8 October 2009

Calder Purses Slashed: No Surprise Here

Calder slashes purses 15%; Horsemen Upset

I wrote this headline a year and a half ago: Calder Raises Takeout: What Imbeciles
There hasn't been very much movement upward when it comes to track takeout amongst North American tracks since I began blogging (I'm only partly responsible for this:)), and that is why I was so flabbergasted that Calder had the audacity to raise takeout rates last year:
The big news to specialty gamblers Monday was that Calder raised its takeout percentage on a few wagering options. The track will now take 27 percent out of Pick 3, 4 and 5 wagering (up 3 percentage points) and 21 percent from the Daily Double and Exacta bets (up 1 percentage point).

Yes, they took an already high takeout rate, and made it higher. What did they expect?
To make more money? HAHAHAHA Nope, they just found out how Economics 101 works. You don't raise the price for the sake of raising the price and expect to make more money. The doofuses need to read up on the basic law of supply and demand: When demand shrinks, they price (the takeout charged) needs to shrink.

The mix of track execs and horsemen is killing horse racing. The horsemen want want more money NOW and they attempt to use coercion to the point that racing execs, even if they had the foresight (which most don't) to grow the game (by lowering takeout), they can't. And in fact, they wind up making decisions like the one made by Calder, that help destroy the game.

The horsemen want more from a shrinking pie. I don't blame them wanting more, but they just don't seem to get the repercussions of their demands. For instance, they want larger signal fees to be charged by tracks so they can "theoretically" make more money from wagers. However, they don't seem to get that the only growing business in horse racing are the ADWs that offer rebates. By trying to squeeze out more, they wind up lowering the rebates offered, which in turn causes the price sensitive players to play less or bet with bookies offshore.

Good Reading: Crisis, Danger, And Opportunity
Well, the comments make for good reading. One jokester (probably a Woodbine Exec) posts under the name CGDean:

There is a simple fix for owners and breeders like myself.

It's a three pronged attack at raising revenues for the people that put on the show.

1. Open up all off track distribution (ADW's, internet, simulcast facilities, etc.) to anyone that wants it and pay them 5% for taking the bet.

2. Raise all takeout to a flat 30% on all bets.

3. Split the offtrack takeout 5% for bet taker, 10% for host track, 15% for horsemen.....on track takeout split 12.5% for track and 17.5% for horsemen.

If we can keep betting around the $12 billion mark, that means there will be close to $2 billion available for purses instead of the $600 million we currently have.

I know some people will say handle will decline but I beg to differ. We are already recovering from the horrendous economic downturn which will increase the already deflated handle. So basically, new money will easily replace any lost money if there is any.

Barry Irwin said "While the takeout is onerous, it has never stopped a real gambler". This reaffirms my thoughts that people will still bet on racing because that's just the way the game works. Even if we are wrong, and handle dips down to 9 million in a worst possible case scenario, under this plan, that still gives us between $1.4 and $1.5 million for purses which is about 2.5 times more than we get now.

Imagine a worst case scenario where our purses are doubled or tripled without slots. If we can get a slot subsidy on top of this, we can have purses in the same range of Hong Kong which will obviously increase betting astronomically and that will raise purses to levels of which we can only dream of.

Is this a moron being serious, or is it someone trying to show how farcical owner/breeders have become with their collective industry mindset and their demands? I can't tell anymore.

I replied to another comment there:

VEC said: "I do not believe our take out, also 22 to 24%, deters the average bettor, and certainly not a newcomer to racing. Not many at the track, or down at the local OTB complain about it."
Again, this misconception keeps on showing up all over the place.

True,most horseplayers don't care about takeout. Just like slot players don't care about the house edge. They never complain about it.

However, Vegas started out with a very high edge on slots, but through trial and error they realized that the optimum edge is 8-10%.

This means that if they doubled the edge, they wouldn't get even half the total money bet.

So why is it? Because customers get blown out to quickly. They may not even realize why they don't feel like going so much, but they don't.

And when they don't go so much, they are less likely to bring friends, family, neighbors and coworkers with them the odd time to expose them to the slots.

Same is true in horse racing.

Pricci is one of the few horse racing journalists who completely understands that horseplayers are the driving force of horse racing, and has no problem writing about it.

Adena Springs Finally Figured Out That It Is More Lucrative To Breed Ontario Sired Horses Rather Than Florida Bred Ones

'The stallions that will be moving from Florida to Gardiner (in Ontario), joining other Adena stallions Sligo Bay and Silent Name, are 1996 Breeders’ Cup Classic (gr. I) winner Alphabet Soup (Cozzene—Illiterate, by Arts and Letters), multiple grade I winner Milwaukee Brew (Wild Again—Ask Anita, by Wolf Power), and graded winner Olmodavor (A.P. Indy—Corrazona, by El Gran Senor). New stallion Giant Gizmo(Giant's Causeway—Golden Antigua, by Hansel) also will stand in Canada.'

SHHH Don't tell anyone, but despite the bad economy gambling continues to be on the rise in Canada.
Well, not at the racetracks though. Maybe one day they'll wake up and understand that it is the onerous takeouts that prevent horse racing from growing. I have a feeling it won't be under Willmot's watch.

For those who think that takeout is the same as it was 40 years ago check out this from the Daily Racing Archives:

LINCOLN DOWNS R I May 13, 1964
Under a new appropriations law that went into effect Monday night, the total parimutuel takeout on racing in Rhode Island is now 16 per cent. The additional 1 per cent is split evenly between the state and the track. The state receives 8 1/2 per cent and the track 7 1/2%. The new tax went into effect with the races at Lincoln Downs Monday night. In Massachusetts and New Hampshire the takeout is 14 per cent. Vermont is the highest in the nation with an 18 per cent tax followed by Maine with a 17 nick.
Stands were full back then. Bettors had fewer betting options, win, place and show, a couple of exactors a day and a daily double. Many left the track with money in their pockets, enough to entice them to go back as soon as possible.

One of the better arguments to today is how does a track rationalize charging more for triactors and other exotics? It doesn't cost them more to print the ticket or to take the bet at a terminal or online. But the reality is that the exotics with the highest takeouts really kill bankrolls and ultimately discourage bettors from playing as often.

I don't have the numbers, but I'm pretty sure takeout at the ORC track (Woodbine, Fort Erie, and Greenwood) were something in the neighbourhood of 14-16% tops. And the government was taking around 7.5% back then. Nowadays, Woodbine's average takeout is closer to 21%-22% and the government only gets 1.3% on each wager.

Did Chantal Sutherland recently have botox lip injections? It sure looked like yesterday on The Score.

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1 comment:

ITP said...

You need to work on your detective skills