Thursday, August 13, 2009

How Much Lower Would Wagering Be......

Without advance deposit wagering?

I see Youbet is now offering a 10% winners bonus on the Saratoga late pick 4. So if it pays $1000 and you hit it, you get back $1100 (an extra $100 that you will rebet of course). In addition, they have some sort of $20 free bet deal. These types of promos are seen at several ADW's out there; I am just mentioning Youbet because I saw it in my email today.

I suspect that without ADW - reselling and adding to churn with rebates - we would be below $12B this year in handles (much lower than that if we counted the large rebate shops of course). There were rumblings this past two years (before the bottom fell out of handles) that horsemen groups and some industry insiders wanted to run and take over advance deposit wagering. My goodness, we can thank our lucky stars that never happened. The chances of getting a 10% winners bonus, or free bets with those folks running wagering would be about equal to hitting back to back to back pick 6's.


Steve Zorn said...

Don't be so sure about a horsemen-run ADW. Our interest is actually aligned with horseplayers'; we want to maximize the amount of money that goes to purses; in the long run, that means finding the right takeout level that will sustain the game in the long term. If takeout is too low, we'll all go out of business and you won't have any races to bet on. If takeout's too high, you'll go broke and we won't have any handle at all. I think a horsemen-run ADW would be at least as aggressive as Youbet in offering rebates and bonuses. Despite appearances to the contrary, we're not (all) idiots.

HANA said...

Hi Steve,

You are the first, and only person inside racing we have seen say that you would help the gambler and grow wagering. The two places we have to go on for evidence here at HANA are:

1) The THG 'want more for purses' stance, where they will get a third, the track will get a third, and the horseplayer will get the shaft.

2) Fred Pope's ideas, which pretty much would eliminate any rebating, or anything like what Youbet is doing with a winners bonus.

I applaud you for your stance, but I worry about the above groups you have to sell this to, who have exhibited (in our opinion) almost zero understanding of horseplayers, or wagering economics.



Anonymous said...

Steve Zorn said...

If takeout is too low, we'll all go out of business and you won't have any races to bet on.

That is something we'll never have to worry about.

I'd like to see every track have a "No Takeout" Pick-4 each month.
It's like a 1% giveback.
It would be "just a start" to bring the Gambler back.


Steve Zorn said...

Au contraire, Anonymous; owners are leaving the sport every day. Not because they're not making a profit; we all know that's unrealistic. We just don't want to lose all our money too fast -- exactly the same situation that a horseplayer is in when the takeout's too high.

No takeout = no money for purses = no owners. So there has to be a happy medium somewhere.

Anonymous said...

Agreed. There has to be a happy medium. But I have a feeling the happy medium - the real optimal pricing point that returns max dollars to tracks, purses, and state coffers is a lot closer to 10 percent than the 20 plus percent currently being charged.

I recently saw a poll on asking if takeout is too high. 90 percent of everybody responding voted that it's too high. A second poll asked if horseplayers should be involved in trying to get it lowered. Again, about 90 percent of the votes said horseplayers should become involved in getting it lowered.

One poster made the following comment which pretty much sums it up:

"Even if you treat it (betting on races) as recreation, you still want a fair shot. If I go to a carnival and try to win a stuffed panda by throwing softballs at milk bottles, it's all for fun and I really don't need the panda, but it would still piss me off if I found out one of the milk bottles was nailed down.

20-25% takeout isn't exactly nailing the bottle down, but it sure is a pretty strong glue."


wmcorrow said...

Lowering takeout will obviously put more money in horseplayers pockets; but, if takeout were reduced to, say, 10% will Las Vegas casinos and other casinos around the country with their state-of-the-art facilities continue to operate their racebooks, along with OTBs across the country? A reduction will drop their income on every gambling dollar from 15-16 cents to 5-6 cents on average - a huge drop in income.

It seems to me that any reduction in takeout will also reduce or eliminate numerous off-track wagering facilities, which will substantially reduce off-track handle.

Cangamble said...

Lowering takeout will make customers last longer for the most part. It will get them to watch more races and spend more time handicapping, therefore possibly making it so that relatives and friends will now get involved as well.
As for availability. The racing product will always be available to anyone who wants to play regardless of the takeout.
Betting will increase, and most ADWs, simulcast centers and tracks, will be making more because of increased volume.