12 March 2010

Tioga Downs Doing It Right, Monmouth Park Doing It Wrong

Tioga Downs put out a press release yesterday that they are intending to lower their track takeout from 18% on WPS, 20% on Exes and DD's and 25% on Supers to 15%, 17%, and 21% respectively. Tioga actually gave HANA (Horseplayers Association of North America) a seat at the table and asked for input a while back leading to this news. Yes!, some track execs do read blogs and message boards and actually take them seriously.

All studies show that if takeout is reduced, handle and the bottom line for the track and horsemen will rise. It usually doesn't happen overnight, but lets see what happens here. I haven't played harness racing in years, but I will support this takeout drop, and if I start cashing tickets, I'll give them even more action. Free past performances would be a huge plus for Tioga to make available.

A couple of quotes by Jason Settlemoir, Tioga Downs VP of Racing and Simulcasting:

“The USTA recently polled visitors to their website and 1,259 out of 1,710 people who voted (roughly 74%) responded they would be more apt to bet races if a track lowered their takeout rate."

“We would even consider going lower on the takeout rates to between eight and nine per cent like the typical hold in the casino world if the state would allow us, and our export sites would be on board."

New York state, or any jurisdiction for that matter, has no business putting a minimum on what a track wants to charge. As for ADWs and tracks not taking Tioga's signal, Settlemoir is correct to be concerned that hardly anyone (if anyone) would take the signal at 8 or 9% in today's market. I don't see why any track would refuse Tioga's proposed structure though....well, Canadians will be out of luck I think if they want to bet Tioga through HPI, and even if HPI did have it, they would base the triactor and superfecta payoffs as if the takeout was somewhere between 25-27%.

Horseplayersbet.com will most probably have Tioga Downs on the menu, and strong Player Rewards will be earned on all bets made.

Tioga Downs President Jeff Gural is currently attending the TRA/HTA conference in California. Attendance is very light apparently. A couple of quotes from Mr. Gural:

"...the race tracks that don’t have slots aren’t here because they can’t afford it. Those that do have slots aren’t here because they don’t care about racing any more.”

“If you’ve got slots,” the pari-mutuel revenues are a drop in the bucket. Why offer slots with an 8% takeout and then charge people 20% to bet on racing?”

He is 100% correct on both accounts. The Pennsylvania Gaming Control Board has demanded that Pennsylvania tracks like Philly Park and Penn National demonstrate “concrete ways their commitment to live racing and breeding.” These tracks have been accused of not giving a rats ass about horse racing as it has now become such a small percentage of the bottom line thanks to the expansion of gaming at the tracks in Pennsylvania. Horse racing appears to be a necessary evil there and other tracks throughout North America that have slots.

Personally, I find it disturbing that tracks with slots seem to have the highest takeouts in most cases. Tioga Downs is definitely doing the right thing by going the other way.

See also, Tioga Downs' Bold Move.

Monmouth To Cut Racing Days In Half While Tripling Purses

They actually think that giving out a million a day in purses will lead to doubling the handle. Not a chance!

A study done in 1998 concludes that doubling purses will cause handle to go up by 6%. Lets say the study is a little outdated because the environment has changed because a higher percentage of betting originate off track. And there is also the problem that this study doesn't take into account the effect of reducing dates, which will probably create a larger than normal live handle. OK, so we might see handle increase because of purse size in the neighbourhood of 15-20%. However, betting is down around 10% this year so far.

Saratoga is still going give out $750,000 a day in purses. This means that quality will be diluted. I can't see many California horsemen being lured to Monmouth, considering Saratoga didn't seem to lure many horses during current past meets.

Monmouth may hurt tracks like Woodbine, keeping a few Americans home and luring the odd good Canadian horse or two. But when you look at speed figures at Woodbine last year in general, even with their good purses, there wasn't much quality there to begin with. And Woodbine only averages a little more than $2 million a day in handle.

And how much quality is there in New Jersey bred races no matter what the purse is? There will be at least a couple a card on average.

Bettors don’t care if owners make more money, they generally are attracted to familiarity (something that is lost in horse racing because good horses retire too early), actual quality, and field size.

I prefer betting non winners or two or three races with a field size of 9-12 than a Stake Race where horses are coming from all over.

The biggest problem with this whole line of thinking by Monmouth is that it is just a way of living with a shrinking pie. This will not lead to growth. In fact, it is just adding fuel to the fire.

Less races equals less owners and trainers and horses. And this inevitably means less growth. The two biggest assets the horse racing industry has is its existing bettors, and horsemen (owners in this case). Horseplayers who last longer betting are more likely to expose others in their inner circle to horse racing. Owners, especially smaller partnerships, are more likely to bring friends and family to the track in hopes of getting their pictures taken. The more they race, the more likely they are to bring friends and family. The more friends and family go, the more likely it is that some of them become semi-regulars or even regulars.

I just don't see this Monmouth experiment working. They would have been better advised to reduce takeout, but they didn't confer with HANA, so they went this way instead.

HANA now has over 1500 members.
To join HANA (free to do so), click here.

TRACKMASTER has made their blog a lot more reader friendly. Check it out.

Triple Dead Heat has a couple of neat posts up. An interview with Centennial Farm's Brandon Boone on Queen's Plate hopeful, Captain Canuck, and a really nice photo essay on Windfield's Farm.

University of Arizona Race Track Industry Program student is doing a Master's Degree Thesis Project: "an attempt to develop a new model that takes into consideration this open market system. I am attempting to show that sound economic principles and techniques can be applied to modern pari-mutuel wagering to show the effects of altering the takeout rates."

Should be interesting. His blog will be updated with findings.

I don't do much on either Triple Crowns. But Triple Crown Chase, a blog run by a horse owner in New York, who races his horses mainly at Fort Erie, does. Check out Triple Crown Chase.

After 5 months, Quebec horseplayers can now go back to betting through HPI, because of the promise to run a short harness meet later this year.
Oh, and they are going with a ridiculous average takeout rate 23% takeout rate instead of a super-ultra ridiculous 30% takeout rate, which probably helped them get into the spot they found themselves in to begin with.

For Quebec horseplayer's sake, I hope many discovered there are plenty of ways to bet on horses and get a much much better deal than betting through HPI the past 5 months.

BTW, if you think thoroughbred takeout is high, which it is, takeout rates on harness racing B tracks in Ontario are sickening, oh, and they have slots...ahem.

Gas Soaked Slots Customer Causes Woodbine Slots To Miss A Night Of Revenues. You have to be crazy to play slots. I'm surprised this doesn't happen more often.


Unknown said...

Doesn't Monmouth offer a couple wagers in the 12% or 15% range?

Cangamble said...

Monmouth has some reasonable takeouts compared to the industry. 17% WPS, 19% DD and Exes, But 25% on tris and supers.
They do have 15% takeouts on pick 4's and pick 5's.

Rowland Hoyt said...

Disagree on two points re: Monmouth. 1) The increased purses will make the track the preeminent track in a VERY crowded market. They need to stand out from the other MidAtlantic tracks, and monster purses like this will do that. 2) The most successful and top-handling tracks are limited in size and length. Keeneland, Del Mar, Saratoga, Oaklawn, Gulfstream, Santa Anita. Each races at a favorable time of the year and gives away gobs of money. There is no shortage of owners who want to race at these places and no worries about attracting owners to the game at these places. Takeout reductions are prudent moves for grind-it-out 200 day/year meets to increase handle, but long-term growth and sustainability of racing will come from dates reductions, increases in quality and tracks willing to become exciting destinations, not day-in-day-out factories. My fear is that NJ will not be given enough time by politicians wedded to the 200-date model's diminishing but still significant returns to reap the better growth the Monmouth plan promises.

Cangamble said...

Hi Rowland, I guess we will have to disagree here.
There is plenty of competition for high class horses during the time that Monmouth will race. And again, I just don't see them getting anything close to the numbers they are anticipating.

There is only so much betting money around to begin with. This won't create new players. And like I said, this type of thinking will create a lot less owners.

Anonymous said...

Typical Horse player you are! Tioga takes a 3-5 % cut in revenue and you are not totally happy. You now want them to give you FREE PP's. You know they have to pay Equibase and trackmaster for those PP's and programs, right?

You must be a HANA member! Let's see if you post this. If you do you will be better than HANA. I posted two posts earlier today (5-6 hours ago) and they have yet to put them up because it goes against what they want to hear.

Cangamble said...

Hey Anon, I'm on the board with HANA. Secondly, they cut their takeout by 15-18% (not 3-5%), but that doesn't mean a cut in revenue, because this was done as a measure to try to increase revenue.
Because I don't play harness racing, like many thoroughbred bettors, I'm just thinking it might be the push needed to get some thoroughbred players to try to give them a try.
Their takeouts are great for harness racing, but thanks to NY States ridiculous laws that limit how low they can go, they are pretty much on par with Keeneland.

As for your comments on the HANA blog, I don't moderate there, and there is a good possibility that either your posts were deemed trollish or the moderator is out for the night or a few hours.

Anonymous said...

You are right I should have said 3-4 % since a cut to 25 to 21 is 4 %. By cutting the 3-4 % it is a "cut" in revenue. Until you see that "growth" that you guys think this will make it is fictional. Again I don't disagree with what they (Tioga) is doing, I disagree with bloggers failure to look at all sides of this topic.

HANA posted it thanks to you and as you read it was not trollish. It was my attempt to balance the point.

Steve Zorn said...

I think Monmouth's plan is a great experiment, mostly because something has to be done, other than more of the same. Not at all sure it'll work, as most of the research suggests that handle is driven, first, by field size, and then, by takeout, and we don't yet know how successful Monmouth will be in getting a whole card of 10-12 horse fields (though apparently they will be paying owners all the way down to last place, as NY does, which should help. At least you won't actually lose money by racing.)

As for the 200-day a year seasons, they'll have to be cut back, one way or another. There's just no point on having races at Laurel, DElaware, Philly and Aqueduct that no one's watching (although the Aqueduct simulcast signal does very well). I suspect the solution, over the dead bodies of struggling local horsemen -- of whom I'm one -- will be shorter meets, more travel, more down timer for horses, and way fewer foals each year. Not a bad thing in the long run, but lots of collateral damage along the way.

The_Knight_Sky said...

To clarify. The NJ law requires 141 racing dates for the thoroughbred season between Monmouth Park (93) and the Meadowlands (48).

It will be waived shortly for this "experiment" by Trenton.

But before that Aycee kicks off 2010 with 6 racing days that is not affected by this plan.