I remember having a chat with a horseman group person several years ago and he was wondering why we do not double the takeout, because if we do we would double revenue. He could not quite get the whole price and quantity thing.
Well we have another, the indefatigable Fred Pope. In his most recent Bloodhorse piece (offering the same advice as all his others ..... 'raise prices and we'll do great') he actually admitted in the comment section he does not care what price we charge:
"Re takeout, I don't care if the takeout is 15% or 25%. "
A poster at Paceadvantage thinks he has Fred figured out.
"Fred Pope is a marketing and advertising executive in Lexington. He has worked for racing and breeding clients most of his career. That tells you all you need to know. Tote monopoly and high takeouts = lots of money for breeders. So Pope is just arguing the case from his side of the fence"
Compare that to a gambler. Rich Eng in his latest piece:
"So here's some free advice.
The racing industry should promote core betting products that create high churn. High churn will increase handle, thus raising purses to attract more owners, who will in turn buy more racehorses from breeders.
The cycle of growth always begins with the customer. If you want to sell more products, lower the price, don't raise it."
See the difference? Case A we have Fred Pope, shuffling the shrinking pie and Case B, Rich Eng, trying to grow that pie through more handle by using simple gambling economics of churn and demand.
Who should be in charge of setting prices in our sport? Who do you trust? Insiders who don't bet, or follow gambling, or people like Rich Eng, who actually studies and lives gambling?
In racing, unfortunately the former gets more play. That's probably a big reason why we are in the mess we are in.
3 comments:
I could think of much more appropriate adjectives to describe Fred Pope than indefatigable.
Once I looked up what the word meant, that is.
i go to the track about once a week for the last 30 years and i rarely consider takeout. I look for a race that i feel I have a good chance of winning. No one is going to bet a race they don't like simply because that track has a better takeout by a few percentage points. It does annoy me that in Illinois, where I live the takeouts are among the highest in North America. I suppose the horseplayers of North America will consider me a loser, a sucker or a shill. I don't think I am either, I do pretty well at the track and I am not a shill for any industry, the jury is still out on the sucker part.
its not a question of caring about takeout -- a lower takeout results in higher odds on the horses, and higher odds on horses means you (and everyone else) will find more betting opportunities.
It's not about betting races you don't like if the takeout is lowered -- it's about betting horses at 9/2 that you might not bet at 3-1.
Saying takeout doesn't matter to bettors is equivalent to saying odds don't matter to bettors.
All things being equal, bettors will bet more, and more often, if offered better odds on the horses they like. Which is exactly equivalent to saying bettors will bet more, and more often, if takeout is lowered.
--el pollo
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