12 June 2009

Woodbine Lowers Track Takeout On Triactors Slightly

Here is a release from Woodbine Entertainment, with my comments added (of course):

Effective Wednesday, June 17, Woodbine Entertainment Group will reduce the takeout on its live thoroughbred and standardbred triactors to a total takeout of 27%, from 28.3%, when all of the mandatory regulatory deductions are included.

Though it is encourage to see that a takeout rate has been reduced in North America, lets not get too excited. With this drop, Woodbine now has gone from having the 68th highest triactor track takeout to now being tied for 66th (out of 71 tracks). They "zoomed" by Fort Erie (28.2%) thanks to this drop.

Unlike U.S. racetracks where taxes are primarily applied to winnings, Canada has its taxes applied as a percentage of wagering. More specifically, mandated regulatory deductions account for 6.8% of wagering or about 24% of Woodbine Entertainment Group's (WEG) total triactor takeouts, the majority of which is represented by the province's 4% Horse Improvement Program.

That is not the consumer's problem. From a customer's standpoint, this is still no justification to have the 66th highest takeout. There are 56 tracks with takeouts of 25% or less, and they all make less than Woodbine does right now when taxes are taken out. And it isn't like the H.I.P. program doesn't help Woodbine's business by making it more lucrative to own a horse running at Woodbine and helping the field size as well because of the purse structure. Bigger fields equals more betting.

WEG's efforts to make its live race triactors more competitive by replacing this excessive pari-mutuel levy with a slots-based levy have been rejected by horsepeople's associations.
Nobody said the horsepeople's associations understand growth. But again, it is up to Woodbine to explain the situation better to them (they have failed obviously). But it is still good to know that the HPBA are a bunch of collective self serving fools. I knew that already.

Simultaneously, in order to partially offset $1 million of new simulcast costs demanded by some Churchill and Magna controlled tracks, triactor takeout rates on these simulcast signals will increase to the same 27% total takeout including all mandatory deductions.
Tracknet has increased signal fees. This hurts the bettor in a big way. Woodbine too, charges a high signal fee, so they aren't innocent here either. And upping the takeout rate to 27% by Woodbine should be deemed illegal. Canadian customers will be getting ripped off even more by WEG if they play Magna or Tracknet tracks. For example, if a triactor pays $810 at Churchill at Churchill, those playing through American ADW's and at Churchill, as well as at simulcast locations will get $810. If someone takes the same risk and cashes the triactor on HPI or Woodbine controlled tracks, the payoff will be $730. This means that nobody should be betting these tracks through HPI. There are alternatives. And players must use these alternatives.

The tracks affected are Arlington Park, California thoroughbred tracks, Churchill Downs, Fair Grounds, Gulfstream Park, Oaklawn Park and Pimlico Racecourse. California regulations also mandate an additional 0.5% on their tri pools.
Again, if you place a bet on these tracks through HPI or at a track under Woodbine's umbrella, you are a mooch.

WEG understands the sensitivity of price increases but believes that limiting the increase to only tri pools on a small number of tracks is better than the alternative of Churchill and Magna pulling their simulcast signals from the Canadian market.
Translation: WEG relies on players being suckers and mooches.

As a net result of all these changes, WEG will still absorb approximately 90% of these increased costs or $900,000 per year, in an effort to minimize the impact to its customers. The recent simulcast agreement with Churchill and Magna will ensure their signals remain in Canada at least until the spring of 2011.
I won't be betting Tracknet or Magna tracks though WEG, so it really doesn't matter to me. It is hard enough to try to beat this game without getting ripped off because a company (WEG) puts itself way ahead of the customer.

If WEG cannot afford to pay out the exact amount that a triactor pays, they should not offer the product, and the government should take steps to not allow them to get away with upping the takeout rate to suit their bottom line.

HANA Pool Party
We are encourage players to put some money in the 9th Race at Monmouth tomorrow. The race is the Monmouth Stakes. Free past performances for the race, thanks to TrackMaster and PaceFigures.com. Strike A Deal might have the fitness edge, but since he is 0 for four at the mile and an eighth distance (with two seconds and a third), he looks like one to include in the exotics, but hard to key on in the first position.

Great article on Presque Isle Downs by someone who really gets it

While some things have improved, others haven't. The sky-high takeout rates that are in place at all Pennsylvania tracks remain in place. Takeout is the set percentage of money taken from a betting pool and not redistributed in winning payoffs.

..............Horseplayer and former economist Maury Wolff has estimated that for every one percentage point increase in takeout, handle decreases between 7 percent and 8 percent. For six consecutive years, Tampa Bay Downs has decreased takeout levels at the start of their meet, and it's no surprise that their racing product has enjoyed a rapid increase in popularity over that time frame.

Management is right when they tell you most bettors don't know that the $470.40 Superfecta payoff they collected on a race at Presque Isle Downs would pay $534.40 had the same race been run at Keeneland Race Course because of the difference in takeout rates between the tracks. However, what most management types fail to realize is that people who get more money back tend to bet more and come back more often, while those who get less back tend to bet less and in a lot of cases give up on the game altogether............

...............Presque Isle Downs has developed a reputation as a track that cares about its own slots players and cares about keeping the horsemen content, but does not care about the horse player.

Presque Isle, Woodbine, Fort Erie, the list is pretty big when it comes to that last line.


bullring said...

Where to even begin. Neither the track, or the horsemen, are willing to sacrifice short term loss, for long term gain.

Anonymous said...

Where do the figures on Tampa Downs lowering takeout and earning more come from?

Cangamble said...

Tampa Bay lowered their takeout in December 2005.

All source handle was up 14.3% immediately.

They were up over 5% the next year, 2007.

2008, they were the same as 2007.

They had a decrease this year of 2.7% where other tracks have been dropping around 9% this year.

They are definitely bucking the trend. More money is churned there and the bettors in North America are more aware of takeout these days than ever before.

Cangamble said...

Bullring, giving the horsemen a say on business growth issues is like giving a 6 year old the right to vote and hold office.