Two Interesting Articles

[PaceAdvantage]

One on out of state bettors NOT flocking to bets with lower takeouts at NYRA:

http://www.drf.com/news/article/31141.html


The other about California allowing trace levels of clenbuterol in post-race urine samples:

http://news.bloodhorse.com/viewstory.asp?id=5562



==PA


PS. The above links may go bad after a few days....if so, you're on your own!! LOL

[Barchyman]

I had recently commented to Randy Fozzard, the CEO of our local track (Turf Paradise), that I wished that he would take some initiative to lower the takeout here (20% on win bets, more on others). He's been a very fan-friendly executive with the steps that he's taken in his nearly 2 years in office, and this seemed like the most fan-unfriendly thing remaining.

He replied that he had not seen enough supporting evidence that decreasing takeout would actually make a difference. I was waiting for him to reconsider based on what would happen at Saratoga this summer.

This article was a frustrating read.

Tom

[andicap]

The drug issue is interesting. For now it's just a proposal and its backed by some scientists who say there's no evidence the drug clenbuterol enhances performance. It does help horses breathe better.

If a drug doesn't enhance performance why ban it -- unless it masks the use of other drugs?

[karlskorner]

PA

Thank you for posting the article regarding "takeout"

I hope all the people who were on my case a week or so so ago about how 10% takeout was going to "save" racing read this. The so called experts (never been to a race track) are befuddled, must be the economy. To quote the economist at U. of Louisville "It's very hard to look at in isolation. The only thing you do know is that if takeout is reduced, people will wager more, SO SOMETHING MUST BE GOING ON' (never been to ar racetrack, but his statistics (which are never wrong) say it must happen}

Or how about the favorite of all bettors, the exacta, commingled wagering has actually DECREASED, forcing NYRA officals to search for answers, at AQU wagering on exotic bets has plummeted 17.8 percent compared to last year.

Think I'll go back and re-read some of those posts.

Karl

[PaceAdvantage]

I think the fact that ON-TRACK patrons have markedly wagered MORE on the lowered takeout bets says a LOT.

Calling this experiment a less then successful one at this point is premature in my opinion. Perhaps NYRA hasn't done a good enough job advertising its lower takeout to out of state patrons??

Why would there be such a disparity between on track and out of state patrons?? Afterall, I would say a majority of on-track patrons are NOT hardcore track regulars at Saratoga. It's a very touristy track as you know.

I think it may have more to do with off-track ignorance rather than off-track apathy.


==PA

[Dave Schwartz]

PA,

I think you got that "ignorance vs. apathy" exactly right.

After re-reading the article, I think they are missing the point of WHY lower takes will increase revenues.

It is not because they public consciously says, "I'm going to bet more." The horse racing public is not going to suddenly start making $22 bets instead of $20 bets.

It is because they get to play more often... they run out of money less often so that get an extra day or two at the track.

It worked on-track because the bettors physically at Saratoga wager primarily on Saratoga and their daily bankrolls reflect the change. Off-track bettors are more likely to be wagering on other tracks as well so that the change has little impact on their daily bankrolls.

As for why the off-track handle decreased I would say that this is a sign of the times. It is a financial jungle out there. My guess would be that the handles would have decreased even more if it weren't for the change.



Regards,
Dave Schwartz

[karlskorner]

PA

I think you answered your own question. The crowd at Saratoga is mostly tourists, the word "takeout" is something you get from McDonalds. But from Ernie Dahlman on down, every wiseguy, sharpy, tout, big spender etc. knows about the reduced "takeout" at Saratoga. A 1% "takeout" reduction to a person like Dahlman is a years salary to most people and then some.

I think they stumbled and it won't be long before NY legislators ease that sucker back up again.

Dave;

To quote you "It is because they get to play more often"
as I stated some posts back, all the reduced "takeout" does is extend the life of the "bankroll", what they don't get today, they'll will get tomorrow. Since the bankroll is a set amount it will just take a little longer.

To quote again "Off-track bettors are more likely to be wagering on other tracks as well so that the change has little impact on their daily bankroll" Re-read some of the posts on the subject 10 days ago, everbody was going to put their monies into the Saratoga pool, because of the reduced "takeout" Of course we represent a minute portion of the bettors out there, but we are a statistic (love those statistics)

Karl

[tanda]

Several thoughts:

1) Takeout reductions coincided with handle increases at Hawthorne,

2) Takeout reductions coincided with handles increases at Churchill and Gulfstream a few years ago,

3) Tax rate decreases have consistently led to increased taxable revenue/handle when governments have instituted those polices, both in the U.S. and abroad,

4) Takeout is the price of a wager, the fee charged to wager. To argue that the take does not affect handles is the same as arguing the price of an Accord does not affect sales. It is ludicrous to suggest that the same people buying Accords would buy them if the price became $100,000 per car. There is theoretical and empirical evidence that establishes that, all things being equal, lower prices must lead to increased sales. Many may not think of the take as a price, but it is. It is the fee, along with breakage, charged to place a wager. When Saratoga takes 14% of win wagers that is no different then if they posted a sign that said "There is a wager fee of 14 cents for every 86 cents wagered charged a the price to make a wager.

Yes, the price of wagers is hidden in many ways. And yes, many buyers of wagers are not bargain shoppers when it comes to wager prices. But a lower take must have some affect in the long run. The laws of economics are just as permanent as the law of gravity and the laws of economics affect all economic activity, including horseplaying.

5) Dave's point that the take allows players to play longer is correct. Therefore, uniform industry wide takeouts should lead to a general increase in handle because more money remains in circulation to churn. Each dollar can be bet more often before it is lost. Also, more winners, who never go bust and bet ad infinitum/until death, will exist.

However, the take has track specific handle increase benefits in that a track with lower prices should attract business from rival tracks with higher takes. Those increases come at the expense of another tarck, thus do not necessarily lead to industry wide handle increases.

A track with better pricing should, therefore, benefit from bith types of handle increases.

6) Karlskorner seems to be continuing to take the position that the same people lose with a lower takeout as with a hiogher takeout. If so, he is plain wrong. Would the same percentage of people win with the current take if it became 90%. Or how about 0%. Let us suppose that 99% of players lose money in the long run (98-99% are the numbers I have read). Does anybody seriously believe that if the take became 0%, then only 1-2 % could make money? I hope not.

A player's R.O.I. is determined in the following manner:

EOC = edge on crowd
T = takeout
B = breakage

ROI = EOC - (T +B)

Any decrease in T MUST increase ROI if all other things remain equal. Also, no matter how good you are (how high your EOC is), there is some point where all winners must become losers. Also, there is some point where all losers must become winners (for example if the takout became an "add-in" and money was actually added to the pools).

Any player who beats the crowd by 5% is a loser now. If the take became 0% with no breakage that player would become a winner.

A take dcrease turns any unprofitable players AT THE MARGIN into winners.

Karlskorner suggests that any winner at 15% take will win at 20% take. If so and assuming Karlskorner is a winner, I would challenge him to prove he could continue to win at a higher take, for example 50%. If take is irrelevent as he suggests, he ought to be able to do it.

7) It is dangerous to draw conclusions from one partial meet. It would be surprising if in the long run the take decrease did not lead to increased handle, but exceptions do occur. There are days even weeks when favorites do not win at 33%, that does not change the fact that in the long run they do win at that rate. Also, we do not know that all things remained equal. For example, if the handle remained stable with take decrease that could be evidence that the take actually increased handle over what it would have been otherwise. If there was some other factor that but for the take decrease would have decreased handle by 5%, then the fact that handle satyed the same means that the benefits of the take decrease were enough to offset the other effect.

When analyzing these problems, is is absolutlely FALSE to ask: How much did the handle change? as the question to determine the take effect.

The correct question is: How much did the handle change over what it would have been if the take had not changed? These are very different questions.

We know the handle did not change, we do not know how it changed relative to what it would have been with no take decrease.

8) Finally, if take does not matter, then why not make the take 100%. After all, the same people will still bet and the same people will still win. The tracks and horsemen make more money. Everybody is as well off or better. What a plan! Or does it have a flaw?

[takeout]

Originally posted by karlskorner
PA

I think you answered your own question. The crowd at Saratoga is mostly tourists, the word "takeout" is something you get from McDonalds. But from Ernie Dahlman on down, every wiseguy, sharpy, tout, big spender etc. knows about the reduced "takeout" at Saratoga. A 1% "takeout" reduction to a person like Dahlman is a years salary to most people and then some.

I think they stumbled and it won't be long before NY legislators ease that sucker back up again.

Here's the beginning of an article that was in DRF on 7-1-95 entitled "Big Apple exodus looms":

__________________________________________
NEW YORK - When the horses reach the finish line in the season's opener at Saratoga, the takeout on exactas, quinellas and daily doubles will soar from 17 to 20 percent in this state.
__________________________________________

Sounds to me like they just put the takeout back where it was.

One of Ernie Dahlman's quotes in the article, was: "It's a free country, and I believe in free enterprise. I can go elsewhere."

[takeout]

Originally posted by tanda

Finally, if take does not matter, then why not make the take 100%. After all, the same people will still bet and the same people will still win. The tracks and horsemen make more money. Everybody is as well off or better. What a plan! Or does it have a flaw?

I think Brunetti already tried that one.

[Tom]

I don't think just kowing that the take out is lower is going to lure very many people at all. I think you are giving people way too much credit for their thought processes. What will eventually improve the handle is that over time, not so many will be broke, and theat the odds are better with a lower take. This thing will take time to evolve. I bet less than 1% of the bettors even know what the take is, let alone consider it. After a while, though, when simulcast palyers start getting 2-1 on horse they used to get 8-5 on, they will be betting NYRA more often and when they do, they will keep enough cash to come back. But this will take time-give it at least a year. NExt time your at the track or OTB, look at the majority of people playing and then ask yourself,
does this guy know or care about anything beyond the 2-4-8 in this race?
Tom

[andicap]

Karl, you are missing Dave's point. If I can play blackjack for two hours instead of one hour I will pass more money (handle) through the tables. Therefore the state will make more money even though I will lose the same amount.
The state and horsemen get a percentage of the handle, not a percentage of my losses.

[harpowitz]

E. Dahlman was a fixture at the Suffolk County OTB Teletheater. He had his own room, separate computer facilities, telephone,etc. When he decided to pack up and leave for Las Vegas, the local newspaper, Newsday, ran a lenghty article, the point of which was that Mr Dahlman's action represented 1/3 rd of Suffolk's OTB handle. His stated reason for leaving was the increase of 3% by the state in takeout on exactas. I doubt anyone can convince OTB officials out here that the amount of takeout is meaningless

[Dave Schwartz]

Harpowitz,

Bravo! And that is how we, the handicappers, must react in order to force change: to take our action to the tracks with the lower takes.

Unfortunately, that is not how we (as a group) react.


Regards,
Dave Schwartz

[takeout]

Originally posted by harpowitz
His stated reason for leaving was the increase of 3% by the state in takeout on exactas. I doubt anyone can convince OTB officials out here that the amount of takeout is meaningless

Agreed. And the other "betting behemoth" in the '95 DRF article, David Hardoon, bet at the track. Doesn't the track make more money if you bet there instead of simulcast? For some reason tracks seem to love to run off their best customers.