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Sunday, April 11, 2010

12% Pick Three: Analysis

We are continuing to look at some value tracks/low take bets (spreadsheet available here), and illustrate how players can take advantage of them if they so wish.

Let us have a look at Retama Park and Sam Houston's, 12% pick 3. The 12% pick 3 is a bet that gives a regular player the chance to compete with larger player in terms of prices. It also allows him or her to grind away, and take home more money than he or she would playing a regularly priced pick 3, hopefully making the game a little more fun, and helping racing in the process.

Here is a chart of 12% pick 3 payoffs versus 15%, 20% and 25% takeouts (for two levels, a chalk hit, and a larger hit). The average in terms of take for a pick 3 is about 24%. Notice just how much more money a player receives when he bets into a low takeout pool. And to the business - notice how much more handle you can receive when you help a player win.



Let’s take a player and see if we can illustrate. He is a smaller bankroll player, but he takes his game seriously and he tracks his bets. Pick 3 bets are all he does, he loves them and thinks he is good at them. He has been playing at track “A” where the pick 3 takeout rate is 25%. He takes $12 tickets five times a day and rarely looks for bombs; he tries to up his hit rate at the expense of payoffs. He hits two of them a racing night, on average, and his average payoff is $26.60. At the end of the meet (over 200 race dates) Jim is a losing player as shown below:

Tickets: 1000
Handle: $12,000
Return: 400 times $26.60 = $10,640
ROI: 0.89
Loss: ($1360)

Now he has read the spreadsheet looking for some value to try and has decided to switch his pick 3 play to Retama. He begins to do his due diligence, he gets trainer and jock stats and plays on paper for a little while. After he feels at home he dives in, playing the exact same way he did at his old track. But this time he gets a 12% takeout on his bets. Using the exact same hit rate and payoff, he notices he has a few extra dollars in his pocket at the end of each week. Instead of getting paid $26.60 at his old track, his new wins pay $31.20. Not much of a difference it seems, but let's look deeper.

Tickets: 1000
Handle: $12,000
Return: 400 times $31.21 = $12,484
ROI: 1.04
Profit: $484

This one small change turned him into a winner - something that 98 or 99 out of 100 players are not. Overall he is $1844 richer by the end of the session, just by shopping for low takeout. His ROI has jumped from 0.89 (better than throwing darts) to 1.04 (a hard-to-come-by figure).

The interesting point with the above study, is that in case A with a 25% takeout, he has gone broke if he started with a $1,000 bankroll. He goes broke long before the meet finishes. We see today how much this has hurt the game as people are reloading their bankrolls less and less now. In effect, there is a good chance that he does not even last long enough to play that full $12,000 handle. In case B, playing at Retama, he does not have to reload. He is not broke; his $1000 bankroll is now $1484. Is he going to go buy a new car with the profit? Of course not. But he might do a few things:

1) Believe he can win
2) Up his bet size and play more
3) Have more fun
4) Have a bankroll to continue to play racing

The pick 3 pools at Retama are about $5500 for each pool. This is not tiny, so you can go bomb searching (as long as you think about the parlay like we spoke about here) from time to time. In the above spreadsheet it shows just how much a 12 versus 25% takeout can help a player who tries to take down pools. In a pool where there are 5 winners, this can mean an increase of $140 per payoff. That is a ton of money for a player over time.

We are well aware that there are some horseplayers who will play into 25% takeout pools, and do so happily. We also are well aware that some horseplayers want to bet a higher class of horse, regardless of the price charged. But there are some players out there who believe it is not worth almost $2000 profit to them to them at equal strike rates to watch those races, and play those tracks. For that type of player, they might want to take a look at some of the offerings of places like Retama and Sam Houston. A potential ROI hike from 0.89 to 1.04 on equal wager size and hit rates is something to think about.

Benefit to the Industry

In the big picture, it shows pretty well how much a 12% take also adds in handles for the business.

Money placed in players pockets over 200 race dates at reduced take: $840,000
Churn Rate Estimate: 6
Excess Handle generated by Retama and Sam Houston's low takeout pick 3: $5,040,000

Now if we could only get more tracks to offer players lower takeout bets. We might be able to turn that 5 million handle increase into much more.

Please join us at HANA, we need your help

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