Jury Still Out on Recent Takeout-Reduction Experiments
An experiment by which the blended pari-mutuel takeout rate at Laurel Park was cut in half proved popular in theory but not at the betting windows. But was it a bust?
Maryland Jockey Club president and chief operating officer Lou Raffetto Jr., during a Sept. 17 presentation at the International Simulcast Conference in Kansas City, Mo., showed his conclusion as part of a slide show. It was a big question mark.
“It was a public relations bonanza and a financial bust,” Raffetto said during a panel discussion titled “Expanding the Wagering Menu.”
The Laurel experiment, which dropped blended takeout to 11.34% across the board, was designed to generate handle. Members of the public noticed, Raffetto said, but competition from the more prominent Del Mar and Saratoga signals, as well as some resistance from facilities that imported the Laurel signal, proved to much to overcome, he said.
Overall handle declined during the 10-day summer meet at Laurel, but it might have increased had International Racing Group and Youbet.com, two account wagering services, taken the Laurel signal. Last year during the same meet, they combined to handle about $190,000 a day on Laurel races; outlets that took the Laurel signal this year wagered $70,000 a day more than last year.
Raffetto said the takeout cut warrants more than a 10-day experiment, but he’s not sure Laurel is the right track for it. He suggested Presque Isle Downs, the new Erie, Pa., racetrack at which most of the purse money comes from slot-machine revenue.
“There’s a perfect example of a track that could charge 11% or 12% takeout and charge receiving sites 1% for signal,” he said. “Can this work going forward? I don’t know, it’s hard to say. But I personally believe the business model in racing doesn’t work, at least for a large number of people.”
Ellis Park president Ron Geary discussed his track’s experiment with a pick four with a 4% takeout rate. (Since Ellis Park waived its 3% host fee, receiving sites actually got 7% on the wager.) The results showed an 82% jump in handle on the pick four compared with last year, but an analysis of the numbers continues.
Geary said he hoped it would generate “ancillary handle,” but overall handle at the Ellis Park summer meet was down. He said the track would decide early next year if it plans to offer the pick four with reduced takeout again.
“Even the best of intentions aren’t always trouble-free,” said Chris Scherf, executive vice president of the Thoroughbred Racing Associations, which hosts the International Simulcast Conference with Harness Tracks of America in association with the American Greyhound Track Operators Association. “Sometimes, innovation falls into the category of no good deed goes unpunished.”
The conference continues Sept. 18-19.
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