Keeneland apparently raising takeout

[Andy Asaro]

Originally Posted by highnote

I had the good fortune to be able to have dinner with Chris Scherf several years ago at a TRA convention. He is very bright and understands the issues in racing better than most.

Haggerty, in his DRF article, quotes Scherf:

“In an ideal world, takeout rates should be lower,” Scherf said. “I absolutely believe that. But if you look at what happens in the real world, I don’t know if you can jump off that cliff. If you’re the one that makes that mistake, it’s pretty clear the next guy won’t.”

Scherf hit the nail on the head. Fear. The decision makers are afraid to lower rates out of fear that handle will decline (or will not increase) and they will be out of a job. Fear is a more powerful motivator than pleasure. That is, people will do more to avoid pain than to seek pleasure.

Racing executives do not necessarily fear HANA, but they probably do not take any pleasure from having to deal with the organization. If HANA makes executives uncomfortable the result will be the executives moving farther away from HANA to the safety of raising takeouts.

So that's one part of the equation.

Next part, Haggerty claims there is misinformation surrounding the topic of takesouts and quotes Jeff Platt, President of HANA, in attempt to prove his point:

"Platt, president of the horseplayers group, stated in an interview this week that a takeout increase 'has never been a revenue generator for tracks. It’s never generated revenue increases or purse increases.' "

Haggerty responded: "That is a popular view among horseplayers, and one that dovetails with the economic theory, but it also is not true.

When presented with those statistics, Platt responded: 'But what would their numbers have been if they didn’t raise takeout?'

Haggerty: That’s unknowable."

Haggerty continues by writing that the popular view among horseplayers and economic theory that takeout increase lowers handle is not true.

Platt argues that CD's revenue declined in 2014 compared to 2013, due to a takeout increase.

Haggerty argues that figure includes all revenue from CD's four tracks including a dramatic decline from Arlington Park, not the wagering revenue from CD itself.

So here's my question:

What about on-track handle and handle at each and every ADW and rebate shop? It might be the case that if there was an increase in handle after CD raised rates it was because large bettors who get large rebates increased their handle. The small bettor, and the on-track and mainstream ADW retail bettor do not get rebates. Small, retail bettors may have cut back on their wagering.

It would be interesting to compare handle from non-rebated players to rebated players.

Therefore, I would argue against Haggerty by saying it IS KNOWABLE by using statistics to study the effects of takeout on handle. The problem is, tracks like Churchill and Keeneland are not going to open up their books and show you. They can paint the picture any way they want and call it true, but there is no way to verify it.

And as Ronald Regan said, "Trust, but verify." Which I always thought was the same thing as saying do not trust until you can verify.

Ca is the best example. We brought them to their knees. They were on pace to be down 400 million and ended up down 250 million only because Hollywood Park put in the 14% P5. That effectively ended the boycott. No doubt in my mind that we can hurt Keeneland badly if they make the effort. HANA should go down swinging with their best effort if they want to have any respect after this.

[ReplayRandall]

Originally Posted by highnote

I probably did miss it. I never claimed to be the most perceptive guy on the forum. I guess I tend to take everyone at face value.

So what's his point?

A player who's well versed at assessing lines/value, will benefit from larger fields in the long-term, this is an absolute certainty. Bottom-line, the smaller the fields, the less +EV plays you'll find/wager. The larger the fields, the more +EV you're apt to find/wager.....It's all about being able to churn enough +EV plays that brings in more overall handle to the game, and more sustainability to the player.....
Small fields are killing the player who can't find enough value plays, which kills the handle, thus killing the game.

[highnote]

Originally Posted by ReplayRandall

Small fields are killing the player who can't find enough value plays, which kills the handle, thus killing the game.

That is only true if players are unable or unwilling to learn how to properly price the horses in a small field. A 3-1 shot in a 6 horse field has the same chance of winning as a 3-1 shot in a large field.

The question was about two handicappers of equal ability.

If handicapper A can only handicap large fields and handicapper B can handicap large and small fields then B will find value more often. But in this case A and B are no longer equal. B is able to diversify.

But when they both bet in larger fields they will still come out the same.

However, if A bets in small fields with 17.5% and B bets in larger fields with 15% takeout, then B will come out ahead in the long run, all else being equal.

There is no question that lower takeouts helps the player. Lower takeouts also means players stay in the game longer even if they lose over time.

[highnote]

Originally Posted by Andy Asaro

Ca is the best example. We brought them to their knees. They were on pace to be down 400 million and ended up down 250 million only because Hollywood Park put in the 14% P5. That effectively ended the boycott. No doubt in my mind that we can hurt Keeneland badly if they make the effort. HANA should go down swinging with their best effort if they want to have any respect after this.

If HANA members were serious activists there are things they could do to try to get Keeneland to move in the direction of lowering takeouts.

But I know the people who run HANA and they're never going to take dramatic measures.

Here's a hypothetical example of what they could do. I'm not saying they should use this. I'm just using it to demonstrate the point.

Let's start with the old adage is "The enemy of my enemy is my friend."

Who is the enemy of horseracing? PETA.

HANA could coordinate with PETA to protest at Keeneland. This would raise awareness. HANA could say that they are going to join PETA and encourage protests every day of the spring and fall meetings until Keeneland lowers the rates.

I have no idea if this would work, but you get the idea. If you want to force change then play hardball.

But here's the thing... I think the people who run Keeneland are good people. I think the horsemen are good people. I think raising the takeout was a mistake. The former CEO Nicholson got along with HANA. It's the new guy that is raising the takeouts. Maybe it's not even his idea. Maybe it is the board?

I don't know. And frankly, I don't give a damn. I don't bet there.

But I do find the discussion stimulating. So that's my motivation. And if I can help the tracks, horsemen, and valuebettors prosper then that's a cherry on top.

I don't want people laid off because handle is decreasing. I don't want to see horsemen go out of business because they're not making enough. I don't want to see bettors ripped off by high takeout. And I don't want bettors who are churning a profit to go into the red.

It only works if everyone benefits. Why should horseplayers' fortunes improve while horsemen's decline?

HANA should just keep drilling home the point that there are tracks with better wagering value. Give a list of them and promote them and try to drive handle to those tracks and do it relentlessly.

Let the market decide the winners and losers.

The only time to take drastic measures is when you're taken advantage of. You can't be taken advantage of when you have other wagering alternatives.

[Andy Asaro]

Originally Posted by highnote

If HANA members were serious activists there are things they could do to try to get Keeneland to move in the direction of lowering takeouts.

But I know the people who run HANA and they're never going to take dramatic measures.

Here's a hypothetical example of what they could do. I'm not saying they should use this. I'm just using it to demonstrate the point.

Let's start with the old adage is "The enemy of my enemy is my friend."

Who is the enemy of horseracing? PETA.

HANA could coordinate with PETA to protest at Keeneland. This would raise awareness. HANA could say that they are going to join PETA and encourage protests every day of the spring and fall meetings until Keeneland lowers the rates.

I have no idea if this would work, but you get the idea. If you want to force change then play hardball.

But here's the thing... I think the people who run Keeneland are good people. I think the horsemen are good people. I think raising the takeout was a mistake. The former CEO Nicholson got along with HANA. It's the new guy that is raising the takeouts. Maybe it's not even his idea. Maybe it is the board?

I don't know. And frankly, I don't give a damn. I don't bet there.

But I do find the discussion stimulating. So that's my motivation. And if I can help the tracks, horsemen, and valuebettors prosper then that's a cherry on top.

I don't want people laid off because handle is decreasing. I don't want to see horsemen go out of business because they're not making enough. I don't want to see bettors ripped off by high takeout. And I don't want bettors who are churning a profit to go into the red.

It only works if everyone benefits. Why should horseplayers' fortunes improve while horsemen's decline?

HANA should just keep drilling home the point that there are tracks with better wagering value. Give a list of them and promote them and try to drive handle to those tracks and do it relentlessly.

Let the market decide the winners and losers.

The only time to take drastic measures in when you're taken advantage of. You can't be taken advantage of when you have other wagering alternatives.

People don't like price gouging and corporate greed. All you have to do is let the public know that they are being gouged for no good reason. The Ad buy helps do that. If the polls hang around 25% that is a healthy commitment. The model for California with the Ad buys will do the trick and prevent Ca. from doing it. I had breakfast this morning in Solana Beach with some people one of whom is on the opposite side as me regarding takeout. This Keeneland thing emboldened the TOC. They had originally planned to make WPS 17% but the boycott stopped them. We can do it with Keeneland.

And by the way HANA should have been clear when this happened that they were going to do everything in their power to fight this. Instead we got mushy defensive statements

[ReplayRandall]

Originally Posted by highnote

That is only true if players are unable or unwilling to learn how to properly price the horses in a small field. A 3-1 shot in a 6 horse field has the same chance of winning as a 3-1 shot in a large field.

The question was about two handicappers of equal ability.

If handicapper A can only handicap large fields and handicapper B can handicap large and small fields then B will find value more often. But in this case A and B are no longer equal. B is able to diversify.

But when they both bet in larger fields they will still come out the same.

However, if A bets in small fields with 17.5% and B bets in larger fields with 15% takeout, then B will come out ahead in the long run, all else being equal.

There is no question that lower takeouts helps the player. Lower takeouts also means players stay in the game longer even if they lose over time.

Sorry, but you again missed the point and merely regurgitated what you said earlier.....You asked "So what's his point?", I then explain what you may have missed, and you're then going to tell me what the point was??.....Stop it already, I've wasted my time, and it probably won't be the last time I do.....Shades of convos with SRU still fill the air.

[AndyC]

[QUOTE=highnote;2206185]That is only true if players are unable or unwilling to learn how to properly price the horses in a small field. A 3-1 shot in a 6 horse field has the same chance of winning as a 3-1 shot in a large field./QUOTE]

Would you agree that there are races where no horse is priced as an overlay? Meaning that each horse is bet to less than fair value due to the takeout. Wouldn't the probability of such an event happening be greater with fewer horses to price than more horses to price?

If you can't agree to the above you must believe that large fields yield more accuracy when valuing horses. A Kentucky Derby field of 20 would have no more value errors made by the bettors than a 6 horse field.

[highnote]

Originally Posted by AndyC

Would you agree that there are races where no horse is priced as an overlay? Meaning that each horse is bet to less than fair value due to the takeout. Wouldn't the probability of such an event happening be greater with fewer horses to price than more horses to price?

If you can't agree to the above you must believe that large fields yield more accuracy when valuing horses. A Kentucky Derby field of 20 would have no more value errors made by the bettors than a 6 horse field.

That's actually a tricky question. Let me think about it. I've got a longer reply to RR that you might be interested in. Posting it in a second.

[highnote]

Originally Posted by ReplayRandall

Sorry, but you again missed the point and merely regurgitated what you said earlier.....

If that was his point and you agree with him you are both incorrect.

You wrote:

Originally Posted by RR

A player who's well versed at assessing lines/value, will benefit from larger fields in the long-term, this is an absolute certainty.

That is not a true statement. If you can asses a line and value then it doesn't matter how many horses are in the field.

Here is the math:

Let's say Bettors AA and BB both have a 3% advantage over the course of a year.

AA only bets 6 horse fields. BB only bets 12 horse fields.

The average odds in a 6 horse field are 4.99. This is 1/6 = 0.167 is the average chance of winning at random.

1.00 - 0.167 = 0.833. This is the chance of losing at random.

Odds are 0.833/0.167 = 4.99.

On average AA will have a 3% advantage betting on 4.99/1 shots.

When AA bets a 4.99/1 shot the public says it has a 0.167 chance of winning. AA says it has a 0.197 chance of winning. That is 3% better than the public.

If the horse has a 0.197 chance of winning then it must have a 0.803 chance of losing. AA says the horse should have odds of 4.08/1. The public says it should be 4.99/1. AA has a 3% edge and will make a bet.

Optimal Kelly is edge divided by expected payoff (or odds) times bankroll. AA will bet (0.03/4.99) x 1000 = $6

If AA wins the bet he will make $6 x 4.99 = 29.94.

If he makes this bet 100 times he will win 19.7 times out of a hundred and lose 80.3 times out of a hundred. So 19.7 x 6 = 589.2. He will lose 80.3 x 6 = 481.80. His profit after 100 bets will be 108.20.

Let's do the math for BB.

The average odds in a 12 horse field are 11.05/1. 1/12 = 0.083. 0.917/0.083= 11.05/1 odds.

When BB bets a 11.05/1 shot the public says it has a 0.083 chance of winning. BB says it has a 0.113 chance of winning. That is 3% better than the public.

If the horse has a 0.113 chance of winning then it must have a 0.887 chance of losing. BB says the horse should have odds of 7.85/1. The public says it should be 11.05/1. BB has a 3% edge and will make a bet.

Optimal Kelly is edge divided by expected payoff (or odds) times bankroll. BB will bet (0.03/11.05) x 1000 = $2.70

If BB wins a bet he will collect 2.70 x 11.05 = $29.84.

If he makes this bet 100 times he will win 11.3 times out of a hundred and lose 88.7 times out of a hundred. So 29.84 x 2.70 = 338.32. He will lose 88.7 x 2.70 = 239.49. His profit after 100 bets will be 98.83.

AA's profit is $108 and BB's is $98.

There are some rounding errors, but AA is slightly better off with a 3% advantage in a 6 horse field than BB having a 3% advantage in a 12 horse field.

Now you can come up with all kinds of scenarios. But my argument was that the handicappers were of equal ability. I thought they would have equal outcomes, but it turns out I was wrong.

It is actually more profitable to bet on small fields than on large ones, all else being equal.

[GMB@BP]

Am I the only one that thought that article was written from a pro-track perspective. Seemed like the reporting slanted that way and when there was opinion it seemed to side with the tracks.

Maybe thats my negative view of the press.

[thaskalos]

Originally Posted by highnote

It is actually more profitable to bet on small fields than on large ones, all else being equal.

If that's what you really believe, then you are in luck. Because the fields are guaranteed to get even smaller.

[Fager Fan]

Originally Posted by cj

Yep, this too. When purses go up, so do feed costs, lasix costs, vet visits, day rates, etc.

Not necessarily. Good trainers generally charge about the same amount whether in NY or CA or somewhere else. In any event, purses have zero effect on what the costs of farriers, feed, etc are.

[AndyC]

Originally Posted by highnote

......That is not a true statement. If you can asses a line and value then it doesn't matter how many horses are in the field....

I have a program that assesses lines with 100% accuracy 100% of the time. I wait until the public assessment (the odds) differ from my line so that my bet results in a positive expectation bet. Do you think that the public makes more mistakes with a big field or a small field?

My ability to assess a line has to be coupled with a mistake by the public relative to my assessment in order to produce a bet. The ability to just assess a line only yields a bet when the public has made an error. Simple probability will tell you that the more chances there are to make an error the more errors there will be.

[GMB@BP]

Man this topic has really gotten sidetracked...seems like this should be a separate discussion.

[ubercapper]

Originally Posted by Andy Asaro

People don't like price gouging and corporate greed.

Are you aware they put in $6 million a year for purses above the contract with horsemen (which I take to mean as not coming from handle) and that wasn't sustainable according to the initial story?

If you were aware of that subsidy (for lack of a better term) and reason for it, as well as, even with the added money, purses weren't competitive with some other tracks, what would YOU recommend to address the issue of having to add millions of dollars annually to be competitive with other tracks that run at the same time time of year?

I'm sure you will agree coming up with solutions is as important as raising issues. Honestly I don't have answers myself but I am hopeful you might have some ideas for solving the issue of purse inequity (which can lead to field size declines from one track to another) considering your intimate knowledge about how tracks operate.

Lastly, I don't understand how this can be labeled as corporate greed if the money is flowing back into purses, and therefore to trainers and their staff, jockeys and others that benefit from the trickle down effect of a vibrant racetrack economy.