Takeout Just One Symptom of the Disease

re: Takeout Just One Symptom of the Disease

wjfraz — Tue, 17 Jun 2014 11:42:00 GMT

The average fan probably doesn't care for the takeout. A more common sense approach to gaining a larger fan base would be to make the tracks user friendly. In this I mean, the cost of food, parking, admission, racing forms, programs, etc., are way too high. Anyone with half a brain knows that the majority of people "donate" their money as the odds are stacked against them. Vegas used to comp to get patrons; racing should do the same. Admission, parking, programs and forms should be given to anyone who shows up. Food should be reasonable. Why would anyone pay $5 for a hot dog or a drink when they can bring them in cheaper? A complete rethinking is in order.

re: Takeout Just One Symptom of the Disease

Old Ned — Mon, 21 Apr 2014 21:47:29 GMT

I became a dedicated fan and horseplayer at an early age, then spent much of my working life as a racetrack executive. I'm retired now, but still firmly hooked on "the game".

I enjoyed my career in management, but must admit to many frustrations over the industry's frequent displays of arrogance, ignorance lack of sophistication regarding business policy and practice. The prime example, in my view, has been the failure of most tracks and other racing organizations to understand modern marketing philosophy -- which demands, above all else, a clear understanding of the needs of consumers and requires that the "product" be designed to meet those needs effectively and efficiently.

The industry was, of course, quick to begin using "marketing" terminology to show how progressive it was but in practice "marketing racing" usually meant "promoting racing" in traditional ways. The common belief was (and still is, it seems) that the beauty and glory of the sport is racing's greatest strength. Once people are exposed to that, the theory goes, they'll be captivated and progress swiftly to being fans, track attenders and bettors.

With this kind of stagnant thinking entrenched as a guiding force, it's not surprising that changing market structure and motivation, and the possible decline in the saleability of the traditional racing product, don't appear to be of much concern to many industry decision-makers.

We can be grateful that a few big new marketing ideas have managed to surface and gain traction in the industry. New types of "exotic" wagering is one, simulcasting another. But, for the most part, these are product changes which were embraced because they appeared to promise immediate revenue increases and wouldn't cause much disruption of racing traditions, not because they were positive responses to important consumer demands.

Pricing is always a key marketing component. But in racing the price of wagering, takeout, is another issue often not addressed in a reasoned, analytical way. If we reduce takeout, industry leaders ask each other and various "experts", will people wager more, attend the races in larger numbers or with greater frequency? And above all, will we make more money? Well, some studies were done (many years ago now) which purported to show that if takeout is reduced wagering will go up so much that there will definitely be a net gain in revenue. Or…if not…at least more people will begin to patronize tracks after wagering "prices" are lowered. But many tracks which gave it a try discovered the results were not as promised and they quietly discontinued the "takeout experiment". And in some cases they discovered that judicious INCREASES in takeout were much more likely to produce immediate revenue increases.

In any case, it doesn't really matter what we in racing think about takeout, what's important is how the market reacts to it. And for a large part of the market, takeout is either unknown, misunderstood, or otherwise irrelevant as a "price" factor. The basic money issues to most horseplayers are the visible costs of patronage (transportation, admission, wagering tools, food and drink) and most importantly betting winnings and losses. Initially at least, takeout affects only one of these items: winnings. The higher the takeout the less paid out on a winning bet. If your bet loses, it's the total amount wagered that's lost, so the specific effects of takeout are invisible. If your bet wins, you're happy and it's unlikely thoughts of takeout enter your mind.

Sure, takeout levels are critical to those mega-players who approach the game strictly as a business rather than as a recreational pursuit. And it might be relevant to some other big-money players, although I think it's unlikely that many of them really think much about takeout. Winning trumps takeout concerns any time, for most players.

If you're an average small-time player like the vast majority, and want to buy multiple combinations on the same betting type (a Superfecta, for example), a reduction in the minimum bet (say to 10¢) is likely to be a much more welcome change that a reduction in takeout (whatever that is…). Some tracks boast about their low takeout on special exotic wagers like the Pick 5, which have become very popular, but would they be anywhere near as popular if the minimum bet was $2 rather than 50¢? Of course not.

Pricing policy is not a simple matter in most businesses, and racing is no different. The goal must be, first, to understand how pricing impact customers and, then, to make the specific decisions in all pricing areas which will produce optimum results for both producers and consumers. It isn't easy, and lower takeout rates is never going to be the simple answer.

re: Takeout Just One Symptom of the Disease

plodderman — Sat, 19 Apr 2014 17:43:37 GMT

Parx is the biggest scam in racing. The takeout there is so high. To be honest, I have no idea what the takepout is, but ALL the payoffs seem lower. Especially the trifectas.

re: Takeout Just One Symptom of the Disease

D1 — Fri, 18 Apr 2014 12:29:39 GMT

Tom always enjoy your articles. Hate the new tak out rates at Churchill but what are my real options?

re: Takeout Just One Symptom of the Disease

Salvatore Carcia — Fri, 18 Apr 2014 04:22:33 GMT

I cannot find a industry database that gives an annual summary of the national blended takeout rate across the country. I think HANA does it by track only. That is a good thing for bettors. But, knowing it for the whole industry could be instructional.

re: Takeout Just One Symptom of the Disease

punter22 — Thu, 17 Apr 2014 16:10:15 GMT

@Rammer, who is HTV? Do you have a web link?

re: Takeout Just One Symptom of the Disease

ouch — Thu, 17 Apr 2014 14:16:00 GMT

Horseplayers have always been hosed. From a $7.50 racing form, IRS forms after 30% has already been taken out for a $600 tri. Young people play blackjack .After cashing in you get a comp for dinner and a show.

re: Takeout Just One Symptom of the Disease

BadSaddle — Thu, 17 Apr 2014 00:20:29 GMT

Tom, On the need for transparency, what's your over/under on how many KyDerby contenders heed Phipps great call to release all vet records 14 days prior? 4? 16? Do you see contenders dropping out to avoid releasing them?

re: Takeout Just One Symptom of the Disease

Rammer — Wed, 16 Apr 2014 20:14:58 GMT

The biggest problem today is all of this in-fighting going on between local tracks, between tracks and their state governments, etc. It's a real turnoff to us loyal bettors. Some simulcast companies have great rebate programs, and HTV is one. HRTV and Xpressbet is the worst. You have to bet something like $15,000 to get a lousy $10 voucher! Mr. Stronach is probably behind it. Another turnoff is how the State of New York restricts tri betting to races with a minimum number of horses in the race. It's the Decade of Greed and the bettors will always get screwed in the end...

re: Takeout Just One Symptom of the Disease

JerseyTom — Wed, 16 Apr 2014 19:26:06 GMT

From what I've been told there are tracks that still get 3%, and some less; the blog acknowledges increases for many over the years. Of course, this information is not transparent, so we don't know exactly what tracks get from each outlet. I would be happy to publish it if it was made available.

re: Takeout Just One Symptom of the Disease

Dan Kelliher — Wed, 16 Apr 2014 19:04:15 GMT

Tom you need to update your facts. There aren't too many tracks getting 3% for their signal anymore. Certainly not from the ADWs who now pay the highest rates in the industry.