Thursday, February 5, 2015

Fix the Splits in the Simulcast Model? Here's an Easy Solution

You've heard about it and so have we. Track A sells their signal to track B for 9%, when takeout is 21%. Everyone seems to lament that the bet taker gets 12% and the track that puts on the races gets 9%. It should be the other way around, says the racetracks.

This is why some of you can't bet Gulfstream at your simo center this winter. It's a big fight.

Magna has some big plans to fix this. From the Bloodhorse "Stronach Group Targets Fundamental Issues"

"Rogers noted the early simulcast model—still largely in place in the industry—that rewards the receiver of a racing signal more revenue than the sending track is problematic and should be reworked. "The days of the buyer importing the signal cheap and keeping most of the revenue (from wagering) are probably coming to an end," Rogers said. "The Stronach Group will do everything possible to deliver a maximum return on the product."

Magna seems sincere about this, and their only goal is to change the "days of the buyer importing the signal cheap and keeping most of the revenue". 

If so, we've got the answer. 

Gulfstream, which sells their signal for 9%, can keep doing that (so they make the same money), but they should lower their takeout to 14%. That way, they get 9% and the bet taker gets 5%, which is "most of the revenue".

Problem solved!

If you are laughing, I don't blame you. Tracks do not want to lower takeout. They want a bigger slice of a high takeout.

That's why you'll hear an echo chamber on twitter or social media from the customers about Mr. Rogers and Magna trying to "fix fundamental issues" in the sport.  It's not fixing them, it's shuffling around the deck chairs.

If the Stronach Group really is sincere about real change, we're here to help any way we can.

Note: Is 14% workable? Probably. Did you know Australian racing passed a law that at maximum 16% could be taken out of any pool? All tracks had to abide by it. In 2014, Australia set a wagering record, and the health of the horse racing business there is considered much better than in North America.

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