12/07/2016 8:33PM

Canterbury weighs whether to keep reduced takeout rates

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TUCSON, Ariz. – Canterbury Park in Shakopee, Minn., will make a decision early next year whether to extend its experiment to cut its takeout rates across the board, citing losses suffered by the track this year despite modest gains in handle, the track’s director of racing operations said during a presentation on Wednesday during a panel at the Symposium on Racing and Gaming.

The Canterbury takeout cut was widely publicized and closely watched in the racing industry because of the length of the experiment and the decision by the track to cut the rates for all of its wagers. Most takeout cuts at U.S. tracks have recently affected only one or two wagers, typically the pick four or pick five, and many meet-long cuts have only been put in place during short meets, limiting the relevance of the data gleaned from the experiments.

While total handle did rise at the 69-day meet, it did not rise nearly enough to offset losses suffered by the track because of the cuts. Andrew Offerman, the track’s director of racing operations, said at the Wednesday panel that in the final accounting, the track had calculated that it collected approximately $320,000 less in commissions than it would have if last year’s takeout rates had been in place.

Immediately following the meet, the Canterbury experiment was analyzed from a number of angles by a variety of sources, and Offerman’s presentation on Wednesday added even more detail to the post-mortem. Still, Offerman said that the data the track has analyzed could not adequately isolate the effect of the takeout cut on overall handle.

Offerman reiterated that several tracks with similar average handle figures have been suffering declines over the past several years as more and more handle migrates to larger tracks, perhaps signaling that handle would have gone higher at Canterbury this year if the track had a larger profile. However, Offerman also acknowledged that Canterbury felt confident in implementing the cut because of double-digit gains in handle each year over the previous five years, with track officials confident they could not only sustain the growth rate this year but build significantly on it.

In fact, Offerman said, the track estimated that offtrack handle would have to climb 35 percent to 40 percent to break even on the cut. Instead, offtrack handle jumped only 9 percent, while ontrack handle declined 3 percent.

“A lot of people are somewhat stunned when they hear those numbers and say, ‘What were you thinking?’ ” Offerman said. “But we were looking at what we had been doing, and we thought we could do that.”

Many horseplayers have been clamoring for takeout cuts for several years, but racetracks have not yet found evidence that would lead to a widespread embrace of the reductions, in part because of the difficulty of isolating the impact from myriad other factors in play. But the case for reduction also took a blow late in the year when the takeout rate at the Monmouth-at-the-Meadowlands meet was cut to 15 percent across the board for 12 all-turf cards. Average handle dropped 13 percent despite the cut (though many other factors affected handle, such as a one-horse drop in average field size).

While U.S. tracks have yet to find a magic bullet for increasing handle, Australia appears to have found several, according to a presentation on the same panel by David Haslett, a representative of that country’s TabCorp. Handle in Australia on horse racing has increased from $11 billion in 2005 to $16 billion in 2015, Haslett said, which is nearly a mirror image of the decline suffered by American racing over the same period.

While Haslett did not identify any single factor for the growth, he did list several options available to Australian horseplayers not available to U.S. players, including the country’s “Flexi-Bet” option, which has seemingly been mentioned every year at the symposium for the past 10 years. Yet the implementation of a similar capability for the U.S. tote has yet to be aggressively pursued.

Flexi-Bet allows a bettor to wager any amount of money on a single parimutel bet or a single-pool betting combination. For instance, a bettor in Australia can bet $15 on a six-horse trifecta box, without having to worry about calculating the cost on multiples of the minimum bet. Haslett said that the ability increases churn, keeps the player engaged, and allows players to “invest at a level they feel comfortable with.”

Haslett also said that Australian bettors are allowed to cash out their pick-four bet after the first, second, or third leg, but the ability to cash out rests on the availability of a fixed-odds market, so it is unlikely that the ability could be mimicked here in the U.S. without a significant change to U.S. regulations. On a related note, fixed-odds betting in Australia grew 16 percent last year, Haslett said, although parimutuel betting remains the dominant form of betting in the country, at 67 percent of all wagers.