How Racetracks could increase on track attendance

[Jeff P]

At this point I don't think the concept of takeout and elasticity is lost on track operators. Many of the people I've talked to in the industry would be in favor of giving lower taleout a try. Many still aren't. And some won't even take my calls to talk about it.

One of the problems, as I see it, is that no one entity in racing has the power to make decisions.

As an example, I own a racing related business, JCapper... and even in a down economy - I've quitely had a pretty good year. I call the shots, but I answer to the customer. The shots that I call tend to be driven by customer needs and wants. The point I'm trying to make is that the business of racing customers is out there to be won... provided you satisfy their needs and wants.

In most if not all cases, the race track operators in favor of takeout reduction can't call their own shots. They can't decide on their own to just reduce takeout. They have to sell the idea to horsemen - and in many jurisdictions politicians. Historically, it has been really tough to get tracks, horsemen, and politicians to agree on just about everything.

Then there's the infighting that goes on between different groups withing the industry. Last year I talked with people on both sides of the TOC/THG vs. Tracknet signal impasse. And recently I've talked with people on both sides of the NYRA vs. Mid Atlantic Coop and the Tracknet vs. Mid Atlantic Coop signal impasses. A couple of days ago I found myself in the middle of a spat between NYRA and Equibase over NYRA's refusal to use Equibase's new Scratches and Changes system... (NYRA being the only organization out there that has so far refused to use the free system that Equibase created for the benefit of players.)

I can tell you that a lot of badwill exists among the parties in these disputes... Enough badwill that it gets in the way of bringing about positive change that would benefit everybody. Many of the conversations I've had literally reminded me of playing the role of an adult who has just separated two 8 year olds from a fight and having to listen to both of them explain through tears what the other other one did first... I'm not kidding about this - and I'm talking about grown men.

Several years ago, Keeneland tried to do a real reduced takeout experiment. The badwill between competing tracks boiled up and the entire Mid Atlantic Coop decided not to allow Keeneland's signal at their outlets. Like I said... 8 year olds.

To really make positive change happen, a majority of the decision makers have to be on the same page.

I can say without question that raising awarenes and doing it in a positive manner is having an effect.


-jp

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[Horseplayersbet.com]

Originally Posted by Show Me the Wire

I will give you one great example of a more influential variable. The poly surface in Cali, there is so much vitrol, about this variable, not even a reduction in take out would bring these poly haters to the table.

Wagering is based on many variables other than take out. An equality equation between take out and increase in handle or attendance is a false premise.

Wishful thinking on any one's part, that take out is the primary factor in wagering decisions.

What is it you don't get? It is not the primary factor in the decision of most bettor's wagering decisions. Their bankroll and their expectations are though. The amount of time they spend thanks to how much they cash when they cash is huge in determining whether a player bets or not. All this has to do with takeout, but it isn't about actually thinking about takeout.

[Show Me the Wire]

Exactly you don't get your own point. If the player has no expectation of winning (poly is unplayable) he is not going to wager, because the take out is low.

Therefore, reducing take out is not going to necessarily increase handle or increase attendance, because there is no expectation of winning.

The premise is false as I stated earlier.

[Horseplayersbet.com]

Originally Posted by Show Me the Wire

Exactly you don't get your own point. If the player has no expectation of winning (poly is unplayable) he is not going to wager, because the take out is low.

Therefore, reducing take out is not going to necessarily increase handle or increase attendance, because there is no expectation of winning.

The premise is false as I stated earlier.

People do play the poly. By reducing takeout, they will play longer and bet more money over time than they do now. Sure, there will still be some who won't bet poly if the takeout were 10%, but they aren't betting it now.
Most bettors bet poly though.

Your argument is like saying if slots takeout were 16%, reducing the takeout to 8% won't matter because a lot of people just won't play slots. The reality is they make more money at 8% bottom line than they do at 16%.

[DeanT]

Originally Posted by Show Me the Wire

Exactly you don't get your own point. If the player has no expectation of winning (poly is unplayable) he is not going to wager, because the take out is low.

Therefore, reducing take out is not going to necessarily increase handle or increase attendance, because there is no expectation of winning.

The premise is false as I stated earlier.

I think you are missing the gross dollars versus gross players part in this. If takeout is lowered at SAX I will bet more, a ton more. So will everyone else who plays there because they will bet until they have no edge. $20 bets would become $50 bets and so on. If 5000 horseplayers ignore it because of the surface, there are thousands of others who take up that slack with more dollars.

Regards,

A Former poly hater who now plays them

[Show Me the Wire]

No my argument is a reduction in take out does not guarantee an income stream to cover the expenses of operation.

Look at it this way. Reducing take out is similar to placing a specific product on sale. The price reduction is more than likely the result of low demand for the product. Decreasing the price will not automatically increase sales or profits, or it may increase sales but not profits, or accomplish nothing at all.

Basically, reducing price is not a very productive way to increase profit or attract new business. You attract new business and generate profits by a demand for the product or producing a substitute product to satisfy demand.

Reducing price is a way to clear out unwanted product, to make room for other profit making opportuntities. Unforunately race tracks only have one product to offer and cutting price is not the solution.

[Show Me the Wire]

Originally Posted by DeanT

I think you are missing the gross dollars versus gross players part in this. If takeout is lowered at SAX I will bet more, a ton more. So will everyone else who plays there because they will bet until they have no edge. $20 bets would become $50 bets and so on. If 5000 horseplayers ignore it because of the surface, there are thousands of others who take up that slack with more dollars.

Regards,

A Former poly hater who now plays them

Yes, you may induce loyal customers to spend more, but the additional spending may not be sufficient to cover the operational expenses.

The premise of equalizing reduced sales price to a corresponding increase in profit is false. If the premise was true, no matter how dumb you beleive mangement to be, managment would be reducing take out.

[Horseplayersbet.com]

Originally Posted by Show Me the Wire

No my argument is a reduction in take out does not guarantee an income stream to cover the expenses of operation.

Look at it this way. Reducing take out is similar to placing a specific product on sale. The price reduction is more than likely the result of low demand for the product. Decreasing the price will not automatically increase sales or profits, or it may increase sales but not profits, or accomplish nothing at all.

Basically, reducing price is not a very productive way to increase profit or attract new business. You attract new business and generate profits by a demand for the product or producing a substitute product to satisfy demand.

Reducing price is a way to clear out unwanted product, to make room for other profit making opportuntities. Unforunately race tracks only have one product to offer and cutting price is not the solution.

If the optimum price lower than the price being charged, then reducing the cost will optimize profits. That is economics 101.

Race tracks only have one product to offer, and that is gambling. And they have lost out to other forms of gambling not because people don't like to gamble, but because people have found other ways to gamble where they last longer or might even have a chance at winning.

Give players more return, and they will last longer, and still in the end lose at least as much as they would have without the takeout decrease....but my contention is that they might lose collectively more as they will spend more time focusing on horse racing. Plus the longer they spend picking horses, betting horses and watching races, the more likely they are to expose others in their personal universe to horse racing.....and you wind up growing the game.

It worked with poker, it works with Betfair, it could work with horse racing too.

[Show Me the Wire]

Originally Posted by Horseplayersbet.com

If the optimum price lower than the price being charged, then reducing the cost will optimize profits. That is economics 101.

Race tracks only have one product to offer, and that is gambling. And they have lost out to other forms of gambling not because people don't like to gamble, but because people have found other ways to gamble where they last longer or might even have a chance at winning.

Give players more return, and they will last longer, and still in the end lose at least as much as they would have without the takeout decrease....but my contention is that they might lose collectively more as they will spend more time focusing on horse racing. Plus the longer they spend picking horses, betting horses and watching races, the more likely they are to expose others in their personal universe to horse racing.....and you wind up growing the game.

It worked with poker, it works with Betfair, it could work with horse racing too.

It worked for poker, etc, because as you pointed out it impacted the expectations of winning and substituted demand (remember my earlier post about demand). Now you circled back to your best point, expectation of winning.. If there is no expectation of winning no amount of reduction can significantly overcome the zero expectation of winning.

Additionally, a reduced price does not generate an equal increase in profits.

And your definition is fine, as price defines demand. If the product costs you $10 and optimize price is $1. all the sales at a reduced price do not increase your bottom line.

Optimum price may guarantee a loss; it certainly does not always equal profit.

I said my piece. Keep on tilting at windmills if you wish

[Horseplayersbet.com]

Originally Posted by Show Me the Wire

It worked for poker, etc, because as you pointed out it impacted the expectations of winning and substituted demand (remember my earlier post about demand). Now you circled back to your best point, expectation of winning.. If there is no expectation of winning no amount of reduction can significantly overcome the zero expectation of winning.

Additionally, a reduced price does not generate an equal increase in profits.

And your definition is fine, as price defines demand. If the product costs you $10 and optimize price is $1. all the sales at a reduced price do not increase your bottom line.

Optimum price may guarantee a loss; it certainly does not always equal profit.

I said my piece. Keep on tilting at windmills if you wish

You are the one who completely misunderstands what I am saying. Luckily, Pace Advantage is full of intelligent readers who understand my points.

You are being disingenuous by twisting my words or putting words in my mouth.

By optimum price I clearly mean the price where the seller makes the most money. If you don't understand that concept, you have no business in this debate. I also suggest you buy a book on Economics for Dummies.

Again, all players, including slot players have an expectation of winning. It increases dramatically at an 8% takeout than at a 16% takeout even though they have no idea what takeout is, and in the long run have no chance of winning.

A question for you, are you purposely being disingenuous, or are you simply just ignorant?

[Horseplayersbet.com]

Show Me The Money. Explain in your own words why slots only take 8% and not 16% or 20%. Some experimented that high, but they don't do that anymore. Why do they charge only 8% on average?

[LRL Racing]

Tracks need to cater to the family and market it accordingly. Many of my families happiest moments came at tracks where we ate $1 hot dogs, $1 soft drinks and everyone bet $2 a race. You cannot get that value anywhere else for four or five hours. What does a professional sporting event cost and all you see are a bunch of steriod pumping overpriced ego maniacs, thugs, etc...
More things like jockey goggle giveaways, backside tours, picnic areas, playground slides, swings. Arlington, Oaklawn, Keeneland all do good because attending the races is the thing to do.
I love horseracing but unfortunately declining attendance threatens its existence and it is a very serious problem. Based on the grandstand sizes at Delaware, Belmont, Aqueduct there were alot of people attending the races whereas now they are not and it is a very serious problem.
Things change.

[Horseplayersbet.com]

Originally Posted by LRL Racing

Tracks need to cater to the family and market it accordingly. Many of my families happiest moments came at tracks where we ate $1 hot dogs, $1 soft drinks and everyone bet $2 a race. You cannot get that value anywhere else for four or five hours. What does a professional sporting event cost and all you see are a bunch of steriod pumping overpriced ego maniacs, thugs, etc...
More things like jockey goggle giveaways, backside tours, picnic areas, playground slides, swings. Arlington, Oaklawn, Keeneland all do good because attending the races is the thing to do.
I love horseracing but unfortunately declining attendance threatens its existence and it is a very serious problem. Based on the grandstand sizes at Delaware, Belmont, Aqueduct there were alot of people attending the races whereas now they are not and it is a very serious problem.
Things change.

Things have changed. The racetrack isn't the only game in town anymore.
And really the price of hot dogs and drinks is inconsequential when the real cost is when betting $200 and giving the track $40 in takeout and the fact that mooch money is gone, so most players are lucky if that is all they lose.
It makes it difficult getting them to come back. There are other ways to blow $80-100 on a Saturday or Sunday with the kids.
Winning gets people to come back. So does breaking even for that matter.

[Stillriledup]

The price of the gamble is really high. They are charging you 20 cents to make a 1 dollar bet, 40 cents to make a 2 dollar bet and so on. That's way too much. Its 1/5th.You have to pay them 1 bet for every 5 bets you make.

[Show Me the Wire]

Originally Posted by Horseplayersbet.com

Show Me The Money. Explain in your own words why slots only take 8% and not 16% or 20%. Some experimented that high, but they don't do that anymore. Why do they charge only 8% on average?

Demand for the product. And they are profitable at that range. Nothing different then I said in my earlier postings.

To clarify I am not saying take out does not effect the bettors bottom line.

Simple business:

Fixed costs and variable costs of operating the plant. Price reductions do not guarantee or generate more profit or guarantee enough income to cover costs. I have illustrated the above many times.

It is all about the demand. Price does not drive demand, demand drives price.

You have it backwards and the idea of corresponding increase in income equaling price reduction is a faulty premise.