27 March 2011

Woodbine Is Heading In The Right Direction

Woodbine just announced that they are lowering the takeout on thoroughbred triactors to 25% from 27%. This is definitely a step forward and an attempt to keep the positive momentum Woodbine has been achieving, relative to the rest of the industry, mostly since the departure of David Willmot early last year when Nick Eaves took over.

This isn't champagne cork popping news though. Even with the drop to 25%, Woodbine is now only tied for 27th when it comes to lowest triactor takeout rates out of 69 tracks.

Woodbine still has a way to go to be number one. Keeneland and Churchill Downs have the lowest blended takeout rates in thoroughbred racing with a 16% takeout on WPS and 19% takeout on all other bets.

Amazing that back when Secretariat ran, Woodbine has a takeout of 17% on everything. Horse racing was very popular, and was pretty much a gambling monopoly back then. I still don't get how when an industry loses monopoly status, that they would even think about increasing prices to the consumer (track takeout). That goes against every economics book ever written, but it explains why horse racing is in the state it is in right now.

Lowering takeout increases churn and allows Horseplayers to last longer. The longer they last, the less likely they are to play other forms of gambling as much, and the more likely they are to eat and breathe horse racing more, and therefore get family and friends exposed to the game, which could lead to more growth.

I would say that racetracks benefit the most by giving their live patrons (and in Woodbine's case, their own ADW customer) the biggest breaks, whether that be lowered takeout or increased rebate. That is how to grow your customer base. I'm not sure that Woodbine has begun to successfully build their business that way, yet.

This lower triactor takeout, like I said previously, appears to be looking towards building on the momentum Woodbine has right now when it comes to US bettors.

Constructive Criticism
Woodbine needs to stop bean counting when it comes to specific wagers. Pay track odds no matter if the takeout at the host track is 12% or 30%.

I have had quite a few private conversations with Horseplayers who admittedly bet less or have gone offshore (with Betfair etc.) at least partly because Woodbine pays less on certain type of wagers than host tracks pay out (eg. Keeneland and Churchill Downs triactors and superfectors).

The amount of money Woodbine grabs off the customer when doing this isn't worth losing the customer over. Let alone the fact that most Horseplayers will bet back the extra money, and even if they don't because the hit was "too big," the positive vibes of coming home with money is worth more than spending money on advertising.

Good vibes go a long way. Gulfstream Park is experiencing this.

Canada is full of gamblers and Woodbine would love to grow at the same pace gambling is growing in Canada, but bad vibes go a long way too, especially in the information age. If you don't believe me, check out the California Handle Massacre. Updated handle numbers out of California are atrocious.

I think the TOC and CHRB deserve this for increasing takeout (not me in the video):

The track owners are scrambling to figure out how to stop the bleeding, but I don't think band aids like introducing a low takeout bet will work at all. The takeout hike needs to be rescinded, and even with that, California tracks are going to have to really work at trying to get back the customers who have simply stopped following their tracks. The longer the takeout isn't rescinded, the harder it will be.

Fort Erie still hasn't announced any takeout reductions. Do they see what is happening around them? More and more tracks are announcing lower takeout bets or are reducing takeout on a few wagers. I am expecting Fort Erie to have an especially brutal year if they don't grab the bull by the horns. Fort Erie is ranked 67 out of 69 when it comes to blended takeout rates.

There are three types of people in this world, those who make things happen, those who watch things happen, and those who say what happened? When it comes to takeout rates and competing with other tracks, Fort Erie's management right now are in category 2, but sooner or later Fort Erie management and horsemen will be in category 3.

This is pretty funny. Even slot operators are talking in terms of takeout and competition. A casino is being reopened in Omaha:

In addition to adding new machines, (CEO Bill) Walsh said officials checked out the competition and set the takeout on the CasinOmaha machines one percent lower than other casinos.

“We feel that by setting the machines lower, people can leave here with a little money,” Walsh said.

HANA adviser and bettor extraordinaire has written a piece with solid solutions that the industry would be foolish to ignore.

The last thing we need is to waste time with another study. The problems are evident. High takeout, drug integrity, signal availability, and tote integrity. The first two problems are racing's biggest, but high takeout is number one, as Daryl Wells used to say, by a good margin.

I do disagree with Fotias about having too much racing. We need grass root tracks as owners and trainers bring in new potential players and tracks are needed within major town limits to expose newbies to the game. Nothing makes a Horseplayer a Horseplayer than the live experience does, but once they are a Horseplayer, the live experience isn't so much needed....but we desperately need new Horseplayers right now.

At this minute though, there is too much racing and too many wagering types because there are not enough bettors or betting dollars to go around. Lowering the blended takeout in North America will solve that problem.

One more thing. The centralized ADW idea is a bad one. Look at what has happened in Canada with HPI. They chased big Horseplayers offshore and to Betfair because they thought they were a monopoly (not to mention the fact that they don't even pay track odds sometimes as cited earlier in this post). If there was healthy competition in Canada (like rebate shops), horse racing handle and profits for purses would be seeing much stronger growth. A centralized ADW in North America would lead to negative growth as rebate players (the only thing in horse racing that is growing right now) would fall off the map, and new players would never be created. The problem is that Horsemen and tracks to a certain extent have a "right now" approach. A long term approach as been sorely lacking in our industry.

Until takeout is 10-12% everywhere, the idea of a centralized ADW with no competition will only help destroy the game over time. If takeout were reduced to 10-12% everywhere, rebates would not be needed to compete, the game would be beatable by enough players to create a buzz, and a centralized ADW would work just fine.

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