Takeout on Thoroughbred racing – Yes, it’s too high!

February 7, 2014

 

CH HeadshotA survey of analytical studies and wagering articles from pari-mutuel jurisdictions around the world inevitably leads to the same conclusion: takeout rates for betting on Thoroughbred racing are too high. In the 2004 Player’s Panel Report, America’s National Thoroughbred Racing Association (NTRA) asserted, “Virtually all known studies of the dynamics of pari-mutuel wagering indicate an inverse relationship between takeout rates and handle, such that a reduction in takeout inevitably results in significantly greater handle.” If this is true (and I believe it is) then the high takeout rates in almost all Thoroughbred-racing jurisdictions are hurting the business and all of its participants. If nothing is done, racing will continue to lose customers to other gaming and leisure activities where they get more “return” for their money. So why haven’t industry leaders acted to reduce takeout? Good question. 

Reducing takeout is not as simple as shaving a certain percentage off the existing rate in question. In the modern era of simulcasting, customers routinely bet on multiple racecourses with different takeout rates and wagering menus. Additionally, account-wagering customers receive rebates that effectively amount to takeout reductions. In this environment, it is difficult for a single racecourse to reduce its takeout due to limited knowledge of when and where the benefit from the takeout reduction will occur. For this reason, it may seem counter-intuitive for racing executives to consider reducing the takeout as a strategy to increase revenue for wagering. Hence, no action.

Let’s examine the high racing takeout in my home market, New York state. From the advent of the New York State Off-Track Betting system in the early 1970s, there was constant pressure from the politically connected Off-Track Betting parlors (OTBs) to seek legislative increases to takeout rates at the three New York Racing Association (NYRA) tracks – Aqueduct, Saratoga, and Belmont. Politicians had no qualms about increasing takeout at the expense of the customer, and the way the system was set up, the OTBs had much to gain. The law was written so that if takeout at NYRA tracks was increased, the OTBs received 100 percent of the takeout increase for wagers made through their channels. The result: today NYRA has four different takeout rates for different types of bets with a total blended rate that exceeds 20 percent.

In 2001, the New York Legislature passed a law establishing “racinos” at six harness tracks and two Thoroughbred venues within the state. These racinos were allowed to operate video lottery terminals (VLTs) – effectively slot machines. Tellingly, when the takeout rate for these machines was established, the policy makers did not emulate racing’s high takeout rate and set the rate for VLTs at nine percent, where it remains today. In addition, the racinos all lobbied the Legislature to provide them with the option to provide additional “free play” for marketing purposes, which effectively reduced the takeout below the nine percent level. Fact: if the racinos charged 20 percent takeout consistent with racing, customers would quickly lose their money and have no incentive to return. As for other forms of betting, legalized sports betting is generally half the takeout of New York’s VLTs, and table games at casinos generally have takeout rates in the low single digits.

It has been argued that people who bet on horses are not takeout sensitive, and do not alter their wagering behavior based on takeout rates. While generally true, this is beside the point. The recent introduction of low takeout wagers – 14-15 percent for small denomination (50 cent) minimums on multiple leg wagers such as Pick 4’s and Pick 5’s – suggest that bettors will respond to lower takeout wagers. I accept that most betting customers are not overtly sensitive to takeout rates when they wager. However, that does not mean that they are unaffected by the higher takeout rate. 

In aggregate, a takeout reduction can have a material impact on the money returned to bettors for future wagers. If a track that handles $5 million a day were to introduce a three percent takeout reduction, bettors on that track would have an additional $150,000 in their collective pockets by the end of the day. Research suggests that a very high percentage of these additional funds would be bet back into the wagering pools as “churn.”

The concept of churn provides an opportunity to examine the complexities of tracking the impact of takeout reduction. For example, if a track operator reduces takeout by three percent in the off-track simulcast market of today, there is no guarantee that a customer will bet his or her increased winnings back into that track’s pool when there are so many other simulcast options available. Also, the types of wagers on which takeout reductions are offered may be slow in returning funds to the customer for another wager. A reduction in takeout in rolling daily doubles can be bet, won, and churned back into the wagering pools multiple times in a day, while a Pick 6 wager with a lower takeout will return money to the customer only once a day.  

A further complicating factor may be the liquidity or size of the pool that the customer is betting into. A large superfecta or trifecta pool at a track with a higher takeout may be preferable for some larger bettors to a track with a smaller superfecta pool and lower takeout. Account-wagering sites with large robotic players can also complicate the takeout for a particular racing jurisdiction. Racecourses welcome the high host fee that they receive from these customers. However, if these robotic players bet successfully, their winning wagers can have an increase in the effective takeout rate for the rest of the customer base. Also, the robotic player may not churn as much of their winnings back into the pool as the average player.

Why examine takeout rate issues? How does the topic relate to our goals at Thoroughbred Racing Commentary? This site was developed to promote best practices in Thoroughbred racing around the globe. On takeout, our plan is to contact experts on wagering activity and racing executives in racing jurisdictions worldwide to study this issue in detail with current data and relevant comparisons.  I would also invite any readers to make suggestions on related issues that we should consider. The goal will be to develop action plans that can be proposed for implementation in individual racing jurisdictions. The long-term hope is that our coverage of this issue will help industry leaders understand the economic benefits of a more competitive, lower takeout rate.

The articulation of takeout as presented here only scratches the surface and this piece is meant to be TRC’s introduction to the topic. Many other factors such as track “breakage,” fractional bets, field size, rebates, and bet types will have to be considered as well.

Once we have a better understanding of how one should proceed in implementing an effective takeout program, we need to study further how those takeout funds are distributed. This is an issue of increasing revenue for racing’s participants at every level. The proper distribution of takeout to racecourses, bet takers, purses, breeders, and government has a major impact on the financial well-being of the industry, and the perils of ignoring the issue are grave.

 

 

 

 

Comments

Gulch
February 11, 2014 5:32pm

Quite clearly, Chuck, had you been a man of conviction you would have lowered takeout instead of illegally violating state law and simultaneously going against what you now claim to espouse (if only for attention).

Further, when you cite as your source the very people who would gain most immediately from the lowering of takeout, that is akin to accepting the testimony of pedophiles on the subject of eliminating the laws which protect children.

Now it isn't "takeout" which has horse racing in the present-day mess it knows. We know this because "takeout" remains just about the same as it always was!!! Do I need to prove this to you, Chuck:

Comparing the 1975 Racing Manual to the 2013 HANA ratings reveals the following:

Track 1974 WPS Takeout 2013 WPS Takeout

Santa Anita 15.75% 15.43%

Saratoga 17% 16.00%

Gulfstream 17% 17%

Churhill Downs 15% 16%

Monmouth 17% - 19% - 25% (1, 2, 3-horse wagers) 17% - 19% - 25%

Now that we've settled that with REALITY, and not just hot air, lets move on.

Chuck, you are simply NOT THINKING clearly when you pen all of this drivel. The junk you are spewing forth here would apply to games like Keno, Roulette, and the like, because 'takeout' is your only control mechanism in such games. When (you were, anyway) in horse racing, which is both a game of skill, and a game with parimutuel wagering, it is grossly negligent to waste time and effort comparing 'the good old days' with the present while concluding that things which have remained constants are the causes for steep declines since those 'good old days'.

What if it's YOU, Chuck? What if YOU, in your role as track management, have butchered this thing to no end, and without showing the first hint of any will for correcting your own negligence?

You are simply NOT optimizing the vast benefits to the unique way that horse race wagering is set-up. This is all on you, Chuck, and on others of your ilk who have for far too long sat idly by while so unwilling to evolve logically.

You speak of wanting to evolve in areas where racing has nothing wrong, yet your head remains BURIED IN THE SAND where it concerns actually addressing what really matters in all things which are dooming horse racing.

Once and for all - forGET this damn "takeout" crusade and please instead try to apply yourself to common sensible solutions for helping horse racing to better present itself to the discerning public.

Charlie Hayward
February 12, 2014 1:11pm

Gulch,
Thank you for taking the time to write your opinion on the takeout issue.
I respectfully disagree with your position on takeout. I did not make any mention of "the good old days" of racing. However, since you bring it up, horse racing in New York had a complete monopoly on legalized gambling through most of the 1960's. Below is a chronological list of legal gambling businesses that have launched since 1967.

New York State Lottery: 1967
NY State Regional OTBs: 1971
Atlantic City casinos: 1978
Connecticut casinos: 1986
NY State racinos: 2004
Pennsylvania casinos: 2006
New York casinos: 2015 (projected)
There is no question that expanded legalized gambling in the New York region has had a negative impact on the total wagering on horse racing.

Thoroughbred racing needs to be more competitive in pricing its product to reverse declines in wagering.

Gulch
February 12, 2014 2:42pm

Charlie - nobody said you did make any mention of "the good old days" - those were not quote marks. I compared "1974" with "2014", Charlie, and thus things which took place in the 1960's, or even 1971 are not relevant. And furthermore, how could you even say or cite that statement which began "virtually all known studies of the dynamics of parimutuel wagering...", when very clearly the 'study' that was Hialeah Park, circa 2010-2011, was not only a failed study, but it was along the lines of a JOKE. You TALK all of this crap, but when implemented, you get miniscule results. I can only agree with you that Thoroughbred racing needs to be more competitive, BUT CHARLIE, YOU ARE NOT THINKING correctly!!!! Forget this moronic takeout-reduction idea that would only sever your Aorta, and begin to show the first bit of true innovation which really could help racing be more competitive with the entities you cite. You are tinkering with things which are effectively 'CONSTANTS', and I basically showed you with data above that they have been just about 'constant' for 4 decades. Charlie, I want you to OPEN your mind, and think about the actual variables you have overlooked now, for a quarter of a century! Look closely at all of the operations you just cited, and realize the giant difference between your industry and their industry. When somebody at some giant casino looks down and sees his revenue is a shade less than his target, HE just alters the house cut - because that is ALL HE HAS in the way of a control, Charlie. So save that takeout-alteration crap for when you're running a Keno parlor somewhere, and you're the blind leading the blind. When somebody enters a casino and lays down his $10 - he knows he has just as much chance as does the next guy through the door. HORSE RACING does not HAVE that luxury, and the consumer knows it!! That is precisely why your first significant effort absolutely MUST happen on behalf of the newcomer who may or may not walk in off the street. Surely you must know it in your head that said newcomer does not give a damn whether the casino takes 6% and/or whether the track takes 16%. (speaking of "studies" - surely you are familiar with the one done a couple of years back which said: "Fewer than 2% of horseplayers even KNOW about 'takeout' ") The problem facing racing is, that because of its own evolution, that which has been choreographed by the likes of YOU, CHARLIE, the could-be new visitor to the track WANTS NOTHING TO DO with a scenario where EVERYBODY ELSE seems to have a huge advantage over him!!! Lots of people love to play the lottery... and they do so with wider eyes as the pots grow... the "takeout" stays the same, and it is much higher than that of horse racing, but people still bet with both fists. But who do you know that would walk into a corner store and play the lottery if it seemed every other person in line stood A BETTER CHANCE to win than he does??? The vast imbalance in a horse racing crowd, represented almost entirely BY the very people you're wasting your ears and thoughts on with regard to this takeout B.S., ARE the ones whose very presence is keeping the needed fanbase away!!! Now what you need to do, Charlie, is to implement everything in your power to counter THAT decided advantage for the good of the entire racing industry, and the entire fanbase. The parimutuel pools are unhealthy as you have had them for decades (and each new solution, in answer to 'the little picture', serves only to make that worse - the pick-3 became the pick-4, and the trifecta became the super high five {the takeout on the super high five, for almost everybody, is a constant 100%}), and NOW it is time for you to see the light, and change the proverbial water in the proverbial fish tank. YOU and others of your ilk brought this about, now it is up to YOU to reverse the disasterous trends you created, and do something for the good of the big picture. You've been focusing on 'the little picture' for the entirety of your career in horse racing, Charlie, and just look where horse racing is as the result of your misguided concentration. Look at the big picture, and change the water in the fish tank!!!

railbird
February 12, 2014 5:26pm

Mr Hayward,
I appreciated the level of professionalism you had brought to the NYRA organization.
There is always more to the story than meets the eye and I hold no grudges. We now have a Governor that is no fan of racing, nor was his father. We have survived a lot, losing the rights to the racing property, losing on the takeout, losing OTB (thank God) and the ever rising costs of maintaining facilities and employee costs.
I hope to see you back in the horse racing management business in the future and perhaps
at a Bowdoin reunion when my wife drags me to Portland!
Steve Walsh

railbird
February 12, 2014 5:20pm

Gulch,
Calm down. Move past the NYRA scandal of old no matter who was at fault. Horse Racing is a lot more than a game of chance. Where else can you get such high odds. Where else can you apply your knowledge of breeding and racing past performances to make your betting decision? I have seen 15 consecutive "red" plays on a roulette wheel. How many gamblers were betting black after 10 spins of red?
Of course the takeout is too high. Of course returning more money to the bettors will eventually increase handle. Adding more casinos and racinos will certainly require that horse racing be more competitive for the gambling dollar.
For newcomers, NYRA has done wrong. They have increased admission fees, and Racing Forms are now so expensive and print so small as to ruin your eyes. A hot dog and a drink will cost you big. These are the things a new horse racing gambler experiences that leaves a bad taste in their mouths. Returning a larger payout will certainly reduce this potentially painful experience, possibly altogether. I would not bet without the Racing Form either.
Gulch, I understand you are bitter about the extra withholding that NYRA took. Please move past it. You should be thinking about the tax implications that come with a big score. Adjusting the tax rate and withholding is yet another way to fix the problem.
Around the corner you have "exchange wagering" which will make it very interesting for the professional gambler. Unfortunately, you may need to sit in front of a screen to make these "last second" wagers. A very large IPad may allow this from the grandstands.
Lowering the takeout is a win/win for all. Believe it.
Railbird

Andrew A
February 12, 2014 6:46am

Gambling on Horse Racing needs to be sold as a Gambling Game of Skill. Most Racing Execs won't even call it Gambling and how funny is that? Successful Businesses innovate and adjust with the times or they go out of business. The thing that's changed is the market. In today's gambling market space, casinos are everywhere. Unlike days gone by (when racetracks were a monopoly) the recreational gambler of today has choices when it comes to where to gamble: Games of Pure Chance: 1. Slots (avg prize payout 92 cents per 1.00 wagered or 8% takeout) 2. Blackjack (house edge approx 2% for basic strategy players.) 3. Craps/Baccarat (house edge approx 1% to 2%) The player knows there's little or no chance of winning long term. But the prize payout pct is high enough and the cashes are frequent enough that the player stays interested - and keeps going back for more. Even more telling are niche markets where racing and casino gaming exist side by side. Just about everywhere racinos have been introduced, the casino side of the plant wins market share from the racing side of the plant - and live handle has been decimated. Then there are games of Skill: 4. Poker 5. Sports... NFL, NBA, NCAA, NHL, MLB, etc. Both have lower rake than racing - and betting on both over the past 10-12 years have grown - while at the same time the trend line for betting on racing has taken a downward turn. Takeout isn't the only reason for racing's downward handle trend. But market research (not by me but by guys much smarter than me like Thalheimer, Cummings, Mackensie & Co. etc.) all name high takeout as huge contributing factor.

Gulch
February 12, 2014 2:52pm

Your first line was so encouraging, and so good, but you then went dead in the water with this: "Takeout isn't the only reason for racing's downward handle trend." Why is it so difficult for you people to understand that "takeout" has been a CONSTANT, as cited above? As such, "takeout" has exactly nothing to do with any "downward handle trend". Any "trend" had to happen irrespective of a constant. (if, say, the earth's average temperature year around, and world-wide, had been a steady 50 degrees, for each of the last 40 years, then only Al Gore would be blabbing about {a} "Global Warming" {trend} )

jack
February 12, 2014 12:07pm

This is very complex subject as steve byk will often say.optimal takeout is a very positive thing for horseracing that will increase revenue and create new gamblers and should not be something that is brought up once a year and forgot about until next year.racetracks and racinos do everything they can too hide takeout information on their website why? We need honest
media that will hold the people in charge responsible and not be afraid too put a name on it.

On another note.Charlie how about a piece on the cost of past performances and it's negative effect on racing.I believe basic past performances should be free and scrolled across the bottom of every screen.this will create new handle, new customers and sell more advanced information.

Thanks

Andrew A
February 12, 2014 5:25pm

Turning Fans into Horseplayers

Players' Expectation and Random Selections in WPS pools
One of the hurdles the industry faces in converting the first time track visitor and new would be racing fan into a long term horseplayer is the severity of the negative gambling experience imprinted during those first few track visits.

How bad is it (really?)

If WPS takeout is 16% you might think the novice horseplayer, who doesn't know a thing about betting horses, and whose selections therefore might realistically be no better or no worse than random picks, should have an expected return no worse than 84 cents per each $1.00 wagered (1.00 minus the takeout percentage) right?

You might intuitively think that - but you'd be wrong.

Believe it or not, the true long term mathematical expectation of horse race bettors who make the equivalent of random selections in WPS pools is a net loss approaching 25 cents per each $1.00 wagered.

That's approximately 1.5 times worse than the percentage net loss most of us might intuitively think results from a 16 percent takeout rate!

Below is a cut and paste of some numbers pulled from my calendar year 2013 database. The database includes every thoroughbred race run in North America during calendar year 2013 from Jan 01, 2013 current through a few days ago Dec 08, 2013.

The top part of the data readout shows what would have happened to the player unfortunate enough to have bet $2.00 to WPS on every starter in every race during the time period covered by the database (approx 350k starters in all.)

The ROI numbers towards the bottom of the WPS columns reflect the return for each $1.00 wagered: Net losses bordering on minus 25 percent for WPS bets.

Data Window Settings:
Connected to: C:\JCapper\exe\JCapper2.mdb
999 Divisor Odds Cap: None

SQL: SELECT * FROM STARTERHISTORY
WHERE [DATE] >= #01-01-2013#
AND [DATE] <= #12-31-2013#
ORDER BY [DATE], TRACK, RACE

Data Summary Win Place Show
-----------------------------------------------------
Mutuel Totals 529184.70 529707.00 531006.60
Bet -699134.00 -699134.00 -699134.00
-----------------------------------------------------
P/L -169949.30 -169427.00 -168127.40

Wins 45440 90386 131813
Plays 349567 349567 349567
PCT .1300 .2586 .3771

ROI 0.7569 0.7577 0.7595
Avg Mut 11.65 5.86 4.03

Next up, the second part of the above sample with the data broken out by odds rank with no attempt to break ties:

By: Odds Rank

Rank P/L Bet Roi Wins Plays Pct Impact
-----------------------------------------------------------------------
1 -14901.00 93348.00 0.8404 17228 46674 .3691 2.8396
2 -15208.70 88526.00 0.8282 9642 44263 .2178 1.6758
3 -18372.90 88404.00 0.7922 6540 44202 .1480 1.1382
4 -18563.50 88650.00 0.7906 4681 44325 .1056 0.8124
5 -22870.40 87296.00 0.7380 3078 43648 .0705 0.5425
6 -22460.60 81236.00 0.7235 2034 40618 .0501 0.3852
7 -20465.90 65288.00 0.6865 1155 32644 .0354 0.2722
8 -14106.40 46530.00 0.6968 616 23265 .0265 0.2037
9 -10315.90 30140.00 0.6577 294 15070 .0195 0.1501
10 -8129.40 17866.00 0.5450 110 8933 .0123 0.0947
11 -2351.20 7388.00 0.6818 46 3694 .0125 0.0958
12 -1884.80 3616.00 0.4788 13 1808 .0072 0.0553
13 -245.60 578.00 0.5751 2 289 .0069 0.0532
14 -63.00 258.00 0.7558 1 129 .0078 0.0596
15 -2.00 2.00 0.0000 0 1 .0000 0.0000
16 -2.00 2.00 0.0000 0 1 .0000 0.0000
17 -2.00 2.00 0.0000 0 1 .0000 0.0000
18 -2.00 2.00 0.0000 0 1 .0000 0.0000
19+ -2.00 2.00 0.0000 0 1 .0000 0.0000

This part of the data sample shows the favorite-longshot bias and hints at why horse racing might be at least attractive to some players from a viable gambling standpoint.

Note that win rate and roi (or player's expectation) varies with the odds.

The player who makes a serious go at studying the past performance records of horses will discover that horses have both positive attributes and negative attributes in their records. Positive attributes incrementally increase the likelihood of strong placings. Conversely, negative attributes result in incrementally worsened placings. Of course, the betting public realizes this and a high percentage of those attributes (as collectively seen by the crowd) are reflected in the odds.

I don't think there's any question that the newbie would be horseplayer faces a steep uphill climb. But most of us assume the hill to be climbed is 1.00 minus the takeout rate. (As you can see from the above numbers that is clearly not the case.)

In my mind getting people out to the track by itself isn't going to cut it.

The real question as I see it is this:

How do you create a good enough GAMBLING EXPERIENCE for the new would be horseplayer to make them want to come back for more?... A LOT MORE? (Enough to where the "fan" turns into a horseplayer?)

In my mind the most probable way the new would be race goer gets converted from a casual fan into a horseplayer is the same transformation process most of us underwent ourselves.

How I Became a Horseplayer
Speaking from personal experience and strictly for myself, 30 plus years ago when I first began looking at horse racing data:

I studied some data and noticed certain things in the data suggesting a realistic shot at break even play and beyond. And because of that I made the shift from "fan" to horseplayer. For me that conversion process did not happen overnight. It took about two years.

I'd like to point out that had I not seen anything early on in the data to suggest break even play was even possible I never would have taken up betting horses in a serious way. My first early visits to the track were at Turf Paradise back in 1981-1982. I initially began going to the races with a group of about a dozen friends who - one by one - dropped out by attending less and less frequently.

By 1984 I realized I was the ONLY one left from my original group. Everyone else had stopped going.

Oh, I'm still in touch with many from that same group. We've gone on many a camping trip, have gotten together for ski weekends in Utah and Tahoe, trips to Las Vegas, have rented beach houses in San Diego, etc., but largely as a direct result of the negative gambling experience imprinted on them - no one from that same group other than myself has expressed even the slightest bit of interest in a day spent betting on horses.

The game was different back then. In my opinion things were easier for the would be horseplayer.

When I first started betting horses in a serious way there were still crowds of people at the track - and many among that crowd were there for a good time... Hell, I remember being in my 20's and striking up conversations with LOTS of people whose betting was based on birthdays and phone numbers. (Good luck finding people at the races doing that today.)

The numbers in the above data sample paint a realistic picture as to the severity of the negative gambling experience faced by the new would be horseplayer.

Keep in mind the above data is WPS only. (FYI, it's worse for exotics... MUCH WORSE.)

I would be curious about the transformation process any of you underwent during your own conversions from "fan" to horseplayer. (Feel free to drop me a line at jeff@hanaweb.org)

Racing's Long Term Handle Trend
According to statistics at The Jockey Club website, North American thoroughbred handle peaked at $15.9 billion back in 2003. The trend has been down sharply ever since.

If the long term handle trend in North America over the past 10 years or so wasn't off by one third or more (not adjusted for inflation) I wouldn't be writing about takeout.

However, I think the long term downward handle trend is alarming. I also think it's crystal clear that insisting on takeout rates that create net losses bordering on minus 25 percent for bettors making random selections in WPS pools plays a big big part in shaping that trend.

According to economic studies commissioned by The Jockey Club we've stopped creating enough new horseplayers to replace the ones who are leaving the game each year. (The last one that I read says the net loss now averages 4% per year.)

The crowd attending the races when I first started going isn't there anymore. And as was so eloquently pointed out by one poster in a thread at paceadvantage.com in this post about getting people out to the track

"Guys don't worry about it.........nobody new is coming"

How Many Zeroes?
Today you still have that same crowd, the 20 and 30 somethings I used to see at the track - only now they are in the casino - where instead of minus 25 percent for WPS they are betting on games of chance where the prize payout percentages offered are significantly higher.

The built in house edge for roulette is 5.26%. I'll use that for example purposes because roulette is generally considered to be one of the worst gambling games you can play in a casino. If you study the layout of a roulette table, you'll quickly realize it's those two 'zeroes' that create the house edge and make roulette the bad gamble that it is.

Q. How many 'zeroes' do you have to add to a roulette wheel to turn roulette into the equivalent of what a newbie horse bettor faces? (Where random WPS selections produce long term net losses bordering on minus 25 percent?)

A. Believe it or not you have to add TEN ADDITIONAL ZEROES - until the layout itself has TWELVE ZEROES ON IT! – in order to turn roulette into the equivalent gamble (net losses of minus 25 percent) faced by a horse bettor making random WPS selections at 16 percent takeout!

TWELVE zeroes! (Mull that over for a few minutes until it sinks in.)

No one in their right mind is going to spend any serious amount of time immersed in study trying to develop a system to beat a roulette wheel with TWELVE freaking zeroes on it. (Can we at least agree on that much?)

While I agree that "marketing" can and will get new "fans" out to the track...

How can anyone in their right mind think that takeout isn't a huge part of the problem?...

That "marketing" alone is all it takes to convert "fans" into horseplayers?...

When what we are marketing, from a prize payout standpoint, is a gamble equivalent to a roulette table with twelve freaking zeroes on it?

I humbly submit to you the idea that no amount of marketing will ever be successful selling THAT.

In my mind the only way to convert first time race goers into long term horseplayers is to give them a realistic sense they can win.

How do we do that (with a straight face) given the above numbers?

Jeff Platt
President, HANA

Andrew A
February 12, 2014 5:29pm

The article above was from the Horseplayers Association and written by Jeff Platt.

Gulch
February 12, 2014 7:03pm

Andy, Your crap is still the same crap! The intuitive B.S. that is your suggesting how somebody else "might think" is an attempt at further misleading those who were once capable of clear-minded logic. I expect that, eventually, even Charlie Hayward will be able to understand the simplicity of something balanced precariously on a number like .84 equating to a no-win equation in the .75 range IS THE RESULT of the LACK OF BALANCE caused in greatest part by those on the other side of .84 !!! To then take advice or instruction FROM the very culprits responsible for the vast imbalance is the mark of a complete fool! In Charlie's world... he would combat the problem of poverty by heeding the advice of the wealthy which would be "keep eliminating/killing all of the poor people". Most governments, by contrast, address such a problem by assisting the very poor, which is a novel concept in Charlie Hayward's world. Horse racing, in turn, having been run by the Charlie Hayward's of the world over the past 30 years, has done a considerable job of just eliminating nearly all of the novices, leaving only the two sides who caused the problem in the first place to have to put up with one another in a stalemate (while the horsemen all over the continent continue to be victimized by such stupidity). Andy and Jeff just can not get it through their heads that when the novice/newcomer is given just two options in horse racing ('put up with the 25% effective cut, or leave') it is THEY THEMSELVES {Andy and Jeff} who ARE the cause for that very horror put upon the newcomer. Perhaps even Charlie can figure out that you can't be any part of the solution unTIL such time as when you cease to be the problem. Now these HANA fools want to recreate the early 1980's in a feeble attempt to "transform" people from disinterested novices to captured fans in today's fast-paced, internet age (put briefly: They DON'T CARE to undertake such mind-numbing exercises in such a fast-paced world - racing has to DO IT FOR THEM - or else!!). And Charlie, note that these HANA fools are still writing about "takeout" in connection with downward handle trends when WE ALL KNOW that "takeout" (as demonstrated previously) has been a CONSTANT during the ten-year window they cite). Now Charlie, you need to CLEAN THE FISH TANK - as it is filled with the likes of Andy and Jeff over at HANA, and no self-respecting, decent human being from everyday North America wants to get into any sort of a 'pool' with those guys.

Andrew A
February 12, 2014 7:39pm

You are clearly "losing it" so I won't get in the way. Wow!

Tinky's picture
Tinky
February 12, 2014 11:34pm

Charlie –

Your site is quite promising, and it's good to see you engage your critics. On a technical matter, as it appears that the lack of paragraph breaks are a reflection of a problem with your software, the sooner you can get that sorted the better.

Cheers,

Tinky

Ice Box
February 12, 2014 11:42pm

Gulch,

Charlie, and this Andy and Jeff you speak of, are simply echoing the work of Dr. Thalhiemer, along with Dr. Betts' most recent look at peer reviewed economic literature on horse racing, takeout and gambling.

What Charlie is advocating has clearly been vetted by those with an expertise on gambling economics.

Have you written anything in Economic journals on this matter as a critique to Dr. Thalhiemer? If so, I am sure Charlie and others would like to examine your position. Perhaps we can all learn something.

Thanks in advance.

Takeout
February 13, 2014 9:49am

I agree that in today's environment with multiple tracks on the menu, various signal fees, takeout is a complicated matter. However, it is way too high, and the only way for horse racing to grow is to lower it across the board.
I have a question for Gulch. If slots were to advertise that their house take was 20% would it prevent one newbie from playing? Of course not. Most regular slot players don't know that it is between 5-10%, but if takeout didn't matter, why don't casinos use a 20% or 25% house take?
Now lets compare 1975 to today. Back in 1975 you had to go to the track to bet, today you can bet from anywhere (on that alone, horse racing handle should be through the roof but it isn't). Yes, takeout hasn't changed much since then on betting types, but back then there were a lot less betting types and exotic wagering (with higher takeout) was limited to certain races. So if the wps takeout was 17% and exacta takeout was 20%, the average takeout was around 18%, today it is close to 21% because gamblers tend to wager more on higher takeout bets that are offered every race. But probably the biggest change is the that bettors aren't confined to the 8 or 9 races on the live menu. So their likelihood of going home with cash in their pockets is greatly reduced because they can bet on other tracks. Combine someone who is making 50-100 plays a day versus 10 plays in the old days, and the potential churn is closer to blackjack (with a 2% house take), but at 21%, it is certainly a bankroll killer, and it kills the fun of gambling. Back in 1975 many players went home with at least some money in their pockets (which enticed them to play the next race day).
Back in 1975, horse racing was close to a monopoly for gamblers, so optimal takeout wasn't even considered as tracks made enough to keep them from experimenting. Today, gamblers can play thinking person's games like poker or sports betting (which is more accessible today than in 1975), and those games with lower rakes are appealing to gamblers who like to get bang for their buck on games they perceive as beatable by some (this attracts some decent dummy money for serious players to go after). Horse racing is not perceived as beatable, and is now almost void of dummy money (much of it is now lost in casinos and on lottery tickets), which makes the game totally unbeatable at a 21% takeout.
Another thing. Comparing the lottery with a 45%+ takeout to horse racing is like comparing apples to oranges. When one buys a lottery ticket, they are buying a dream of a bigger home, retirement, etc. When someone buys an exacta ticket, this is not the case. Plus there is no learning curve involved in playing slots or buying a lottery ticket.

Gulch
February 13, 2014 8:30pm

(sigh) OK, I'll play along with this... You are simply incorrect when you state: "the only way for horse racing to grow is to lower (takeout) across the board". Were that the case, or even perceived to be the case, takeout would have been lowered just as soon as the year-to-year handle increased ebbed in the 1970's or 1980's (per Andrew Beyer: Handle on horse racing is growing in Turkey, and takeout there hovers near to 50%). Did you answer the question that was supposed to be for me? or not? The obvious answer to the question you left unanswered is that casinos see literally thousands of 'plays' in a small period, vs. one play every half hour at tracks across North America. That's the reason why casinos don't take money 20 or 25% at a time. (Being able to bet from anywhere should automatically drive horse racing handle through the roof??? The difference in field sizes alone between 1975 and the present nixes that belief). Your logic about "(gamblers tend to wager more on the exotics)" is akin to telling your doctor how much you like steak and other red meat after he tells you that your health is failing. These were 'choices' you made, and in one way or another you must pay for the choices you made. Besides, as I already pointed out, the takeout data in New Jersey remains unchanged (even on exotics) from 1974 to the present. And I'm confident that if you did a study on the state of horse racing in New Jersey today, comparatively speaking, you'd find a huge down trend despite "takeout" having been unchanged. To blame that trend on takeout is simply wrong thinking. (three entities are to blame for the vast increase in the exotics wagering that is in some ways choking racing today: "track management, Platt, and Asaro" - Nobody walks into a track for the first time and says: "I want to bet a super high ten") The scenario you present for what I assume is a seasoned veteran player of today, where he makes 50-100 plays a day at a simo site, IS EXACTLY what the novice faces when confronted by 9 or 10 live races each and every day. And it is precisely that novice's unwillingness to run the gauntlet among the Andy Asaros and the Jeff Platts of the world which has track and OTB crowds dwindling to nothing in modern times. That's it, period. Go to your local race track this weekend and make a pass-by near the cash machine after the 3rd race. See those people in line there? - You won't know any of them, because they're all the novices for whom THIS is the first exposure to live horse racing. The advent of widespread exotics wagering has only served to exacerbate the problem, while suffocating not only the newcomers all day and every day, but now even the large fringe group among regulars and even many hard-core players. It is precisely for this purpose that the last place you want to turn for advice and brilliance about how to alleviate horse racing's self-created problems, is Andy Asaro and Jeff Platt. Instead of implementing changes suggested BY the sharks in the fish tank, for the soul benefit OF the same sharks in the fish tank, you want to counter the vast imbalance created by Asaro and Platt, and do something for the vast majority instead. To sit around heeding a bunch of self-serving individuals who are each effectively holding a sign stating "We ARE the one percent!" is foolhardy (remember the survey which said: "fewer than 2% of horseplayers even KNOW about takeout"?). Finally, you keep comparing all of these other gambles to horse racing, when because of horse racing's unique set-up (game of skill, and revenue derived NOT from how much customers lose, but from how much they BET)... it is in fact you who is "comparing apples to oranges". After decades of horse racing, the Charlie Haywards, the Jeff Platts, the Andy Asaros, and the track managements doing the same things over and over again while hoping for a different result, isn't it time to reverse the idiocy they alone have created (that which drove-away the fan base in the first place) and cause horse racing to become the least bit 'approachable' once again to the random guy on the street?? Lets create a scenario where that random guy can hope to stay competitive for long enough to {a} Miss that first 'date' with the cash machine (after race 3); {b} Remain at the track all day (instead of getting blown-out of the box after race 6 on his first visit); {c} Feel that he was really 'in the hunt' (regardless of which photos did or didn't go his way, or whether he actually came out money ahead); {d} at least witness some genuine bit of excitement over the racing, and intrigue over the many racing details which a giddy Jeff Platt loved at Turf Paradise in 1982 (which simply CAN NOT OCCUR for first-time visitors who were alienated from moment one, and relieved of their entire cash holdings before the 5th race). (this repetitive "wrong over and over again" trumpeted by Asaro and Platt would be no more than amusing were they, for example, seated at a slot machine or a Keno table across the room where their own personal interactions with the gambling had no bearing on those of others. Since this is horse racing, complete with parimutuel wagering, Asaro and Platt have only their own interests in mind, AT THE EXPENSE of everybody else's. In the present, and because they've chased all of the novices away, their only means of improving their performances in racing are tethered to cannibalizing the remaining 1.996% of the horseplayers who even know about takeout. The 98+% are increasingly unreliable as shark bait given the unstable environment in racing's fish tank choreographed by track management and by Platt and Asaro. Unfortunately for the two of them, the others among the 1.996% are much nearer to their own abilities in terms of parimutuel performance and thus Platt and Asaro's main hope for taking steady chunks out of them as well is if takeout across the continent were slashed to 6, 8, or 10%. The latter would, of course, prove a disaster for horsemen, for breeders, and for any of the 98+ percent who really cared about the undercarriage of horse racing). So, it comes down to a simple, political question: "Should we look to appease the 1%, or should we look to appease the 99%?" (let me close with a line from... well, a track manager, who once said: "You can do it any way you want, but the way you have it now is wrong")

peckhart
February 19, 2014 3:02pm

"It has been argued that people who bet on horses are not takeout sensitive, and do not alter their wagering behavior based on takeout rates. While generally true, this is beside the point. "I  disagree with this notion of player price insensitivity Mr Hayward. I'll explain why.70%+ of all betting turnover is played into exoticpools. This is astonishing to a foreigner like me. The reason I seeis because exotics ARE quasi low takeout bets with respect tovanilla w/p/s. They lower the EFFECTIVE takeout rate by supplyingmultiple bets at near the same takeout rate as w/p/s  single bets.i.e. Think of placing a w/p/s parlay, you'd pay takeout three timesas opposed to once for a three leg exotic. So, I think the mere factthat players decide to play gimmicks in the first place shows thatthey are VERY takeout sensitive.  If you all say no its because we justLOVE exotics then I'll withdraw everything I said. LOL.

Gulch
February 20, 2014 8:59am

Peckhart:   RIGHT!  So then what do these idiots do?  After you opted for the pick-3 instead of the 3-horse parlay, to dodge a huge chunk of "effective takeout", they then nudge the actual "takeout" downward on those bets, intending to make you believe that you are saving a whole lot more money (relatively speaking), when you're not...  Were tracks showing the first hint of actual innovation, vs. the smoke and mirrors which prevails today, they would boldly offer the "reduced takeout" wagering on WPS, where it could really be significant. Tracks could easily and happily get by without inspiring you to leave your money on the shelf and out of action for 60-90 minutes at a time, during a pick-3 or pick-4, but that is just one more giant mistake made by racing management all across the continent since racing's heyday.  If it were the 1980's, the effects of money left on the shelf for an hour were relatively insignificant, but today, money left on the shelf for an hour sits there through dozens of simulcast races before then being redistributed to a relatively few recipients.Now unfortunately the very few reductions in the WPS pools experimented with in North America in recent years have been met with predictable disinterest by the wagering public, but that is where a track intent upon actually showing the first bit of concern for the wagering public should begin.   Horse race wagers have over time flowed steadily and predictably, much like the Colorado River, and it is track management, usually while concerned only with the immediate picture, which has so poorly harnessed the effects OF that steady flow to the habitual detriment of everyone involved in racing.

Gulch
February 20, 2014 9:25am

 
(sigh) OK, I'll play along with this... You are simply incorrect when you state: "the only way for horse racing to grow is to lower (takeout) across the board". Were that the case, or even perceived to be the case, takeout would have been lowered just as soon as the year-to-year handle increases ebbed in the 1970's or 1980's (per Andrew Beyer: Handle on horse racing is growing in Turkey, and takeout there hovers near to 50%).
 
Did you answer the question that was supposed to be for me? or not? The obvious answer to the question you left unanswered is that casinos see literally thousands of 'plays' in a small period, vs. one play every half hour at tracks across North America. That's the reason why casinos don't take money 20 or 25% at a time.
 
(Being able to bet from anywhere should automatically drive horse racing handle through the roof??? The difference in field sizes alone between 1975 and the present nixes that belief).
 
Your logic about "(gamblers tend to wager more on the exotics)" is akin to telling your doctor how much you like steak and other red meat after he tells you that your health is failing. These were 'choices' you made, and in one way or another you must pay for the choices you made. Besides, as I already pointed out, the takeout data in New Jersey remains unchanged (even on exotics) from 1974 to the present. And I'm confident that if you did a study on the state of horse racing in New Jersey today, comparatively speaking, you'd find a huge down trend despite "takeout" having been unchanged. To blame that trend on takeout is simply wrong thinking. (three entities are to blame for the vast increase in the exotics wagering that is in some ways choking racing today: "track management, Platt, and Asaro" - Nobody walks into a track for the first time and says: "I want to bet a super high ten")
 
The scenario you present for what I assume is a seasoned veteran player of today, where he makes 50-100 plays a day at a simo site, IS EXACTLY what the novice faces when confronted by 9 or 10 live races each and every day. And it is precisely that novice's unwillingness to run the gauntlet among the Andy Asaros and the Jeff Platts of the world which has track and OTB crowds dwindling to nothing in modern times. That's it, period. Go to your local race track this weekend and make a pass-by near the cash machine after the 3rd race. See those people in line there? - You won't know any of them, because they're all the novices for whom THIS is the first exposure to live horse racing. The advent of widespread exotics wagering has only served to exacerbate the problem, while suffocating not only the newcomers all day and every day, but now even the large fringe group among regulars and even many hard-core players.
 
It is precisely for these reasons that the last place you want to turn for advice and brilliance about how to alleviate horse racing's self-created problems, is Andy Asaro and Jeff Platt. Instead of implementing changes suggested BY the sharks in the fish tank, for the soul benefit OF the same sharks in the fish tank, you want to counter the vast imbalance created by Asaro and Platt, and do something for the vast majority instead. To sit around heeding a bunch of self-serving individuals who are each effectively holding a sign stating "We ARE the one percent!" is foolhardy (remember the survey which said: "fewer than 2% of horseplayers even KNOW about takeout"?).
 
Finally, you keep comparing all of these other gambles to horse racing, when because of horse racing's unique set-up (game of skill, and revenue derived NOT from how much customers lose, but from how much they BET)... it is in fact you who is "comparing apples to oranges". After decades of horse racing, the Charlie Haywards, the Jeff Platts, the Andy Asaros, and the track managements doing the same things over and over again while hoping for a different result, isn't it time to reverse the idiocy they alone have created (that which drove-away the fan base in the first place) and cause horse racing to become the least bit 'approachable' once again to the random guy on the street??
 
Lets create a scenario where that random guy can hope to stay competitive for long enough to {a} Miss that first 'date' with the cash machine (after race 3); {b} Remain at the track all day (instead of getting blown-out of the box after race 6 on his first visit); {c} Feel that he was really 'in the hunt' (regardless of which photos did or didn't go his way, or whether he actually came out money ahead); {d} at least witness some genuine bit of excitement over the racing, and intrigue over the many racing details which a giddy Jeff Platt loved at Turf Paradise in 1982 (which simply CAN NOT OCCUR for first-time visitors who were alienated from moment one, and relieved of their entire cash holdings before the 5th race).
 
(This repetitive "wrong over and over again" trumpeted by Asaro and Platt would be no more than amusing were they, for example, seated at a slot machine or a Keno table across the room where their own personal interactions with the gambling had no bearing on those of others. Since this is horse racing, complete with parimutuel wagering, Asaro and Platt have only their own interests in mind, AT THE EXPENSE of everybody else's. In the present, and because they've chased all of the novices away, their only means of improving their performances in racing are tethered to cannibalizing the remaining 1.996% of the horseplayers who even know about takeout. The 98+% are increasingly unreliable as shark bait given the unstable environment in racing's fish tank choreographed by track management and by Platt and Asaro. Unfortunately for the two of them, the others among the 1.996% are much nearer to their own abilities in terms of parimutuel performance and thus Platt and Asaro's main hope for taking steady chunks out of them as well is if takeout across the continent were slashed to 6, 8, or 10%. The latter would, of course, prove a disaster for horsemen, for breeders, and for any of the 98+ percent who really cared about the undercarriage of horse racing).
 
So, it comes down to a simple, political question: "Should we look to appease the 1%, or should we look to appease the 99%?" (let me close with a line from... well, a track manager, who once said: "You can do it any way you want, but the way you have it now is wrong")

Viking
February 28, 2014 9:29pm

Gulch - Your point that takeout hasn't changed since 1974 and therefore can't be one of the issues contributing to racing's problems is moronic.  In 1974 there were no casino options for racing to compete with (outside of Vegas) and therefore their low takeout had no impact.  Nowadays the low take of casinos and other Internet gaming options makes their product much more viable and sustainable than racing is for the average/new customer...regardless of whether these customers are price sensitive or not.  The racing monopoly has been gone for a long time, it continues to lose ground in the world of gambling and Mr. Hayward's point is spot on in that lowering takeout is one of the few levers that can be pulled to fight back.  But very few tracks are doing it.  (In fairness, some tracks are limited in their ability to make these changes due to regulatory restrictions.) Comparing 1974 to 2014 is stupidity if you don't factor in all the variables.  There certainly is an "optimal takeout" and right now we're not at that particular level.  Mr. Hayward: Thanks for the great website.

Gulch
March 8, 2014 1:08am

Viking,

Clearly you're another spin-head fully lacking in understanding the obvious.

First of all, what I said was that "takeout has exactly nothing to do with any downward handle trend"(period).

And "racing's problems" have become the Charlie Hayward's of the racing world. Charlie Hayward and others of his ilk continue to beat the same dead horse, just like you, when anybody with any brainpower would be looking elsewhere for actual problems, rather than continuing to beat a carcass which is a mirage put there by the Andy Asaro's and the Jeff Platt's of the world. It should be completely obvious to you, Viking, that Asaro and Platt have only themselves as any sort of a priority - and that alone affords reason to just drop any dumb idea they collectively utter.

Don't forget that this "Mister Hayward" is the same person who, despite this seemingly innate knowledge shared by just you, him, and a handful of other self-serving fools (but "fewer than 2%" of anybody involved in racing), is the person who violated state regulations in not lowering takeout. This is quite clearly a person who talks one game, and does just the opposite (again, much like those HANA dimwits).

I never said anything about any "racing monopoly".

You and Hayward have to be blind imbeciles to think or suggest that "lowering takeout is one of the few levers that can be pulled".

How about instead of all you people categorizing horse racing with casino games, you collectively wake-up and present horse racing correctly, and as the completely different 'game' that it is? You fools love to compare the takeout in horse racing to that in poker, when anybody knows that the two simply cannot be compared, as poker's takeout has exactly nothing to do with the game being played. (that is to say that 8 guys sitting around a card table could be donating $30 an evening to a local gambling establishment or they could be splitting the cost of a hotel room in which they play the same game, for the same stakes, with no hourly fee removed from the table) (and you're comparing that to horse racing's takeout, which is something calculated precisely with each and every pool) (clearly the "moronic" person here is you, Viking)

No track should be wasting the effort that is lowering takeout, because any such track doing so is merely lording over 80% of somebody else's revenue, and very little of their own revenue when they go about these vast takeout reductions. If the store manager at Macy's in Chicago decides he's going to lower the price of a pair of socks by 30%, that's fine for the store in Chicago, but when his decree more greatly affects a sporting goods store in Santa Fe, than it does his own revenue, then the guy in Chicago had better rethink his logic in all related moves.

So, Viking, why don't you profess for us as to exactly what the "optimal takeout" for horse racing is? You're just another blowhard who has no idea or understanding outside of being so confident that the takeout of today, which has been approximately current for decades, is wrong. Just tell us the number??? It should be easy for a brainchild like you.

Furthermore, a big boy like you, Viking, should be able to figure out that racing pulls its "lever" 9 or 10 times on any given day, while the proverbial levers at casinos are pulled hundreds of time each hour - thus the difference in the relative takeout percentages.
When comparing 1974 and 2014 the major constant in racing lies with track management. These are the same, narrow-minded fools who have brought North American horse racing to its knees, and who have collectively shown approximately zero innovation during the 40 years in between. Horse racing, as presented to the fan base, has changed dramatically during that time, but the powers that be, the Charlie Haywards of the world, are still standing around with their collective hands out. All that while pimping somebody else's product and adding essentially nothing to said product. Twenty-five years ago now, the track management entities were offered the chance to pimp dozens more of somebody else's products each day, and they jumped up to do so, yet continued to add exactly nothing to any of them.

This is precisely the reason why racing has been in steep decline since that era 25 years ago - the fact that individual entities all over the continent have added exactly nothing to the myriad products now offered from all around the world.

It is just time for the racing bigwigs to move the Asaros and the Platts out of everybody else's way, as they should have done decades ago, and start doing something for the person who walks in off the street for the first time ever next time the bugle blows. For it is they who would spearhead any vast reversal of present-day misfortune in the racing world - not Platt and Asaro (who remain the major reasons why those newcomers effectively want nothing to do with horse racing)

Racing's collective management has been like a screw, for twenty-five years now, and they keep turning in the same, upside-down direction year after year after year, because that's all they know how to do. They keep turning this screw, tightening it on the decent horsemen who are putting on the show... tightening it on their own career longevity, and they then get together a couple of times a year to sit around and wonder why they're stuck!!!

They're stuck because they've been presenting their product wrong for twenty-five years, and they're collectively too stubborn to at least exhibit the common sense which would be to reverse the idiocy that has been the steady tightening of the screw of doom. Whenever these fools have an idea, they should by now follow the impulse which would be to do the opposite. It's obvious that the light never goes 'on' for these people, but it's long past time the horsemen in this equation should have mandated that somebody change the bulb.