1 July 2011

It Must Be The Economy

Well, that is the excuse that seems to be prevalent over in California, as the leaders over there look to blame everything except their disastrous decision to hike takeout at the beginning of the year.

It is estimated that handle at California A tracks will be down a whopping $400,000 million.

The horsemen are getting a bigger cut of the betting, so the big losers are the tracks. I doubt the tracks will be able to hold out much longer before drastic action will have to occur....either that or they can rescind the takeout hikes.

Meanwhile, it is hard to blame the economy when tracks like Will Rogers Down increased their handle by 92% during their meet that just ended. They increased their exposure, that was big, but they also maintained decent field size. Another big thing is that they sell their signal relatively lower than the average track. This is very appealing to bettors who get rebates. And with tracks in California going the opposite direction, tracks like Will Rogers win out from price sensitive bettors.

Going forward, Will Rogers (it just doesn't sound like the name of a racetrack) should think of a name change, maybe The Great Race Place or something like that.

Also, if it is the economy, how did Woodbine pull off a record handle last Sunday on Queen's Plate Day?

Economies go up and down, and I'm sure horse racing has been affected the last two years. However, when the economy was on the rise, horse racing handle was still trending downward.

With Horseplayers able to play just about anytime from just about anywhere, more than anytime ever, why is horse racing dying?

It is the price of the product (the takeout).

Two things at play here:

Horse racing is a thinking person's gamble. It has a steep learning curve too. How do you attract a thinking person to get motivated to learn the game when there are no visible winners?

Secondly, horse racing is still gambling. I believe every gambler, no matter how outwardly emotional or how Spock like they are, get some degree of highs when handicapping and or placing a bet and or watching a race and or cashing a bet.

The more races they handicap, the more bets they will place, the more races they will watch, and the more bets they will cash.

All the above is predicated on churn. Churn goes up, the lower the takeout, and goes down, the higher the takeout.

Keeping the gambler in the game is paramount in growing the game.

Racing right now is focusing on lowering takeout on low churn wagers (Pick 4's, 5's, and 6's). This is just a competition for the existing Horseplayer. It does nothing to grow the game.

Lower the takeout on WPS, doubles, exactors, and even triactors and dime supers, and then we might start to see actual growth.

Must Read Post Over At Pull The Pocket: Why Is Optimal Takeout So Hard To Understand
If you are a racing exec or in a Horseman's Group, read this article.

One more thing. Why are so many Horseman's Groups involved in how much a track can charge in way of takeout? Does Royale tell Walmart what price they have to sell toilet paper at?


Tinky said...

Excellent post. And a small correction: I expect that you meant "paramount", rather than "tantamount".

Cangamble said...

Tinky, I have no idea what either word means, but I took your word for it and made the correction.

Davey said...

Is it possible that newbies are not coming into it because there is so much presence of online gambling these days, which is drawing people to a different way of betting, so they are not going to the races so much?

Greywoof said...

That's some of it, Davey. This blog hit the target spot on. For newbies, how about that tote board designed in the 1930's (I guess). How many youngsters can do fractions these days in their heads? How about those bet names - Super High 5, etc. I think "Win" is the only thing that a newbie can understand. Look around in a race book here in Vegas. You'll see only white haired people hunched over their forms.