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.

Who Contributes More To Horse Racing? The Horseplayer Or The Owner?

It is maddening when I read a comment by horse owners that reads something like this: "we invest a lot more than Horseplayers!" or "we should have the biggest say because we put on the show!" Both of these statements are untrue, and here is why:

Tackling the second statement. No, the track puts on the show, and the show is gambling. The proceeds from gambling losses by customers make the race track and the purses it gives out tick.

WHO CONTRIBUTES MORE MONEY?
It is estimated that thoroughbred horse owners collectively lose 40% of what they put in ( for some jurisdictions that have slots, this amount may be lower, while owners in jurisdictions that don't have subsidized purse money added to purses may lose more).

In 2009 $1.1 Billion was distributed in purse money. After owners give 10% to trainers and pay the jockeys their share, that leaves around $900 million that goes to the owners. 40% of that is $360 million . Sounds like a lot, but it is pale in comparison to what Horseplayers lose. EDITORS UPDATE: Turns out that the number lost by owners could be closer to $1 billion, but if you take into account that Horseplayers lose after tax dollars, and much of the lost money for horse owners is pre tax dollars, the amount that Horseplayers lose in real money is much greater than what is lost by owners collectively.

$12 Billion was bet (I'll stop short at calling this money invested, though horse owners like to use that term for the money they gamble on owning horses). The blended takeout rate is around 21%, but because of rebates the blended rate is probably closer to 18% these days. This means that over $2.1 Billion is lost each year by Horseplayers.

And if you include the lost money by gamblers at games like slots or Instant Racing, monies that are used to subsidize purses, gamblers/Horseplayers lose a lot more than $2.1 Billion each year.

I'm not even going to add the costs of Forms, data, transportation, admissions, and concessions (much of which owners can deduct, but the 99% of Horseplayers who lose money cannot).

Now, if we dissect the $360 million lost by owners further, almost all of it is lost within the industry, and a good amount of it goes to horse owners who have a horse racing related business on the side (like farms that break horses, etc.), or even a full time business (like a vet who owns horses). Some of it in the form of day pay goes to trainers, which helps subsidize the horses they own or co-own.

Another thing is that in many cases, horse owners only risk a small percentage of their whole net worth, while in many instances, Horseplayers are risking their entire net worth...in some cases, the Horseplayer doesn't have a positive net worth.

So who exactly is more important to the racing industry? Those who lose less than $360 million $1 billion a year (mostly pre-tax), or those who lose more than $2.1 Billion after tax dollars?

Why does horse racing cater to owners and not Horseplayers? That is the bigger question. California is now a disaster thanks to putting the horse owner first. And why again do horse owners have such a major input in the price the track charges the customer?


UPDATE! QUOTE OF THE DECADE SO FAR:

"If there isn't any gambling, owners lose a lot more. If there isn't any gambling, gamblers lose a lot less."

-CJ (PaceFigures.com)


GULFSTREAM PARK: P.T. BARNUM AND HARRY HOUDINI WOULD BE PROUD OF THEIR MARKETING

When reading all the fluff having to do with Gulfstream Park's 2011 opening, one would really get the impression they have lowered their takeout rates. This is from their website:

Gulfstream Announces 2011 Wagering Menu

12/16/2010

Record Low Takeouts, New Wagers To Welcome Fans

HALLANDALE BEACH – Gulfstream Park Racing & Casino announced today a wagering menu for its 2011 thoroughbred meet beginning Jan. 5 that includes:
• A 50 cent Pick-5 with a record low 15 percent takeout.
• Low takeout rates on Bet-3 and 50 cent Pick-4 wagers of only 20 percent.
• An early and late 50 cent Pick-4.
• A 10 cent Pick-6.
• Rolling Daily Doubles, Superfecta’s and Bet-3’s.
Win, Place, Show, Daily Double, Exacta and Trifecta wagers will be a $1 minimum wager.

There was a link in the rest of the article which gives takeout info on Gulfstream. I clicked it.

The first thing that struck me was seeing 26% on trifectas and superfectas. I could have sworn they were 25% last year.

It turns out I was wrong. They snuck in an unpublicized takeout hike of 1% on tris at the beginning of last year. This year, they have snuck in a 1% increase in superfecta takeout.

So what about "record low takeouts" that are being advertised on their site and being bought by the racing media?

The new pick 5 doesn't count as a takeout drop because it is a brand new bet. And it isn't a record low at 15%, it ties the record set by Monmouth Park.

The Bet 3 and Pick 4 rates of 20% are the same rates they had in 2010.

I don't see record low takeoutS, I see one tied record low and that is it.

However if you look at the new Pick 6 which now resembles the Beulah Fortune 6, the nature of the bet has changed, and the takeout has gone up 33%, from 15% last year to 20% this year.

Depending on how successful the Pick 5 bet is, it will be a coin toss as to whether their actual blended rate goes up slightly or down slightly or remains around the same.

Yes, the Pick 6 has a shot of bringing in the lottery/slots crowd if the jackpot grows once or twice during the meeting, but to promote Gulfstream Park as a track that has lowered its takeout is just plain deceptive and wrong.



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John McCririck (Mutton Chops): "Horseplayers Have No Chance To Beat The Takeout In America"

On Saturday around 12:30 PM EST, HPITV aired the Gulfstream Park pre game interview by Alyssa Ali of John McCririck. It started off simple enough, discussing the 6th place finish of a fan favorite English horse (I believe it was Nicconi) and how that isn't good for racing, because racing needs heroes to keep running well (or something like that).

As you can tell by now, I was just able to take mental notes of the conversation. Trying to find the actual video online has been futile so far. After watching it, I knew for a fact that Gulfstream wouldn't have the nerve to put it on their Youtube channel.

Ok, now for the good part. Alyssa and McCririck started discussing the state of the game in America today.

The following points were made by Sir Chops:

*Horse racing is dying because horsemen and racing execs don't make decisions based on what customers (the bettors) want.

*Lack of freedom for bettors has stifled growth. Horse racing needs to allow betting exchanges and even bookmakers to become allowed in America. (Editor's note: I'm not convinced bookmakers are needed.)

*It doesn't matter who you are, you aren't going to beat an average takeout of 20-25%.

*If not for (he pointed to the new Gulfstream Casino) casinos, horse racing would be dead in America today.

As McCririck started telling the viewers the blatant truth about horse racing in (North) America today, I could see Ms. Ali become very uncomfortable. She had a "deer in the headlights" look on her face.

The reality that high takeout hurts growth or that horsemen are hindering growth (and actually helping with horse racing's death) are two facts that the industry does not want to be mentioned in a public medium.

Exchange betting can help grow horse racing in North America because thanks to low takeouts, players have a chance to win. Of course, most players lose, however, visible winners create a buzz and something for all to strive for. This worked in growing poker. Again, most poker players lose, but the few that are visible winners gives the perception that if you are good enough, you could make a living at it.

Betting into a 20% takeout only creates the idea that horseplayers are degenerate gamblers who will gamble on anything and never have a dime to show for it. No wonder that is how horseplayers are treated in North America by many racing execs.

There wouldn't be that much money added to the tracks or horsemen's bottom line from exchange betting revenues directly (Betfair spends a lot on marketing, salaries, and technology, and made only around $50 million USD in net profit last year). $50 million from all types of wagers, not just horse racing, isn't much even if all of it were added to the $1.2 billion that is handed out in purses in North America today. And one could argue that exchange betting may cannibalize some of the parimutuel pool.

However, where exchange betting can be beneficial, is by bringing in new customers who will begin to follow and play horse races.

The fact exchange betting doesn't deal with exotics is a plus, because players who like big priced horses or are torn between two or three horses may rather play exotics into the mutuel pools.

It is very difficult to compare British racing to North American racing because purses are generated from levy's that are placed on bookmakers, exchanges, and parimutuel betting on UK races plus sponsorship usually by companies that take bets on UK races.

Some more facts from Jockey Club stats:
Purses are 1/4 betting handle in Canada (thanks to slots).
Purses are about 12% total handle in the US.
Purses are about 1% the total handle in the UK.
Per capita though, UK residents bet around 6 times as much on horses as US residents do.

No matter how you slice it though, horse racing is in a tailspin in North America, and bets being overpriced are the main reason why.


Isn't This What I've Been Talking About?

In an article in Gaming Today, the point being made is that casino customer's satisfaction is at a new low, and it all has to do with the casino operators shifting from what used to work to what looks like the typical horse racing exec's attitude and it coincides with a higher rate of player dissatisfaction (survey says 88% of players are dissatisfied at local casinos):

In his presentation at last month’s Casino Marketing Conference, Meczka (Michael Meczka, president of Los Angeles-based MM/R/C Inc. and a 30-year member of the American Marketing Association) said that today’s casino marketers are constantly asking each other, "How can we extract more revenue from our customers?" rather than the questions they should be asking: "How can we provide service?" or "How can we give our customers what they expect?"

Meczka said the casinos’ "short sighted" solutions to the burning desire of getting deeper into the customer’s pocket include the following:

• Reduce playing time by speeding up the games (electronic and table)

• Increase the number of coins required to play

• Remove the popular 3 and 5 coin max games

• Eliminate the slot machine’s "arm" and replace with a button (increased speed, less playing time)

• Shorten the video reel spin cycle to reduce playing time

• Increase the hold percentage by 1 percent, which decreases the playing time by 17.5 percent

• Use table games with high holds and multiple side bets, as well as the lowest pay tables in order to force players to lose quicker and more often.

Meczka said the "short sighted" result the casinos are seeking is to "get the money fast … and get the player out of here."

The "success" of these policies, however, will eventually doom the casinos, Meczka said. "Ultimately, customers will have less satisfaction with the casino experience," he said, adding that customers will eventually reduce their frequency of visits, cut back on the amount spent and, eventually, stop coming to the casino altogether.

When customers cut back, some will leave altogether, some will find other things to gamble on, and most importantly when it comes to growth, when a customer is not going, they are not going to bring others to the casino...or racetrack. Conversely, the longer they last, the more likely they are to come back quicker, and the more likely they are to expose friends, family, or coworkers to the game as well.

For more, read The Big Squeeze, over at HANA's blog.



Bold Executive Named Leading Ontario Sire by CTHS
Trajectory ranked 2nd and Mobil was named leading new sire.


This just didn't get enough press in Canada. The exercise rider who died a few weeks ago in a very unfortunate training accident at Tampa Bay was a former jockey who rode in Ontario. From the the DRF Letters to the Editor:

Exercise rider a pro right to the end

This letter is in regard to the Feb. 4 article "Exercise rider dies at Tampa." I just would like you all to know that Robert Shields, better known as Ted or Teddy, was a very talented rider. Ted had ridden and worked with horses all his life. It was truly his passion and something he thoroughly enjoyed. He had a racing career as a jockey for many years, having a trainer in Canada named Carl Chapman hold his apprentice contract. His first win was at Bowie racetrack in Maryland in the late 1960s. He had the pleasure of working for many outstanding trainers, including Woody Stephens and Mack Miller. He had ridden races and exercised horses up and down the East Coast, from Woodbine and Fort Erie in Canada, to Saratoga, Belmont, Aqueduct, and Finger Lakes in New York, to Calder, Gulfstream, and Tampa in Florida, as well as many racetracks and training centers in between.

Any trainer or groom I had ever spoken to about Ted had always said what a "good hand on a horse" he was, and that he "had a good clock in his head," which is why he was always sought out to breeze horses in the morning.

I have been assured that he had galloped the horse who ultimately would be his last several times before Monday's accident, so he was familiar with this particular horse. Although Ted was 60, he was still a very capable rider. This accident could have happened to any rider at any time or anywhere. At least he was doing what he loved, and he did not suffer.

He is survived by his ex-wife Linda (me), our 15-year old daughter, Claire, and his younger brother, William.

Linda Shields - Fort Lauderdale, Fla.

Another Tracknet Track Underperforming In A Bad Market: Golden Gates Trims Purses By 7 1/2% and Drops 3 Stake Races Is it because of the Big Squeeze?