2011.

This is the same flawed logic used by Churchill Downs this past April to justify their takeout increase.

The logic?

We make more money with higher takeout because our latest handle numbers multiplied by new higher takeout rates is bigger than our latest handle numbers multiplied by older lower takeout rates.

But in the real world it never works out that way.

Why not?

The logic is flawed because it fails to account for the fall off in handle caused by higher takeout rates.

Based on my experiences in dealing with them, and based on their actions: Their thinking really does appear limited in depth to the same flawed logic presented in the aforementioned spreadsheet and article.

The logic?

We make more money with higher takeout because our latest handle numbers multiplied by new higher takeout rates is bigger than our latest handle numbers multiplied by older lower takeout rates.



-jp

.

[EMD4ME]

Originally Posted by castaway01

Because with 90% of the money being bet off track, the host track gets only their signal fee for all money not bet on track. If they cut the takeout by 3% on a bet, it takes money out of the pocket of the companies/tracks who take their signal (any ADW), who then bitch and moan at the host track for cutting into their profits. Sure, if wagering went up 50%, then even a signal fee of 5% of win pool handle would make a lot more money, but that's mostly a fantasy in this day and age.

Yes, I know it's oversimplified, but the fact that the track fighting for the takeout reduction doesn't see much direct benefit is why there isn't more incentive for them to do so.

Great point Castaway, you beat me to it. The takeout reduction hurts the ADW or track taking the bet. I don't see why more small tracks don't do it. They're going to get their 3% anyway, why not advertise a lower takeout? Doesn't cost them a thing

[Lemon Drop Husker]

3% WPS and 5% on all other wagers is a significant reduction in takeout. Kudos. I will most certainly be looking to play some races there again.