In terms of Keeneland's takeout increase ahead of the 2017 fall meet, customer response—specifically well-reasoned arguments opposing the increase—convinced track officials to roll back much of that increase beginning with the upcoming spring meet.
Noting that 57% of wagering on its races is either win, place, show, or exacta, Keeneland will reduce takeout in those pools. Takeout in the win, place, and show pools will be reduced from 17.5% to 16% and exacta takeout will be reduced from 22% to 19.5%. The 16% rate on win, place, and show matches the previous rate before the fall 2017 increase and the 19.5% exacta rate nearly matches the previous 19% rate.
Takeout is the amount of money removed from each pari-mutuel pool largely used to pay tracks and purses. Essentially it's the price of wagering on horse racing and the sport's main source of revenue.
Keeneland vice president of racing and sales Bob Elliston said the track expected some pushback on its fall 2017 takeout increase—"nobody likes a price increase"—but the quality of the points made by many customers made an impact. That pushback included a Horseplayers Association of North America boycott of the Keeneland fall meet.
"We heard incredibly valuable feedback from our players about how those wagers were the most egregious for them in terms of a price increase because they discourage churn," Elliston said. "They're winnable bets if you will. A lot of people like playing in those pools. And if you win, you can churn that money back into multi-race wagers and things like that.
"I would say the quality of feedback we got from our players, particularly on those types of wagers and pools, was extremely valuable and something we took to heart."
Elliston said the price increase did generate added revenue for purses, but in making those price increases Keeneland wanted to keep its wagering product competitive with other major racetracks. Both goals were evaluated after the meet.
"Financially we hit right exactly where we thought we'd be, and that is we increased our revenue streams that we committed to serving our mission—the increased spring stakes purses and increased overnight purses," Elliston said. "But we also listened to our customers and evaluated the results and dug deeper into some of those results which produced some 'Ah-ha' moments for us that said, 'We need to relook at this.'"
As for the takeout rates on other wagers at Keeneland, the Pick 5 will be offered at a 15% rake and all other exotic wagers will remain at 22% (They were previously 19% before the fall 2017 increase). Elliston said lowering the win, place, and show and the exacta takeout brings them in line or lower than other major circuits, and that the takeout on the other wagers already is in line or lower than other major circuits, an assessment in line with takeout information tracked by HANA.
For the fall meet, Keeneland reported an 8.4% all-sources handle decline on its races to $121,712,035 for the 17-day meeting that concluded Oct. 28. Keeneland's on-track numbers were down just 0.1% from last year to $17,597,035. Handle at Kentucky simulcast outlets was down about 2% and retail advance-deposit wagering outlets were off about 3%. Elliston believes the boycott may have accounted for about half the decline in handle.
Despite the downturn in wagering at the Keeneland fall meet, more money was generated for purses. The Keeneland spring meet will feature 16 stakes races awarding a track-record total of $4.4 million. Elliston said the takeout reduction will aim for a competitive balance.
"Keeneland's goals are mission-oriented, and we continually review, measure, and listen to our customers across all business lines to ensure our operations promote the health and vibrancy of the horse industry," Elliston said. "The changes to takeout last fall were aimed at further enhancing the quality of our racing program. We were successful in that goal and will offer a season record $4.4 million in stakes purses this spring.
"Higher wagering also generates purse money, and we believe these takeout rates strike a competitive balance to which our customers will respond favorably," Elliston said. "We targeted win, place, and show, and exacta wagers because they make up nearly 60% of our total wagers."
Keeneland officials said the lowered takeout rates are the first of several new and enhanced handicapping initiatives planned for the 2018 spring meet to be announced by Keeneland in the upcoming weeks.