Betting menu discussion

[Andy Asaro]

Originally Posted by AndyC

Completely agree and have been saying the same for years. The popular narrative to describe the decline of racing is that all racetrack managers are idiots and if they only pulled their heads out of their backsides everything would be hunky-dory.

What appears to be an easy fix from the outside looking in is often just the opposite from the inside. Think Obamacare.

In California they are paralyzed by politics and don't want to ruffle the feathers of prominent Stakeholders in California. And yes, some of them are/were idiots. Case in point the Daily Double takeout fiasco a couple years back.

Here is one of the best examples of idiocy. I spoke at one of the following CHRB meetings about what they were doing meeting and ended up in an argument with M. Auerbach about it. And this wasn't Tom Ludts only idiotic act as a Stronach Group Executive.

http://blog.horseplayersassociation....r-takeout.html

Excerpt of article by Jeff Platt:

Link to the July 18, 2014 CHRB Meeting Transcript:
http://www.chrb.ca.gov/Board/board_m...t_14-07-18.pdf

Quote from page 83 of the transcript:

"MR. LUDT: We do listen, and I do think that's very important. And my challenge and in -- not just me, but the tracks and a TOC, in setting these things, we just -- not -- like we said, it was an experiment. The handle went up, but if you look at the net to the purses, it actually went down almost 500,000 to the net purses on daily-doubles, singling that out."

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. Gotta go to article to download spreadsheet


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%.

[Dahoss9698]

Originally Posted by dilanesp

I know some rail enthusiasts. They love long distance trains.

And they are convinced that Amtrak intentionally stiffs the long distance trains and if Amtrak ran more of them it would lose less money. They have an advocacy organization, NARP, which says the same thing and publishes studies that purport to prove it.

Meanwhile every railroad in the developed world has been trying to dump long distance trains for 60 years. And unlike NARP, they have access to the real numbers.

Never assume (1) the people who run businesses don't know what they are doing, (2) you, an outsider, have discovered some simple truth that the people running the business are too stupid to figure out, or (3) the people who run businesses don't have access to better data about profit and loss than you do.

Those assumptions are literally never true. And they are all over the Internet, not only in horse racing.

You really think the people at NYRA, Stronach, and Churchill don't have detailed data on the effect of takeout? That it never occurred to them to cut it? That they would never cut it even if the data showed a cut would make them a profit?

These arguments are based on assumptions that people who graduated either from the best business schools in the country or from Arizona's racetrack industry program, who have worked in the industry for many years, don't understand the most basic facts about their business and a bunch of horseplayers, who, let's face it have a huge self interest here, understand it better without any training, experience, or access to real numbers.

That's not the way the world works. ANY discussion of this issue has to assume that track managers are not idiots and have studied takeout, and for some reason are not lowering it. There may be regulatory roadblocks (as Andy talks about), but they are not too stupid to have thought about the issue.

With all due respect, don't talk down to me. I asked if you gambled because often your posts don't come from a horseplayers perspective.

You think horseplayers have a huge self interest? What about the tracks? Don't they have a huge self interest?

To assume that us dumb horseplayers don't have the training or experience to understand this issue better than a racing executive is very wrong. In fact, it seems like the only people fighting for the longevity of this sport are the horseplayers. Everyone else seems to be squeezing whatever last drops they can get out us before throwing us away.

Don't take this the wrong way but as a horseplayer I'm going to trust what Asaro and Halvey have to say here way more than you. They've provided examples and presented arguments that you've avoided. You've done the usual talk around an issue. It's not 1970 anymore, join us in the real world.

[HalvOnHorseracing]

Originally Posted by dilanesp

I know some rail enthusiasts. They love long distance trains.

And they are convinced that Amtrak intentionally stiffs the long distance trains and if Amtrak ran more of them it would lose less money. They have an advocacy organization, NARP, which says the same thing and publishes studies that purport to prove it.

Meanwhile every railroad in the developed world has been trying to dump long distance trains for 60 years. And unlike NARP, they have access to the real numbers.

Never assume (1) the people who run businesses don't know what they are doing, (2) you, an outsider, have discovered some simple truth that the people running the business are too stupid to figure out, or (3) the people who run businesses don't have access to better data about profit and loss than you do.

Those assumptions are literally never true. And they are all over the Internet, not only in horse racing.

You really think the people at NYRA, Stronach, and Churchill don't have detailed data on the effect of takeout? That it never occurred to them to cut it? That they would never cut it even if the data showed a cut would make them a profit?

These arguments are based on assumptions that people who graduated either from the best business schools in the country or from Arizona's racetrack industry program, who have worked in the industry for many years, don't understand the most basic facts about their business and a bunch of horseplayers, who, let's face it have a huge self interest here, understand it better without any training, experience, or access to real numbers.

That's not the way the world works. ANY discussion of this issue has to assume that track managers are not idiots and have studied takeout, and for some reason are not lowering it. There may be regulatory roadblocks (as Andy talks about), but they are not too stupid to have thought about the issue.

You picked a good example. Perhaps the only group less competent than racetrack management is Amtrak management.

I don't think CDI and Stronach have the right studies, and I'll elucidate below. You ever hear of Garrett Hardin's The Tragedy of the Commons? Very famous essay for economists. The bottom line is that everyone acting in their own self interest - the rational economic man that you assume all the racetrack managers are - inevitably destroys the commons. No matter how smart and trained they are if they don't have the right information or the right analysis they come to a spurious conclusion. Even so, tell me why if everyone has the definitive study, why doesn't everyone have the same takeout rates? They can destroy racing by doing exactly what they think they should do to maximize their commission.

What we know is that the relationship between takeout and volume is dependent on the price elasticity of demand (change in demand as a result of pricing changes) and cross elasticity of demand, which measures the responsiveness in the quantity demanded of one product when a change in price takes place in another product. Other gambling games, like sports betting, and pari-mutuel wagering are to some extent substitutes for one another. Since sports betting has a 10% take, the obvious question is that if racing dropped the take in the win pool to 10%, would that increase take because of price elasticity, and increase take due to people changing from sports betting to race betting, and would those increases increase volume enough to increase commission? If you believe betting is price inelastic, keep raising the take until you affect volume.

Research suggests that if you return more money to the bettors, a very high percentage of these additional funds would be bet back into the wagering pools as “churn.”

The interesting case is Canterbury Downs, which did lower the take and did see handle increase, albeit not enough to keep revenues at previous levels. There could be a lot of reasons for that.

- The whales (big money bettors) don't like the lower take because it cuts down on the rebate they depend on for their annual profit. You can't offer a 10% rebate if the take is 13%. If you want to not underestimate something, don't underestimate the power of the whales.

- Since so many people might be betting Canterbury through ADWs or off-track facilities, when you get the extra revenue from Canterbury from the lower take, you are just as likely to bet it at another track. That defeats part of the purpose of lowering take.

The places that raised take lost handle. The place that lowered take gained handle. So why didn't the experiment work?

Other than the whales and the churn, there may not have been enough advertising to get people to change long held behaviors. I've been to plenty of tracks and OTBs. I'm trying to remember when Canterbury was on a screen. Sort of out of sight, out of mind for most people. The Canterbury experiment needed to be in the face of bettors outside of Minnesota a lot more than it was. We all remember the articles in the racing rags about Canterbury, but how much did we see after the rollout? To be frank, Canterbury is not a national track in the same way Saratoga or Churchill or Del Mar are.

It's perception as a small track hurts the handle. On a Saturday at the height of the racing system, the competition for the betting dollar comes from 30 other tracks. The competition is too thick to have one small track taking an action be the definitive answer to the question of take and handle. Plus the people who wanted to bet real money (sort of the sub-whale category), still needed assurance that the pools would be big enough to accept the action. In a lot of ways, Canterbury was the wrong place to try the experiment. How many people betting on their computer limit their action to Canterbury so the track gets all the churn? But the important point is that handle DID increase. For me, the experiment was a rousing success, even if it wasn't for Canterbury.

Canterbury proved the point. For the experiment to generate the answer we all expected, given the current conditions of racing (ADWs, dozens of tracks operating simultaneously) more than one small track would have to adjust, and the big handle tracks in NY and CA and KY would have to be among them. And any study that only looks at takeout for a respective track, isn't necessarily going to come up with the same answer as a study that looks at it in the aggregate. Even so, that study doesn't yet exist. But let me assure you. If the right combination of tracks reduced the takeout, handle would increase by enough to overcome the lower house advantage. Until it happens and I'm proven wrong, I will continue to maintain that.

[HalvOnHorseracing]

Some of the racing managers are - I won't be pejorative and use the word idiots - not extremely competent.

I gave my explanation. The Tragedy of the Commons. It was perhaps one of most influential essays ever written and was one of the three things I called the harmonic convergence of environmental command and control - the creation of the EPA, the first Earth Day, and Hardin's essay. Worth a read.

http://science.sciencemag.org/conten...3859/1243.full

They are killing themselves because (1) they are not all regulated by the same entity and (2) they are unable to act other than in their singular self-interest. Idiots - no. Fools - totally.

[Poindexter]

Originally Posted by dilanesp

Same ways that elasticity is studied in other contexts.

You can extrapolate, somewhat, from how bettors respond to small changes in takeout to how they will respond to bigger changes. That's how economists plot a demand curve.

You can also analyze the factors that drive price elasticity (availability of substitutes, competition, branding, necessity versus luxury, etc.) and predict it.

Further, there are probably comparables somewhere out there if you look hard enough. For instance, 8-16 limit hold 'em drops about 4 percent in California. How do bettors respond to poker takeout increases? Are there foreign horse racing facilities that have changed takeouts around the 8 percent level? What happened when blackjack went to 6 to 5 or video poker went from 9-6 to 7-5 payouts?

There's a LOT of data out there on this. None of it may be absolutely conclusive, but I am sure when you put it all together it tells a story.

First off why are you using data from poker and blackjack? Those games are not overly priced(at least relatively speaking). This data is absolutlely meaningless to the sport of horse racing. Foreign horse facilitiies? What does that have to do with us? You want to compare other forms of gambling, I think the only game with similar takeout might be keno.

I go back to the my burger analogy. If I am charging $25 and everyone else is $6 to $10, what difference does it make if I put a big marketing campaign and come up with the friday night special of $19.99. Yes I will sell more burgers, than I am selling at $25, but that hardly is going to maximize my revenue. All these studies you talk about are analagous to measuring profit on my burgers at the $20 -$25 price levels. I offer them for $22.50 one month, my sales barely budge and I then conclude that $25 is optimal. No, it doesn't work that way. Optimal is somewhere between $8.99 and $12.99, but since I stubbornly hold onto the belief that my burger is so much better than everybody elses and deserves to be double their price, my sales never reach the point they could have, my profits never reach the point they could have and ultimately I go out of business (now going out of business certainly seems analagous to racetracks).

Back to the first paragraph, Even if I have the data of all the $6 to $10 burger shops, how the customer reacts to price changes with their inferior but fairly priced burger, will be much different than how consumers will react to price changes in my delicious $25 burger. Any extaplolation made from the data of the lower priced burgers mean zilch in regards to my higher priced burger and vice versa. Also short term reactions do not equal long term reactions. Somewhere down th line you have to forget the fricking data, which doesn't exist anyhow (in it's proper context) and use a little common sense. If you don't see that ......................not much more than I can say. We will agree to disagree. But you and the brilliant racing decision makers are 100% wrong.

[Poindexter]

Halv, sports betting has a 4.545 % take. Risk 110 to win 100. roi. Bet both teams, lose $10 cost 220 or -10/220 or -4.545%. Or bet 100 games go 50-50. Lose $5500 on the 50 you lose, win $5000 on the 50 you lose -500 net. Risk was 210 per game or $21,000 over 100 games. Lose 500/1000 or -4.545%. Pretty paltry relatively speaking, but then again every game is like a match race.

[dilanesp]

Originally Posted by HalvOnHorseracing

Some of the racing managers are - I won't be pejorative and use the word idiots - not extremely competent.

I gave my explanation. The Tragedy of the Commons. It was perhaps one of most influential essays ever written and was one of the three things I called the harmonic convergence of environmental command and control - the creation of the EPA, the first Earth Day, and Hardin's essay. Worth a read.

http://science.sciencemag.org/conten...3859/1243.full

They are killing themselves because (1) they are not all regulated by the same entity and (2) they are unable to act other than in their singular self-interest. Idiots - no. Fools - totally.

The tragedy of the commons is a real problem in horse racing (it neatly explains the cannibalistic fights over racing dates in Florida), but it has nothing to do with whether racetrack officials have studied the effects of takeout.

[dilanesp]

Originally Posted by Dahoss9698

With all due respect, don't talk down to me. I asked if you gambled because often your posts don't come from a horseplayers perspective.

You think horseplayers have a huge self interest? What about the tracks? Don't they have a huge self interest?

To assume that us dumb horseplayers don't have the training or experience to understand this issue better than a racing executive is very wrong. In fact, it seems like the only people fighting for the longevity of this sport are the horseplayers. Everyone else seems to be squeezing whatever last drops they can get out us before throwing us away.

Don't take this the wrong way but as a horseplayer I'm going to trust what Asaro and Halvey have to say here way more than you. They've provided examples and presented arguments that you've avoided. You've done the usual talk around an issue. It's not 1970 anymore, join us in the real world.

Dahoss:

1. Of course the tracks act in their self interest. That's my whole point! That's why if takeout decreases had the magic effect people claim here, they would do them! Self interest!

2. My claim is not that anyone here is either dumb or uneducated. My claim is that there is real expertise in the track managements on this issue, which we can't duplicate. We don't have their numbers, and we don't have their experience.

[HalvOnHorseracing]

Originally Posted by dilanesp

The tragedy of the commons is a real problem in horse racing (it neatly explains the cannibalistic fights over racing dates in Florida), but it has nothing to do with whether racetrack officials have studied the effects of takeout.

Then I respectfully submit you don't understand the breadth of it. Hardin's primary point was that everyone operating in their own best interest (individual racetrack managers) will inevitably destroy the commons (racing) in the absence of command and control regulations. The phrase he used was "mutuel coercion mutually agreed upon," even if only gave the example of why we don't condone the robbing of the commons of money (banks).

The point was unless the separate racing entities cooperate to save racing, then what happens is exactly what we see happening.

In this case the concept of cross elasticity is in play, and unless racing realizes that their competition is not other tracks as much as it is other gambling opportunities, they will not cooperate to operate in the best interest of racing by dropping the take. It worked in Canterbury proving there is an inverse relationship between take and volume. But it failed ultimately because it did not cover all of the commons. I believe your argument that "if it worked they would be doing it" is only true if only one of the tracks drops its take while the others do not. In the example of the commons, one herder trying to do the right thing gets overwhelmed by the herders doing the wrong thing. Unless they are all in it together, there goes the commons.

In which other professional sport is mutual coercion mutually agreed upon not in play?

[ReplayRandall]

Just a thought, but besides the trainers, don't the ADW's really control the game and the takeout now? Can you think of anyone else who bettors and track mgt. are more dependent on for the continued survival of the game than the ADW's?

[dilanesp]

Originally Posted by ReplayRandall

Just a thought, but besides the trainers, don't the ADW's really control the game and the takeout now? Can you think of anyone else who bettors and track mgt. are more dependent on for the continued survival of the game than the ADW's?

There's a lot to this.

[Dahoss9698]

Originally Posted by dilanesp

Dahoss:

1. Of course the tracks act in their self interest. That's my whole point! That's why if takeout decreases had the magic effect people claim here, they would do them! Self interest!

2. My claim is not that anyone here is either dumb or uneducated. My claim is that there is real expertise in the track managements on this issue, which we can't duplicate. We don't have their numbers, and we don't have their experience.

Yes, track managements are so good at running tracks that most are dependent on slot money or they'd fold.

They're so good that none of them have figured out that running races on top of each other hurts their handle.

They're so good that they haven't figured out small fields hurt handle, so running the same type of stake race at 3 different tracks the same weekend hurts field size.

Again, you're giving the people in charge way too much credit.

[dilanesp]

Originally Posted by Dahoss9698

Yes, track managements are so good at running tracks that most are dependent on slot money or they'd fold.

They're so good that none of them have figured out that running races on top of each other hurts their handle.

They're so good that they haven't figured out small fields hurt handle, so running the same type of stake race at 3 different tracks the same weekend hurts field size.

Again, you're giving the people in charge way too much credit.

Consider the following two facts:

1. There are people coaching in the NFL who can't do the job well, and should be replaced.

2. The worst NFL coach still knows quite a bit more about football than even relatively savvy fans, and knows a whole lot more about certain aspects of football coaching (such as reviewing "all 22" films, conducting team workouts, and other non-public aspects of the job) than basically any fan, even a top gambler, for instance, knows.

Those two statements are not inconsistent.

Having said that, I also don't think that American racetracks are run as badly as you do. I will concede that.

I can say with some confidence that NYRA was run badly in the early 1980's (when they were bleeding attendance and the other major tracks were not), and the 2000's (when there was a corruption scandal), and I can also say that Churchill Downs did a terrible job running Hollywood Park (which basically set it up to close). So it's not that I defend all track management.

But the basic problems with horse racing in the US are due to a decline in day to day public interest due to changing public tastes. That's not the fault of NYRA, that's not the fault of Frank Stronach, that's not the fault of Churchill, and that's not the fault of anyone else running a racetrack. It's really hard to run any sort of an enterprise during a period of industry decline and look competent.

But the reality is that in situations where there is still public interest, track managers do a fine job. Oaklawn is still run well. NYRA runs Saratoga and the Belmont Stakes well. Churchill does a great job of putting on the Derby. Del Mar is consistently run well. And Stronach does a great job putting on the Preakness, the Santa Anita Derby, opening day at Santa Anita, and especially Breeders' Cups. Keeneland is run well too.

The problem is, day to day, there just aren't that many Americans interested in horse racing. You could have the best possible talent managing all the tracks and it wouldn't make much of a dent in that.

[AndyC]

Originally Posted by HalvOnHorseracing

Some of the racing managers are - I won't be pejorative and use the word idiots - not extremely competent.

I gave my explanation. The Tragedy of the Commons. It was perhaps one of most influential essays ever written and was one of the three things I called the harmonic convergence of environmental command and control - the creation of the EPA, the first Earth Day, and Hardin's essay. Worth a read.

http://science.sciencemag.org/conten...3859/1243.full

They are killing themselves because (1) they are not all regulated by the same entity and (2) they are unable to act other than in their singular self-interest. Idiots - no. Fools - totally.

Synonym for fool.....idiot.

[HalvOnHorseracing]

Originally Posted by AndyC

Synonym for fool.....idiot.

I'm trying to decide if I'd rather be a fool or an idiot, not that there is an obvious choice.

Old joke. Female student is giving a short presentation in anthropology class. She refers to the civilization she is talking about as "backward." The professor interrupts her and says, "we do not call civilizations backward. We refer to them as underdeveloped. Now young lady would you rather be known as underdeveloped or backward?" She immediately replied, "backward."