How low could takeout actually go while still having enough left to run the show?

[dilanesp]

Originally Posted by cj

If it cost too much to put on the show, find ways to make the show cheaper. Certainly some excessive costs in racing.

Most of the costs involve land, labor, and animals.

They HAVE cut costs. They closed racetracks and made a lot of people bet major tracks. That spreads the cost over additional bettors.

What people here don't seem to get is that this makes the takeout more important, not less, because it is now the only relevant revenue stream.

[dilanesp]

Originally Posted by Stillriledup

What it really comes down to is that there are too many tracks and not enough customers. With simulcasting now, its like you have twenty 7-11s within a 3 block cyber space radius, before simo each track was its own island, if you wanted to bet there, you had to physically go there. Now, with simo there's no need to physically go to the track to get down.

As far as lowering the cost of the show, trainers and jocks are all replaceable, not one of them would hurt the game financially if they retired tomorrow, so by supply and demand, they seem to be making more money than 'replaceable' people should be making and some of that money could go back into the game, owners wouldnt have to share their purses with trainers and jocks and those skilled laborers would just work for what the market would bear.

Jocks should be able to undercut other jocks in fees, no standard fee, no need for it, if a jock is riding a grade 1 horse in a 5 million dollar race, another jock can call those connections and say he or she will ride for 1 or 2 percent less....and they can bargain and let the market set the price with the savings going to the owners. More money for owners means more owners can survive in the game and that's good for overall health. A jock making a million or 2 salary for the year doesnt help the game at all, its just money coming out of the pockets of owners.

In practice, I suspect the thing that prevents that is the owners' perception that a good jockey increases their chances of winning the race or finishing well.

[dilanesp]

Originally Posted by Seabiscuit@AR

They tell us that rebaters make up 20% of the pool in some places and get 10% rebates. Based on this you could cut takeout by 2% for everyone at no cost if you removed the rebates

Airlines could cut coach fares by eliminating frequent flyer programs. They don't, because they would lose frequent flyers....

[cj]

Originally Posted by dilanesp

Most of the costs involve land, labor, and animals.

They HAVE cut costs. They closed racetracks and made a lot of people bet major tracks. That spreads the cost over additional bettors.

What people here don't seem to get is that this makes the takeout more important, not less, because it is now the only relevant revenue stream.

What racing doesn't seem to get is that a lower percentage of a much bigger number is better than a higher percentage of a smaller one.

There are plenty of areas where costs can still be cut. Most plants are far too big and have way too much overhead for the amount of people attending, for starters.

[FocusWiz]

Originally Posted by alydar

And how would removing rebates increase handle?

I think that this is a problem with most social systems. The far-reaching impact of any change envisioned as a "solution" is never truly known and it appears that we do not have the capacity to accurately predict the overall impact.

If nothing else changes and you cut the rebates, it would appear you could spread that wealth among the remaining wagers and can reduce takeout. However, if the "rebaters" go elsewhere with their money, the handle gets reduced. If at some point it gets reduced to the point where the tracks may think they need to increase takeout, the opposite of the goal is reached. The increased takeout will cause even more players to defect. However, if the reduced takeout attracts new wagerers and the handle increases beyond what it was prior to losing the "rebaters," there might be a possibility that takeout can be even further reduced, attracting more new players.

My guess is that a 2% decrease in takeout would not be noticed by the general public and would not attract new business. It might increase the wagers of the 80% of the "non-rebaters" but I question whether that increase in handle would be sufficient to offset the reduction in wagering by the "rebaters."

My other guess is that many of the "rebaters" who are able to achieve a 10% rebate are using the rebate as a cushion to either offset small losses or ensure a significant return. If they are somewhat sophisticated in how they handle their money, losing the rebate will more likely encourage them to invest elsewhere.

[dilanesp]

Originally Posted by cj

What racing doesn't seem to get is that a lower percentage of a much bigger number is better than a higher percentage of a smaller one.

There are plenty of areas where costs can still be cut. Most plants are far too big and have way too much overhead for the amount of people attending, for starters.

I will walk you around Santa Anita sometime. You can tell me what you would cut, and I will patiently explain why you can't.

Santa Anita was managed by a bankruptcy court for a time. Trust me, all cuts that could be made were.

Finally, I see a ton of horseplayers assert the price elasticity of takeout. It reminds me of supply side economics.

Nobody doubts that cutting takeout could increase handle. The question is how much, and will the track still be able to meet its purse and tax commitments and make more money doing it.

That's a much more complex question than people would like it to be.

[dilanesp]

Originally Posted by FocusWiz

I think that this is a problem with most social systems. The far-reaching impact of any change envisioned as a "solution" is never truly known and it appears that we do not have the capacity to accurately predict the overall impact.

If nothing else changes and you cut the rebates, it would appear you could spread that wealth among the remaining wagers and can reduce takeout. However, if the "rebaters" go elsewhere with their money, the handle gets reduced. If at some point it gets reduced to the point where the tracks may think they need to increase takeout, the opposite of the goal is reached. The increased takeout will cause even more players to defect. However, if the reduced takeout attracts new wagerers and the handle increases beyond what it was prior to losing the "rebaters," there might be a possibility that takeout can be even further reduced, attracting more new players.

My guess is that a 2% decrease in takeout would not be noticed by the general public and would not attract new business. It might increase the wagers of the 80% of the "non-rebaters" but I question whether that increase in handle would be sufficient to offset the reduction in wagering by the "rebaters."

My other guess is that many of the "rebaters" who are able to achieve a 10% rebate are using the rebate as a cushion to either offset small losses or ensure a significant return. If they are somewhat sophisticated in how they handle their money, losing the rebate will more likely encourage them to invest elsewhere.

Basically correct. Rebates are a frequent flyer program. They reward a customer who is sensitive to their benefits while slightly increasing the price the rest of us pay.

They are also regulatory arbitrage, which only can work if most people don't use it.

[cj]

Originally Posted by dilanesp

I will walk you around Santa Anita sometime. You can tell me what you would cut, and I will patiently explain why you can't.

Santa Anita was managed by a bankruptcy court for a time. Trust me, all cuts that could be made were.

Finally, I see a ton of horseplayers assert the price elasticity of takeout. It reminds me of supply side economics.

Nobody doubts that cutting takeout could increase handle. The question is how much, and will the track still be able to meet its purse and tax commitments and make more money doing it.

That's a much more complex question than people would like it to be.

I think people understand the complexity, but they also understand that raising the takeout DOES NOT WORK. Check handle lately? If it weren't for rebates, racing would be approaching harness racing levels by now. What are rebates? Takeout cuts. Daily Doubles in California were cut and the resulting handle increase more than made up for the 2% cut in takeout rate. So what happened? They were raised back up the next meet. So please, spare me.

As for the plants, you point to one that you say can't be cut. It is one that hosts the Breeder's Cup often. There are tons of others where this isn't the case. They are far too big and costly for the business they generate. I would even argue that keeping plants of size (like Santa Anita) for one or two days a year, and that is only for some years, is silly. The tracks don't even make out very well on those days financially.

Cuts are hard, but they are do-able. I saw massive cuts in the budget of the Air Force during my time. There were always cries of doom and gloom and explanations of why it couldn't be done. Guess what? Jobs still got done, and done so more efficiently.

I don't believe for a second there isn't plenty of fat to trim at Santa Anita. I'm sure there are jobs that could be eliminated, or combined with others. They could race less, which judging by field size they should. And we know that can be done, because the five and six day a week calendar has already been trimmed to four and sometimes even three.

[therussmeister]

Originally Posted by cj

If it cost too much to put on the show, find ways to make the show cheaper. Certainly some excessive costs in racing.

For starters they could use dogs instead of horses. Monkeys instead of human jockeys.

[Robert Fischer]

Horse racing is either run by fellows who are ignorant of the media, or there are unwritten laws keeping horse racing out.

[cj]

Originally Posted by therussmeister

For starters they could use dogs instead of horses. Monkeys instead of human jockeys.

Yeah, because that is what I was saying.

[dilanesp]

Originally Posted by cj

I think people understand the complexity, but they also understand that raising the takeout DOES NOT WORK. Check handle lately? If it weren't for rebates, racing would be approaching harness racing levels by now. What are rebates? Takeout cuts. Daily Doubles in California were cut and the resulting handle increase more than made up for the 2% cut in takeout rate. So what happened? They were raised back up the next meet. So please, spare me.

As for the plants, you point to one that you say can't be cut. It is one that hosts the Breeder's Cup often. There are tons of others where this isn't the case. They are far too big and costly for the business they generate. I would even argue that keeping plants of size (like Santa Anita) for one or two days a year, and that is only for some years, is silly. The tracks don't even make out very well on those days financially.

Cuts are hard, but they are do-able. I saw massive cuts in the budget of the Air Force during my time. There were always cries of doom and gloom and explanations of why it couldn't be done. Guess what? Jobs still got done, and done so more efficiently.

I don't believe for a second there isn't plenty of fat to trim at Santa Anita. I'm sure there are jobs that could be eliminated, or combined with others. They could race less, which judging by field size they should. And we know that can be done, because the five and six day a week calendar has already been trimmed to four and sometimes even three.

They have already cut racing, a lot. 4 day weeks, 8 race cards, 1 week breaks, etc.

Santa Anita is not allowed to lop off half its grandstand. It's a historic landmark. They have layed off ushers, mutuel clerks, ticket takers, and maintenance staff.

This. Is. Not. That. Simple.

[Robert Fischer]

Originally Posted by dilanesp

I have had arguments with expert poker players who studied the game for years about the stock market and sports betting. Even people who know better are convinced they can beat things they really can't.

Barnum, Arthur Miller, and The Honeymooners were right. Even smart people will always convince themselves that they can make easy money.

And people are the same way about their improvement suggestions.
We all think we know it all.

[classhandicapper]

This is a idealistically delusional idea because it won't happen, but the state should not being getting a flat percentage of the handle. Tracks should be taxed on their profits (if they earn any) like other businesses.

With states taking a huge chunk of "take" right off the top, there is very little wiggle room to reduce the track take for players even if a track is well run because some of the costs are clearly fixed and racing is a low margin business.

The way things are organized is ridiculous.

[Robert Goren]

When I first started betting, the takeout was 12% and 5% of that of was tax. Figuring that state needs 1% to pay for the regulation of the sport, I would say that an 8% takeout is the most sport needs. It could be less. One thing could go right away is the outrageous stud fees and yearling prices. I don't need to bet on 100k yearlings at age 4 running in 10k claimers.
There is a new business model emerging with computer betting. The tracks have been slow to embrace it and in some case have actively opposed it. That is really sad. We don't need huge grandstands and acres of parking places anymore. Smaller is better right now. Do things for the computer bettors like multiple web pages for each race. One always on the horses. One on exactas and another on pools. I would rather have that than an extra thousand in purse money in failed attempt to turn a six horse field into a seven horse field.