How much would 8% takeout move the handle?

[banditbeau]

As I mentioned a few days ago Fairmounts inquiry about Canterbury\'s recent meet and their numbers coincided with a note I sent to them about as Miff noted \"racings 3 T\'s - takeout,testing,and transparency. I used most of the note to try to get them to at least consider reducing their takeout. As MJ noted, they have a cherry of a deal that lasts 6 more years. The have a card room, their daily handle of about $720k and about $10/day of concessions per paid admission (ave - 6700/day) pays for the current $120k/day in purses, and the topper, they are in the 4th year of a 10 year $75 million purse enhancement deal with a nearby casino, that appears to essentially amount to a no-compete clause for any other type of gaming. This combination guarantees them it seems a profit, at least until the purse enhancement deal dies. With that backdrop, I tried to impress upon them that racing is going the way of blackjack at casino\'s. (see 2 link articles below) Plus as these articles mention, racing has a double negative when it comes to any savvy bettor - to many decisions to make in wagering, combined with way to high takeout. With less than 3% of the wagering dollar now going to racing, down from 100% as short a time ago as the late 60\'s, racings fate seems sealed without major changes, which include lower takeout as #1 priority from our list of 3 T\'s. And,Canterbury is the only track in the country with the wherewithal to give it a shot. I used Tavasco\'s number, (I think it was his note), that casino\'s have figured out the 8% range as the optimum rake (up from the 6% range not to long ago - coincidence I guess that casino\'s have closed with that change??), and that if it worked for them that it seemed that would be the ceiling for any track to compete, especially given the learning curve compared to a slot machine. Surprisingly, they not only responded, but also called and talked about the suggestions for nearly an hour, and left me with a couple of questions and a \"I will call you back\" to talk more if that\'s OK! Every issue he mentioned as a concern has for the most part been discussed on this board, including the idea of the effect on the whales, which luckily I argued as JB did today that they were looking at it all wrong.  I suggested 8% takeout on everything and pointed out how IF this worked, and their handle went from $720k/day to $2 million per day, they break even.  Big jump I know, but, if successful, they not only take care of all the regional competition in the entire Midwest, but also any other track they run against. And, if they stay status quo, they will show a profit until the purse share agreement runs out, at which time every investor in  the company will rightfully question what they did with $75 million over the past 10 years to project a favorable future? I am sure there are arguments against it, but the bottom line is they will remain in the lower third of the HANA rankings, run maybe Arlington out of business, and put a hurt on Prairie Meadows before the cash runs out in a few years, as each lacks their purse agreement, but really it seems almost negligent to not at least TRY it in some form. In the end, their question was, and I pose it to you, how much would you guess an 8% take on all wagers, would move the handle. They have a great turf course, one of the safest dirt tracks in the country, and a backstretch that appears to be as good if not better than the rest of the country -it was built in the late 80\'s. They averaged over 8 entries per race, so field size was good. I told them I depend on Thoro-Graph along with other data but that very few if any other TG users would look at Cby regularly given their current low pool totals and high takeout.They asked to actually talk to JB and any other large bettors that might influence them.  Thus their first question - IF, IF they were to lower the rake to the 8-10% range on all or some pools, what impact what be felt?  

http://pullthepocket.blogspot.com/2015/09/millenial-gamblers-hats-clubs-action-or.html

http://www.fool.com/investing/general/2015/02/28/the-death-of-blackjack-and-what-games-are-replacin.aspx

[Sandreadis]

These guys could learn a few things from the Kid Rock business model.
Lower ticket prices ($20), concessions and parking. Concerts are packed.
Everyone drinking and buying T-Shirts.

http://www.billboard.com/articles/news/6473080/kid-rock-20-dollar-concert-tour-announcement

[mjellish]

If a casino in vegas decided to start paying 9/5 on blackjack instead of 3/2, how do you think that would affect their handle and the number of tables they would need?

How about having all the roulette wheels have one 0 and pay 36-1?

How many more rooms do you book?

Now same questions, but change it to an online casino.


At the racetrack, what happens to handle if the ontrack takeout was 10%, and the simulcast was 14%.  Do you sell more $3 hot dogs and sodas that way than if it was just a flat 10% no matter what?

[miff]

Most of the NYC OTB\'s had a 6% surcharge vs track price, yet attendance at NYRA tracks did not improve at all.

Any racing official who does not know that the game has permanently moved off track(app 80% of handle)is out of touch. Aside from boutique meets and big days, the masses are not going to the track anywhere near as often as they once did.

Spending a dollar on trying to increase attendance at the track is a waste of money.

[mjellish]

I dunno Miff.  I get it about the game moving more and more online.  But I wouldn\'t throw in the towel on ontrack attendance.  If I was the czar at a racetrack with carte blanche I would definitely do things to bring the regular players in (like lower takeout and offer amenities), and I would be doing things to bring the recreational players out as well.  Canterbury does a very good job of this. They mail out vouchers that are guaranteed to be a winner (somewhere between $5 and $10,000) but they are only good on certain days, like Travers Day or MN Championship Day, etc.  They have pony rides for kids on Sundays.  They have free music and dollar hotdogs on Thursday nights.  They used to have Golden Gloves boxing in between the races.  All that stuff matters.  Of course the facility also has to be clean and well managed with minimal hassles such as parking, lines at the bathrooms, traffic, etc.  

They give me free admission and valet parking, which is nice.  But if they also gave a 5% or a 3% rebate for ontrack wagers I think that would tip some people from playing online to playing onsite.  There are other benefits to being on site such as being able to view the horses in the paddock, watch them warm up, note wind and track maintenance, view the entire field during the race, etc.  Sometimes there are even hot women around, which never hurts.  

[miff]

MJ,

Everything I see,read,hear tells me Elvis has left the building re increasing on track attendance in a meaningful way.

At the smaller venues, it may be beneficial to do the things you suggest but at Belmont/Aqueduct type venues it won\'t fly. Weekday attendance at Belmont/Aqu is downright depressing. When I go,the place is stone dead, no buzz at all. The crowds of the past are gone, seemingly for good.NYRA tried the \"young\" concert route and it\'s going nowhere in a hurry,that crowd bet like $20 per head but loved to drink and chase the skirts.Did it create a few more new fans?, maybe, but that is not going to be meaningful going forward.

Bold innovation is required to possibly revive the game,that will not happen under the current Clueless Clowns/Politically appointed stooges.


Mike

[TGJB]

If tracks really want people to come they can\'t run on weekday afternoons.

At one point the Betfair people (the ones I was friendly with are now gone) were looking at buying Monmouth, and asked me what I thought. I said instantly, put in lights. It\'s a beach area during the summer, run a twilight card. It\'s big bar-band area (Bruuuuuce), have an area where there\'s live music and a bar. Make it the thing to do at night.

That would help attendance and concession sales (similar things have worked at CD and Dmr), but the people who would come are not serious bettors. Having a lower takeout on track than off will make almost no difference in attendance in most markets, I believe. Lowering takeout a lot overall would be an interesting experiment.

[MonmouthGuy]

Couldn\'t have been much more than 5,000 people on Stars & Stripes Day at Belmont with Perfect weather, 6 graded stakes, 2 G1s, the Suburban, a Food Truck Festival,  a baseball Cap giveaway, petting zoo, pony rides and a post card concert by a Grammy winning Christian Rock Band.

Only things missing were a monkey riding a bicycle and Trump.

Need to attract betting customers first, then bring in the casual fan. But Belmont just too big. Never coming back to a time where anything except a Breeders Cup or Triple Crown race flatters the facility.

[TGJB]

Beau-- yes they can talk to me, and they should talk to MJ, he\'s a very big bettor and it\'s his home track. You can tell them I\'m friends with Joe Friedberg, he\'s been involved in a lot of things with that track and is very well known. Among other things Joe was one of my lawyers in the Rachel case. (Also attorney for Prince, Dennis Green, Randy Moss etc...).

[MonmouthGuy]

Agree on Monmouth and I think that is what they are trying to do.  Delayed by 1-2 years after Sandy.  Local residents have fought against lights but you are right on track with how it should be done.

[TGJB]

Belmont has a geographical problem, and way too much competition for the entertainment dollar in NY. They are much better off going after the serious player. Places like Canterbury, Kee, CD, Del Mar and Mth are in entirely different situations.

[MonmouthGuy]

Agree and edited/added to last sentence of previous.

[miff]

NY Mayor De Blasio warming to the idea of permitting ATM type horse bettng machines across the 5 boroughs.NYRA also has go ahead on up to 7 Restaurant/theatre type simo operations.

Could be a boost for NY handle.

[moosepalm]

TGJB Wrote:
-------------------------------------------------------
 Places like Canterbury, Kee, CD,
> Del Mar and Mth are in entirely different
> situations.

Agreed.  Many of those places, and especially Saratoga, are gateway drugs to the sport.  They provide an \"experience\" for those in the maiden ranks.  I was out at Turf Paradise in late March (the day that they had \"misidentified\" two horses, and one of them won).  It was like a carnival out there, and it was jammed, at least for the size of the venue.  I have no idea if that will have meaningful impact in terms of recidivist players, but it\'s probably the last hope for on track participation.  Without that, I\'m not sure how to introduce the sport to the entry-level player.  As for the more serious players, the conversation has to start with take-out.

[Topcat]

mjellish Wrote:
-------------------------------------------------------
>
>
> They give me free admission and valet parking,
> which is nice.  But if they also gave a 5% or a 3%
> rebate for ontrack wagers I think that would tip
> some people from playing online to playing onsite.
>  There are other benefits to being on site such as
> being able to view the horses in the paddock,
> watch them warm up, note wind and track
> maintenance, view the entire field during the
> race, etc.  Sometimes there are even hot women
> around, which never hurts.  


The second sentence, here, is something I\'ve wanted to see seriously tried (feel free to fudge with the operative %, but it must be made worthwhile).   None of this nonsensical fractional-1% pie-in-sky rebate junk; gun for 2%-3% from the opening whilstle, on everything a player cycles if he\'s on the grounds.