Aggregate US slot machine hold=7.7%

Started by breakage1, July 26, 2016, 07:32:27 PM

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breakage1

http://www.agem.org/images/news/AGEM_Slot_Hold_Analysis_Report_FINAL.pdf

on page seven at the above link it has a chart dating back to 1990.

It is interesting after bottoming in 1996 at 5.96% that it is now up to 7.7%.


Regardless, horse racing is WAY TOO HIGH.

The math problem is the same, maximize revenue via a hold tax for a form of gambling entertainment via multi outcome events.  The costs of providing that entertainment have no bearing on the optimal hold rate to maximize the incoming revenue.

If horse racing hold levels maximized take out levels-

Why aren\'t the slot companies and casinos charging same levels for slot machines?

Unlike racing, I would venture to guess that IGT, MGM et al have spent significant resources on the problem.

Boscar Obarra

You could speculate that the cost of putting on the show at a racetrack is significantly higher than the cost of planting a few slot machines in a carpeted room.


 But since racing\'s costs are \'fixed\' , then a doubling of handle should allow for a halving of takeout.  But the handle can\'t  possibly double  until the takeout is slashed.


 Not  sure it would double even in the face of a 10% takeout, but it might. I wonder how much betting there would be on the races at Saratoga with a zero takeout. They really should try it for a race or two.

jma11473

Is it any kind of revelation to say racing takeout is too high? The real issue is that with so much money coming in through ADWs, any takeout cuts only hurt racetracks (since the ADW fees don\'t change) unless handle skyrockets. Canterbury cut takeout, handle barely budged. Laurel tried lower takeout a few years ago, nothing changed. Of course I\'m not arguing for higher takeout, but tracks that are barely getting by are not going to slash their revenue by 20% or 40% in the hopes that someone takes notice. Plus usually you have to convince state regulators to cut the takeout, and they sure aren\'t going to give up a chunk of revenue. So as long as you have horses to feed and humans involved, the situation looks stuck.

mjellish

You need to cut takeout AND guarantee your multi race pools.  That attracts more players and more $, and some of those players will also wind up putting $ in the straight pools.  It goes without saying you have to have a quality racing product as well.

TempletonPeck

I think this is a good point, guaranteed minimums help.

Another thing I think bears consideration is that recreational players don\'t check the takeout before they play, so it takes a period of time for them to learn by osmosis basically that horse wagering is a better gamble than they\'ve been trained to think it is (after the takeout gets lowered).

They don\'t read these forums, they just go make a bet once in awhile, so it takes them a lot of those bets to feel the difference in takeout.

ajkreider

Which is why I\'m not sure where the extra handle is supposed to come from.  Do casual bettors use the takeout % in their decisions to go to the track?  Is there lots of cash sitting on the sidelines that will come rushing in when the takeout drops to 15%? Is it being bet on other things? Perhaps we could steal betting from other jurisdictions??  

Maybe computer-driven whales will increase their betting pile, but lots of people thing that\'s a bad thing anyway.

I just don\'t see where the windfall is.

banditbeau

Short summary of Canterbury results 39 days in to their meet. I\'m no accountant but these numbers have to be in the ballpark based on their reported daily handle and attendance.
Their stated goal in the newspaper was \"5% on track , 30% off track increase\" in handle off last years marks. It is not happening yet, and by all accounts with anyone who is looking to play there the recurring echo seems to be the product day to day is not appealing enough to make the leap to bet there regularly - to many short fields with huge favorites, plus 2-3 quarter horse races per day that attract small pools. Thisledowns, Sufolk, and Evangeline have all followed Cby\'s takeout cut with some form of reduction of their own.

Close as I can tell -
Overall handle is up 7.9%
Off-track is up 11.8%
On-track up only .5% (but per capita remains in the $30 range)
Attendance is up 5.2% (Their high attendance was 21,000 on July 3)

The blended take out rates of both this vs last years rates would make the takeout reduction alone a substantial loser at this point even with the added $100k of increased income from admissions increase as compared to last year.  Tougher to measure is the value of the added exposure they have gotten from many sources (Byk type shows, wagering account spots etc) - they have most certainly gained here.  Plus other Midwest tracks are not showing gains - Arlington is down to 7-8 races some days, and Prairie Meadows handle is less than Cby\'s.  

So is takeout helping?  Who knows. As mentioned the current product is not super and the signal is apparently tough for some to get. By comparison Indiana Downs or Hoosier Park regularly swamp the handle of Cby, often racing on weekday afternoons. The takeout question is a tough task to take on that seems at least to be a recipe that includes as MJ said, better product with guaranteed pools, more accessible signal, and some time to let that value of the changes set in so as to allow gamblers to take appreciable note.  Cby is one of the few given their current casino pact that seems to be in a position to see if our premise of lower takeout = higher handle works. And just because it works or doesn\'t work at a small Midwest venue does that translate successfully to other parts of the country?

bb

BitPlayer

I think you\'ve got this backwards.  With ADW betting, the tracks get the ADW fee, and the ADW nets the difference between that fee and the takeout.  The reduced takeout comes out of the pocket of the ADW, which, I assume, compensates in part by reducing rebates.

breakage1

It is not any kind of revelation but frequently some percent of people involved claim there is no proof that racing\'s hold is way too high.

IMHO this is  proof as the slot machine and casino companies could charge 20% or they could charge 2.5% on slots-I suspect they have invested resources and concluded that the optimal answer is in between 5-10%.

This is in addition to things like they did around $40K into the FL P5 yesterday with around a $4K carryover.  I don\'t know what the normal pool is for that bet is but it\'s not $40K if they have a $4K carryover.

Obviously, this game is the betting 99% of the time and if they just made the betting remotely palatable it would attract more betting.

RICH

in my opinion, the takeout out argument is baloney as far as increasing handle with people having fun and playing. My 20 yr old son and all his friends and my nephew and his friends who I bring to the track and the local teletrack could give 2 shits about a takeout, they have no idea.

I been playing for over 40 years, used to be a much bigger player. Been here since 1996 the beginning. The takeout issue will never have a bearing on bringing anyone into the game or keeping anyone in the game, at the fun level. You guys who play deep and strong, yeah that may matter. But you guys just butt heads with each other. Times have changed, anyone around back in the day can tell you what it was like. Today is nothing at all like yesterday with the sheets, not even close.

Its just not the same game or the same opposition anymore. Bringing everyone up on Aug 11 for the 25th year, hopefully will see if anyone is around the old Carolina BBQ area