JC / Railbird

Horseplayer Dreams

Rich Eng:

I can tell you this: The only organization in America with exacta and daily double takeout less than 19 percent is the New York Racing Association (17.5, Aqueduct, Belmont, Saratoga). The only racetracks with win, place and show takeout less than 16 percent are those in the NYRA (14.0), California (15.4) and Nebraska (15.0). With Aqueduct now gaining approval for 4,500 slot machines, California is positioning itself to get crushed by the NYRA.

John Pricci:

In a perfect world, takeout in every pool at every track would be 10 percent, lower if do-able. And if it were any lower than that, see how many big-time hedge fund managers would trade in their Wall Street Journals for a racing form. What’s a horse race if not an individual marketplace?


I have to hand it to NYRA, it has done a great marketing job regarding its relatively low takeout on WPS and exacta wagering. Whenever takeout is mentioned, NYRA is held in esteem for its low rates even though its takeout on three-horse (or more) exotic wagers is an onerous and shameful 26%.

Kentucky’s major tracks–Churchill and Keeneland–are clearly the best value going in terms of quality racing and relatively low takeout.

The Breeders’ Cup should refuse to return to New York until something is done about the ridiculous takeout there on three-horse bets, which is what everyone most enjoys (trifecta, superfecta, pick 4, etc.) on Breeders’ Cup day chasing those big pots.

Sadly, now that NYRA has slots, there is no incentive for attract the wagering dollar. Purses and capital improvements will come in the short term. Takeout in New York might as well be 50% because it no longer needs the bettor’s money to fund its core product.

How can horsemen, regulators, and racetrack executives in New York justify offering $80,000 maiden races thanks to slot machines with 5%-15% takeout while horseplayers are paying a 26% tax? It’s pathetic.

Posted by EJXD2 on September 18, 2010 @ 10:23 am

Bad news for NYRA about the slots. For about a decade that was their catch-all defense.

Now that’s gone. Good for the horsemen, who will be on welfare for a decade or so longer, but to fans and horseplayers it may now become even more obvious that all the “wait til our slots come” was a pathetic excuse masking the fact that NYRA has lost a lot of ground even compared to other slot-less operators (most of all to Monmouth, and they certainly have more of a problem with slots-propelled neighbors). Speaking of Monmouth, the countries’ most hope-inspiring track is now completely surrounded. Procrastination of decay triumphs over rebirth once more (which may quite generally be a fitting title for a book about North American racing, ca. 1960-2010).

4.500 nails in the coffin of East Coast racing. Thanks, NYRA!

Posted by malcer on September 18, 2010 @ 2:19 pm

Couldn’t disagree more that anyone should be making a stand in racing over the cost of making wagers.

The cost of making a bet has never mattered to the vast majority of horseplayers. No one has ever proven outside the lab that reducing takeout leads to any sort of quantifiable advantage over other tracks or to the tracks’ bottom line.

The players most affected by takeout – regular high-handle players – eventually garner rebates or other perks…or they abandon racing all together for other games.

When we as horseplayers bitch about takeout, we are essentially asking for a product we are already buying for less than we have purchased it in the past.

In the lab, economists have long told us that if we put an extra $1.00 in players pockets, it will help the churn, lead to higher handle and better purses…yadda x3. But the fact is, you can’t lower the takeout enough to effectively register with most players (in terms of more money in their pockets) and you certainly can’t lower it enough to compete with other legal casino games.

And by that theory, shouldn’t Del Mar or any of the California tracks see their business increase if they joined the rest of the country and dropped their exorbitant admission charges? Why would reducing takeout have some magic multiplier effect but reducing admission wouldn’t?

Because more important than cost of the bet is the quality of the product. I have yet to hear about how much more money Delaware is making off their exacta bonus. NYRA, Keeneland and other places have all abandoned lower takeout models. Yet both NYRA and Keeneland have remained market leaders.

Let’s stop tilting at these takeout windmills. Any gains to be made from lowering takeout will only be felt through volume. Do we really think a larger volume of horse racing is what the game needs right now?

Posted by Rolly on September 20, 2010 @ 3:37 pm

I agree that horseplayers have shown ad nauseum that they don’t care about takeout, which is why I’ve said on more than one occasion that tracks should charge a minimum of 50% takeout because no one cares.

We all know that’s silly, though, and if we know that 50% takeout doesn’t make sense, then we should know that 30% takeout doesn’t make much sense either.

No one has ever advocated for no takeout or even something silly like 4% (which Ellis tried and people didn’t support). But 10% on straight wagers and 20% on exotics should cover it.

And your admission charge example is extremely weak. That’s a one-time charge. The takeout is applied to every bet and effects your bankroll exponentially.

Posted by EJXD2 on September 20, 2010 @ 3:51 pm

“The cost of making a bet has never mattered to the vast majority of horseplayers.”

This is a curious argument, that I hear time and time again. I can never figure it out.

This argument would only make sense if wagering were going up.

If a company was raising prices, or had too high a price, and people were buying more of it, it makes sense. But horseplayers are playing less and less racing. How can we say, when we have lost over half our handle the last 15 or so years, that it “does not matter”?

Of course it matters. People lose money because they cant beat 22% take and they leave.

In 1990, when stock brokers were charging $300 a trade for thirty years, they might have said the same thing. However, when in the late 1990’s this cost was changed to charge $10 a trade instead of $300, trading exploded. Of course price mattered to them – volume went up.

When pinnaclesports and others were taking tons of customers away from racing, racings response was to “shut them down”. A noble pursuit, yes, however why were tehy shutting them down? Because they were taking racings customers by offering a takeout reduction of 7%. If pricing did not matter, why did players flock to them?

Racing does not want betfair in. Betfair has 3 million players. How did they grow from 0 to 3 million in eight short years? Because pricing mattered.

Poker would not raise takeouts from 4% to 24% and see 75% of their players leave and say “pricing does not matter to the majority of poker players”. Racing does that, again and again. it makes no sense, economically or otherwise, yet it is a mantra of this business since about 1940.

Old time thinking needs to be sent back to where it belongs – in a different age.


Posted by PTP on September 21, 2010 @ 2:50 pm

Takeout matters to the industry, but it doesn’t matter to horseplayers.

The vast, vast, vast majority of horseplayers don’t care what the take out is. They want the action.

Look at blackjack on the Las Vegas strip. 6-to-5 tables dominate the scene, but people still play. Fleece’em while they’re there is what the corporate big whigs think.

Sure, most people have less money when they leave than they did before, but the economy is down and they take fewer trips, anyway, so might as well get them for all that money now.

Players have shown time and again that they are NOT price sensitive.

Posted by EJXD2 on September 21, 2010 @ 3:01 pm

And PTP, there have been lower takeout games available to horseplayers (albeit illegal for the most part) for the better part of the 70 years you say this “old time thinking” has been going on.

Big handle players flocked to Pinnacle because they could get action on other sports and a rebate. Racing got them shut down (rightfully…it was illegal) and found ways to cater to heavy bettors who could markedly affect handle. Problem solved. The rest of the players never cared.

No player ever looks at a toteboard and thinks…”damn, I like this horse at 2-1, but if only we were in NJ, I could bet him and get 5-2. Aw…hell. I ain’t playing him because of that.” They bet the horse because they like the horse…or the action…or the perceived value. If they lose the takeout is 100%. If they win, few think it could have been more if the track was run by someone more enlightened.

And horse racing just cannot be compared to other games. There is nowhere near enough churn to match the takeout or rake on games like poker or a slot machine.

Handle is down for myriad other reasons. The cost of making a bet is not one of them. If it was a significant factor, tracks with lower takeout would outperform those with higher rates. That doesn’t happen anywhere outside the lab.

Posted by Rolly on September 21, 2010 @ 3:13 pm

[…] “Horseplayer Dreams” post from a few days ago has attracted a thoughtful comment thread on the thorny issue of takeout. Some weeks ago, I was browsing through the appendix of Tom R. Underwood’s […]

Posted by Jessica Chapel / Railbird v2 - Money Matters on September 21, 2010 @ 6:22 pm


It depends on what pool you are fishing in. I remember chatting with an exec about takeout ten years ago. He said “I asked around the grandstand and no one knows what the takeout is”. Well of course that is the case. The people at the track are existing players into high rake; they dont care. But the most important aspect of business and business growth is getting the markets that you are not speaking to. That is what RGS, pinnacle, betfair and every other successful gambling enterprise did. If racing was not going to service price sensitive players, well they would. And they did, with much success.

Players of games in a casino are not the market, and never have been. Skill game markets are the markets for racing, and always have. Have you ever heard a horseplayer leave racing and tell you they are spending $2M a year on roulette? Of course not; they are betting sports, or backgammon, or poker – skill games.

The “legal” skill game market was $100B in 2002. By 2012 it will be over $500B. That is a five fold increase, while racing is cut in half.

Racing, with $10B in handle, should not be lecturing them on price, but lecture they do.

As for non-price sensitivity, the data does not, and never has borne that out. Any jurisdiction that uses demand elasticities to govern their betting volume win. Hong Kong, after six consecutive years increased betting volume in 2007. They lowered effective take by 1.8%. it resulted in a boost in handles, and increased money for purses by 9%.

Yes, even Hong Kong with a monopoly on wagering has done what the betfair’s of the world have done – lower take to more handle and more benefit.

As for your black joack example, well even that shows a positive correlation with a negative elasticity.

Since they raised takeout, something (not so) curious happened: Hold went down.

“blackjack’s share of the casino revenue pie was just 9.7 percent of all revenue, the first time its slice ever dropped below 10 percent. And the win or “hold” percentage last year was just 11.3 percent, the lowest level ever recorded in Nevada.”

“In a sense, the casino’s desire to squeeze more money out of the blackjack tables has actually backfired, with the result having an opposite effect,” said a floor supervisor at a casino on the Las Vegas Strip. “In addition, many casinos have raised the table minimums, which have driven away the casual players, and the tighter rules have pushed high-end players to other games, such as baccarat.”

According to the floor supervisor, these changes hit smaller players hard. They did not make a conscious decision to quit, they just quit; and they were important.

“Those players were crucial to the casino’s bottom line,” he said. “When you have every seat filled at a table– even if they’re only $5 players – you have a steady income stream subject to the 12 percent hold.”


Take cash away, and an edge away from ANY gambler, and it results in less volume – by definition, we have an elasticity not equal to one.

It’s easy. Take bets at your local bar on a pick em football game at -110 and -110. The next week take bets at -150 and -150. Sooner or later people are meeting a different bookie, at a different bar.


Posted by PTP on September 21, 2010 @ 7:59 pm