13 December 2009

Handle Up: Why Woodbine Bucked The Trend

Woodbine execs probably know better, that their recent announcement about the handle increase for 2009 for thoroughbred racing, isn't as good as it seems, or maybe they don't.

"All-sources handled totaled $361,435,208, compared to the $337,660,570 from the 167 dates in 2008. The daily average handle this year was $2,164,282.....Most of the $23.7 million increase came from U.S. sources. TVG, the national racing channel, offered Woodbine racing for the first time beginning on June 19."

Now let me give you the rest of the story.

Handle at thoroughbred tracks in North America in 2009 will show a drop of around 10% when final numbers come out in early January, so Woodbine's increase of 7% was against the trend.

Bad economic times is most likely to blame for the drop, however, even during the economic upswing prior to the bursting of the bubble, horse racing was barely holding steady from year to year when it comes to total handle.

So why did Woodbine do so seemingly well? There are a few reasons, and all of them helped.

1. Being featured on TVG definitely increased Woodbine's exposure. Horseplayers tend to bet races that are shown on TV. When a track gets featured, players become more familiar with the horses, jockeys, and trainers.

2. Probably the biggest plus for Woodbine was that they were not involved in signal blackouts, and other games that were being played out in 2009 by racetracks and horsemen groups. Woodbine's signal was available at every major ADW in the USA without disruption. When a player can't bet on a certain track, they will gravitate to another track. Tracks like Woodbine and Delaware were major benefactors in 2009.

3. Woodbine's seeded Pick 6 experiment caused handle to increase during its short run, and may have helped Woodbine's long term exposure in the USA. Woodbine lost money on the deal, and even with the increased handle and exposure, their bottom line has suffered.

4. Field size of 9.1 horses per race (up a little from 2008) is attractive to almost every bettor on the planet. It leads to bigger payoffs. And if a bettor hits something really big, he or she might actually overcome Woodbine's monstrous takeouts (their Win Place Show and Exactor takeouts are reasonable in today's market, but that isn't what I'm talking about here).

5. Mine That Bird put Woodbine on the map in a few more households in the USA in 2009.

6. $2 million races might help with exposure a little bit. But horseplayers collectively are more into bigger fields and reasonable payouts in the long run. When you do the math on days that have the big races, sure handle is up considerably, but the reality is the track loses a lot of money on those days if one looks at their cut of takeout versus what they give out in purses.

7. CHANTAL SUTHERLAND! The series Jockeys put her on the map. Male bettors (and maybe a few female bettors too) are all aware of her stunning good looks now. The fact she was the second leading rider at Woodbine this year, and brought home some nice prices, especially earlier in the year, definitely got more Americans playing Woodbine. I get lots of hits daily because certain individuals search "Chantal Sutherland nude."

8. Woodbine dropped their takeout on triactors from a whopping 28.3% to a whopping 27%. Now this probably didn't get US players to play more, however, the limited details announced regarding Woodbine's handle seem to indicate that domestic handle was close to even versus 2008, and dropping the takeout definitely helped. The increased payouts Canadians received when cashing triactors were most likely churned back on Woodbine races. Not so much in the USA, where players were more likely to churn the monies back into a race at another venue. As an aside, is it coincidence that tracks that increased their takeout in the past 18 months or so like Calder, Aqueduct, Belmont, Pimlico, and Laurel have seen high teen decreases in handle in 2009, almost double the trend?

9. Another thing that prevented domestic (on track and HPI account wagering) numbers from following the downward trend in North America was the fact that Woodbine were reportedly more aggressive in giving more of their biggest bettors large "secret" rebates in order to keep them from betting offshore or with a US ADW (most don't take Canadians, but some do) and even perhaps Betfair. This definitely increase churn on their own product domestically, maybe even by enough to make up the difference of losing 10% versus staying even in domestic handle. I know that when I receive a rebate in the neighbourhood of 7%, my handle increases three or four fold. But keeping big customers doesn't increase real growth. What Woodbine needs to do is give their smallest players the same rebate. It will keep them in the game longer, and then and only then do you have the foundations of growth. See "The Pie" over at the HANA blog.

10. Woodbine appeared in the US version of the Racing Form. Of course, this will help handle. It is amazing they were only up 6% when considering everything on this list.

Lets keep things in perspective here. Woodbine's $2.1 million daily handle isn't very good when compared with Hawthorne's $2.7 million daily handle. Hawthorne gives out less than half the purse money Woodbine does, so it deflates the racing quality argument that Woodbine likes to make. Hawthorne is available not just at major ADWs but all ADWs, especially the ones that give larger player rewards that savvy bettors tend to flock to. Hawthorne having a traditional dirt surface probably helps Hawthorne's cause at least a little as well.

There is also no mention about whether betting was up or down when it comes to Woodbine's customers playing other tracks. My guess it that it is down. Their practice of ramping up takeouts on triactors and superfectas, etc. at many US venues, which wind up shortchanging Woodbine/HPI customers, can only hurt them in the long run. Many players will avoid such bets, and may inevitably be driven offshore by Woodbine's utter callousness on this issue.

Woodbine with their quasi monopoly on Canadians should be doing a lot better. Perhaps, with David Willmot finally stepping down and being replaced by a younger and brighter individual (Nick Eaves), more betting incentives and initiatives will be made to attract more Canadians to play the horses.

For more on the topic of Woodbine's increase, which includes comments of players who either like or dislike betting Woodbine check out the 3 pages of comments at Pace Advantage. Here is a sample, by this dude named Dean:

"I lost respect for Woodbine several years ago when they raised their takeout from 14.75% to 25% on their pick 4. They did not tell anyone; it was a takeout raise of the worst kind.

But, their product is good, and this year let us remember that they offered out that huge seeded pick 6 (probably not a good idea with a $2 pick 6 and lack of whale money) but they did offer that low take bet. If next year they offer out a reduction in take, or a few other horseplayer centric items, I will gain a lot of that lost respect back (just personally as a player).

I think about six years ago now I think it was Maury Wolff, or maybe Andrew Beyer; they were speaking of Tampa bay downs. The quote from them was something like "excuse me about Tampa but with their huge takeouts I don't think they want me as a customer"

But now look at Tampa because they lowered takeout (and have for several years) and had a sea change in horseplayer respect. A lot of players love Tampa for what they have done and their handle is doing really well.

Anyhow, long winded crap from me that tracks can change and earn some respect, imo. All they have to do is try."


Nick said...

Saying Nick Eaves is brighter than Willmot isn't really saying much at all. LOL

The_Knight_Sky said...

I think American tracks should set up shop in Kuala Lumpur and take credit for "Handle up" for their meet.

Handle up "only 7 percent" is how I read it.
Given the fact that the Tracknet dispute in the midatlantic has prevented wagering on Churchill Downs and Fair Grounds throughout the autumn, the wagering dollars were ready to be diverted to another host track.

bullring said...

I remember the full page ads in the DRF advertising the 14.75% take on the Win 4.

They just one day jacked them up to 25%, no full page ads for that.

Anonymous said...

re: Nick Eaves, check your blog of
April 4, 2008 and your above mention
of him making things better, doesn't
look good.

Do you have an update on the
status of the
Kahnawake Gaming Commission
in Quebec?

alan said...

What if any contribution do you think that Polytrack has made to Woodbine bucking the trend (your skepticism of the significance of the numbers notwithstanding)?

Cangamble said...

Alan, the poly hurts more than it helps usually, but with Woodbine it might not hurt as much. When I think poly and Woodbine, I think bigger fields and bigger prices. The long meet helps with familiarity. Bettors get used to jockeys and trainers. Turf races make up for whatever bettors they lose because of the poly.

The price sensitive players though stay clear.

Cangamble said...

Nick, I just heard Eaves on The FAN and I take back my comment that he is brighter than Willmot.

Anonymous said...

it's another business that takes advantage of those who don't understand the ins and outs (takeout breakage) of racing...i go to the offtrack and tell these guys i play with how it works...it's shady business really...the so called FINEPRINT...

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