Friday, October 23, 2009

In the Takeout Does Matter File....

Read comments on commentary pieces at many industry websites and blogs and you will no doubt see a bevy of them which say "takeout does not matter." We as horseplayers know it does; getting paid $12 for a winner rather than $10 can be a make or break for us. Yesterday it was announced that Betfair and the Breeders Cup signed a deal, and for the first time betfair punters can bet right into the pari-mutuel pools.

However, takeout makes a difference:

The heavy deductions from the win and place pools in the American PMU – its equivalent of the Tote in Britain – mean that these are unlikely to appeal to many Betfair punters

Betfair has a different mindset - grow the handle by not killing off your customers with 22% takes, but by offering them value, so they do not run for the exits, they run to bet more races. From their annual report:

But shouldn’t we want customers to lose money as quickly as possible?

Slot machine operators around the world routinely return a higher percentage to punters than they are required to under regulation. Altruism, or commercial nous?

Racing knows that customers who go racing, and a) feel they had no value for money at the racecourse, and b) don’t win a single bet all day, don’t have much fun. They may not come back. In just the same way, we know that the least valuable customers to Betfair are the ones who lose all their money quickly. They go away and never come back. So, we are happy to take less off our customers per bet.

Business is all about offering your customer the product he wants at the price he wants. If you can do that, he’ll spend his money with you.

That mindset has grown them from a meagre 20,000 customers in 2001, to over 2 million today. They are the fourth largest internet start-up in the world, and have won innovation awards world wide.

The UK article is correct. Price sensitive customers care very much about takeout. In the UK there is a home for them, in the US and in North America there is not. We as an industry seem to choose to send them to play low takeout poker instead.

h/t to Equidaily.

Related: Low Takeout is Our Friend

1 comment:

Anonymous said...

This is disturbing news out of California. At least the tracks won't be raising their takeouts for now, but for the Gov to sign this bill shows that his advisors don't understand, and aren't listening to, the fans. Here's the link. Good luck at the races everybody! -Hyena_my