08/19/2010 2:34PM

The Tyranny of the Wagering Menu


In 1960, the total handle at the four tracks that were then under the auspices of the New York Racing Association (NYRA): Aqueduct, Belmont, Jamaica and Saratoga, was $531,528,210. With a total of 219 days of racing, according to the Daily Racing Form's 1961 American Racing Manual, that comes to an average daily handle of $2,427,069.
In 2009, total NYRA handle at Aqueduct, Belmont and Saratoga was $3,027,810,064. NYRA had 250 days of racing last year, so its average daily handle from all sources, according to NYRA's 2010 Media Guide, was $12,111,240.
That looks good at first sight. In fact, it looks terrific. Handle in 2010 at NYRA tracks was five times what it was in 1960. Everyone take a bow, please, plus an extra week's vacation.
But wait a minute! According to the Dollar Times Inflation Calculator, the dollar in 1960 had the same buying power as $7.15 in 2009. At that rate, the 2009 equivalent of NYRA's 1960 $2,427,069 average handle is $17,353,542.
Looked at from that perspective, NYRA did $5.3 million less business per day in 2009 than it did in 1960.
It is a similar story at tracks around the country, of course. And there are many reasons for the decline: more tracks, increased competition from casinos, the failure of racing to properly market itself. Those are just three that come to mind. There is, however, another more insidious resaon for the decline, viz., the huge increase in the types of wagers available to bettors.
Conventional wisdom tells us that the more choices we have in any given endeavor, the happier we will be. That seems to apply to horse race betting as well, but recent research tends to debunk that thinking.
In his 2004 book, The Tyranny of Choice, Barry Schwartz offers a theory that is fast gaining credence with economists around the world. It is that the more choices people are offered in any given circumstance, the more confused they become, the less rational are their decisions, the less happy they are in the long run.
Schwartz sites an experiment at a gourmet food shop where customers were offered samples of six different kinds of jam coupled with a discount coupon to buy whichever was their favorite. A week later, the same store offered the same deal, but with 24 different kinds of jam. The results of the sale were surprising, to say the least.
The table offereing six flavors sold ten times as much jam as the table offering 24 flavors.
An experiment at the Iowa State Fair in 2003 yielded a similar result. Two ice cream stands were set up on opposite sides of the fair in areas with equal pedestrian traffic. One offered six flavors, the other 24 flavors. The stand offering six flavors outsold the 24-flavor stand by 6-to-1.
Schwartz concluded that when confronted with an increased number of choices, consumers become increasingly confused. Some merely walk away from the large choice offers and buy nothing, not because they dislike the product being offered, but because they don't want to spend the time weighing the numerous pros and cons involved in the decision making process.
Is it not reasonable to conclude that the same theory can be applied to Thoroughhbred wagering?
In fact, the tyranny of choice may be one of the main reasons attendance and handle are declining at virtuually every track in the United States. The sample involving NYRA handle in 1960 and 2009 is a perfect illustration, for a number of reasons, all of them centered around the increased number of choices available to bettors in 2009.
In 1960, every penny of the $2.4 million wagered daily on NYRA races was bet on-track. There were no off-track betting shops, there was no phone betting, and there was no simulcast wagering. Moreover, NYRA cards in 1960 rarely exceeded eight races a day. Just as importantly, there were only three types of bets available at NYRA..
In those days, you could choose form between win, place and show wagering on every race, plus a daily double on the first and second races. In 2009, bettors had those wagers from which to choose, plus a plethora of daily doubles, Pick-3's, rolling pick 3's, Pick 4's, quinellas, exactas, triples, superfectas, Pick 6's and Grand Slams.
Factor in many of those same wagering opportunities available at each track's simulcasting parlors, which didn't exist in 1960, and is it any wonder bettors today are spoiled for choice?
And yet, NYRA handle in real dollars adjusted for inflation in 1960 was nearly 50 percent higher than it was in 2009.
While the contemporary wagering menu may seem like a bonanza to regular players, the figures quoted above tend to belie that idea. More importantly, our Byzantine wagering menu is very probably a turn-off to newcomers. In a sport which has the longest learning curve even without taking betting into consideration, imagine what goes through a newcomer's head when confronted with eight or ten types of bets available on each and every race. Then think what he goes through if he stumbles across the track's simulcast wagering area.
It was a much easier game in 1960 when all we had was win, place and show and a single daily double. Since the early eighties when quinellas first made their appearance at NYRA tracks, we have added dozens of new bets. Multiply them by the increased number of tracks upon which to bet and the increased number of wagering outlets, factor in the decline in attendance and handle since then, and the theory of the tyranny of choice in American horse race wagering hits home with a vengeance.