Rebates Are The Way Of The Future

Anyone who reads this blog knows that I am a major proponent of dropping takeouts, but realistically, it just won't happen in the near future. For a drop in takeouts to be effective in growing the game, it has to happen across the board, all over North America. One problem is that every jurisdiction have their own ways of dealing with takeout. Some state or provincial governments take a big whack of taxes, while others like Ontario, take very little. Some jurisdictions require a lot of red tape just to get a takeout change, while some, like Ontario, make it easy to drop or raise takeout.

Then you have horsemen deals, like in Ontario, where H.I.P. (Ontario's Horse Improvement Program) gets 2% on each wager and 4% on triactor bets. These type of deals were not carved out by anyone looking down the road, or even thinking that perhaps a takeout drop might happen in the future.

If that was the case, the deal not be on the percent wagered, but a percent of the overall takeout. For example, even if the racing execs at Woodbine are embarrassed by having a 28.3% takeout on triactors, the way the contract is written, if they were to lower to the industry standard of 25%, H.I.P. would still be getting their 4%. If the contract would have been written correctly, at 25%, H.I.P.S. would get 3.53% at that level. This contract gives the Woodbine execs the excuse not to even look at takeout drops.

Of course, a drop in takeouts, would mean more money bottom line. It works in slots, Betfair, sports betting, online Poker, etc. Especially the skill games, which horse racing is, when winners are created, more players are created. More players means more money for the tracks in the long run. Plus the longer a player lasts, the more time they will devote to playing. The more likely they are to become hooked, and the more likely they are to bring family and friends to the track to give it a try.

But I also see a case for tracks to keep takeout levels higher than other forms of gambling. But only in the case of people who come to the track once or twice a year, and/or those who decide they don't want to have a betting account. Some tracks have their big on track handle days, and I really can't argue why they shouldn't get a bigger cut from the people they may never see again regardless. This also includes the corporate dining crowd too. I have no problem with these people having to play at a higher takeout level, as long as they have the right to open a betting account and get rebates if they choose to do so. Once a person has a betting account, they are likely to play a lot more often than those who don't anyway.

No one knows what the optimum takeout level is, but I know for sure it isn't 20-21% which is the collective takeout average in the industry today. Most studies have the average pegged between 10-13% though.

This is where rebating comes in. Once a dirty word, rebating is becoming more and more prevalent in the industry today. More and more tracks and ADWs in the US are starting to give their account players 2% on at least selective bets, and their big betting players are carving out much bigger deals (7-10%). I even know players getting 12% or more at selected ADWs.

Personally, I believe all account players should get equal rebates. I'm a firm believer that today's big player was yesterday's small player. Again, my logic behind rebating small players the same as large players also has to do with the fact that most people only have so much discretional money they can lose during the long run (in this case, the long run is 6 months to a year). If they lose quickly betting horses, they are more apt to bet other things including buying lottery tickets, etc. If they get rebated daily or weekly, they get a constant reminder to stay in the game. And 2% doesn't cut it (and the piddly stuff Woodbine rebates most players is laughable). No, rebate every account player 6% and watch handles and profits soar.

Still, there are some takeouts which have to be adjusted, as they are borderline criminal. Philly Park, for example, has a track takeout of 30% on triactors and superfectas. Just disgusting, and just a little more disgusting than Woodbine which has a track takeout on triactors of 28.3%. I have no idea how Fort Erie gets away with track takeout of 26.3% on exactors (a good 6% higher than industry standard), but maybe they aren't getting away with it, and maybe that is just another reason why the track is near death.

Speaking of Fort Erie, the proposed speedway may not be a dead issue after all. How about The Jeff Gordon Speedway? That could be good for slots and maybe even horse racing too, because fans can only watch auto racing for so long before they have to do something else.

I still find it amazing that tracks like Woodbine, Philly, and Fort Erie who have slots, have higher takeouts than those without slots (perfect example is Keeneland). It is a wonder where the track focus really is when it comes to tracks with casinos.

For an almost up to date track takeout chart of most North American tracks, click here.



A couple of other things. I want to thank those who emailed with their disdain over Woodbine/HPI when it comes to their ramping up of takeouts on some simulcast wagering propositions such as Keeneland triactors and Tampa Bay Pick 3's. I knew I wasn't alone on this issue.

HANA was able to more than double the pool at Tampa Bay during last Tuesday's Pool Party. This week, we tackle a Mountaineer exactor on Tuesday night. I'll update which race as soon as it is decided upon. UPDATE: It will be race 3 on Tuesday night. Bet the exactor to help support HANA.