10/09/2013 1:42PM

Fractional wagering gaining favor with racetracks and fans

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LEXINGTON, Ky. – Racetracks are likely to continue to lower the minimum wager on many bets but are unlikely to put any significant downward pressure on takeout rates, officials of racetracks said on Wednesday during the closing session of the three-day Simulcast Conference in downtown Lexington.

Horseplayers are constantly asking racing officials to lower the minimum bet, especially in multi-leg wagers like the pick four and pick six, the officials said. And the data on lowered minimums has so far indicated that lowering the minimum wager increases the size of the pool for the bet, according to Scott Finley, a member of the panel who is the top simulcasting official for the New York Racing Association.

NYRA lowered the minimum wager to 50 cents from $1 on its pick four two years ago, and the average pool for the pick four is now 20 percent higher, Finley said. NYRA also debuted a daily 50-cent pick five at the start of the Belmont meet in September, and the bet has yet to negatively impact either of the two pick four pools offered daily on the Belmont card or the $2-minimum pick six, Finley said.

As a result, NYRA is now planning to lower the minimum wager on its trifecta bet from $1 to 50 cents “in the next month,” Finley said.

Starting with the adoption of the 10-cent superfecta by some tracks in the mid-2000s, many tracks have been lowering the minimum wager on a variety of bets. The fractional bets are especially valuable to players with limited budgets, because they can cover more combinations with their bankrolls, particularly in multi-leg bets that are targeted by the sport’s most sophisticated bettors.
John Walsh, the simulcast director at Hawthorne Race Course in Cicero, Illinois, said that bettors at his track consistently request that bet minimums be lowered. But, to the chagrin of many horseplayers who maintain that takeout rates are too high, Walsh also said, “I never hear anyone say anything about a takeout rate unless I read a blog.”

The issue of takeout rates is complex because of an enormous array of factors. In an ideal world, one that exists in an economic model, lower takeout rates would lead to higher levels of betting and additional churn because bettors would receive more money back in the form of higher payouts. It would also make racing more competitive with other gambling games by more closely aligning the price of bets on horse races with other games such as poker or slot machines, where the takeout is usually around 5 percent, compared to racing’s 20 percent.

But limited real-world studies have failed to demonstrate the dynamic conclusively, in no small part because a track that drops its takeout rate to a sufficiently low level is usually ostracized in the out-of-state simulcast market because the lower rate cuts into signal takers revenue, rendering any study of the resulting betting figures too complicated. As a result, tracks that have lowered takeout rates significantly over the past 10 years are few and far between.

Still, many groups representing horseplayers consistently press the industry to adopt lower takeout rates, even though many racetracks can ill afford to give up revenue at a time when betting on U.S. races is only finally stabilizing after a six-year decline.

Kentucky Downs, a small, all-turf racetrack in southern Kentucky that held five days of live racing this September, dropped its exacta takeout from 19 percent to 18.25 percent for this year’s meet. Handle on the track’s races was up 69 percent compared to last year, but purses at the track were up 104 percent, to nearly $900,000 a day, and the track’s field size averaged 10 horses per race, an astounding figure.

As a result, Corey Johnsen, the track’s president and part-owner, said he could not make a confident assessment of the impact of the drop in the takeout for the exacta, a pool he targeted because, he acknowledged, “the president of that track likes exactas.”

“I’m not here to tell you the takeout rate was the sole reason, but I think it was an important part of the combination,” Johnsen said.

Joseph Giambra More than 1 year ago
Just try and bet a $1.00 DD wheel a Santa Anita, FA says come up with $2.00 or get shut out, I don't any cheapskates playing at my track! Well MR A-hole I'll take my business elsewhere. In fact I found a nice site the other night, Retma Park, home of cheap horses large fields great tri payoffs (ten cent min.) and exacta overllays galore. Only down side is you can't whack the pools to hard or your killing your price. Nice place to spending a relaxing sat. evening after play the Likes of Keenland, Woodbine and Belmont in the afternoon, Ive kept the taxman in the dark
Anonymous More than 1 year ago
The lower the takeout the more winner's.The more winner's the more put back into the pools.That's all the tracks care about.So why even talk about it.
Sal Carcia More than 1 year ago
Ed, the issue is that from a tracks' view more handle does not necessarily equate to more profits. It is just the same bankroll that lasts longer (more churns) or shorter depending on the takeout. The profit is the same in either case. So, the tracks have the choice to bring in your bankroll at a slower or faster pace. I think in business the choice will fall to the latter.
Ed More than 1 year ago
Shame they don't let you edit or delete a post here. What's that all about? I need two passes to fix spelling and other errors at least !
Ed More than 1 year ago
The takeout has been the scourge of horseplayers forever. Some know it, most are oblivious. These infinitesimal (1,2%) cuts prove nothing. Cut the take on Win or Exactas to 10 % and see the reaction. The game is actually much stronger than folks think, surviving under what can only be called an onerous rake. IMO is you get the take low enough, you could see an explosion of handle. Maybe they are afraid of a 'price war' so they don't want to open that Pandora's Box. These comments by track brass that they don't hear complaints about the takeout of a smoke screen.
Jack Lee More than 1 year ago
I would not have bet Kentucky Downs this fall if their takeout was as high as Hawthorne Race Course.
Sal Carcia More than 1 year ago
The benefit of lowering the minimum of a wager is immediately obvious to the player. Lower minimums result in greater coverage for the player. The effects off takeout rates are not immediately obvious to the player. The takeout is raised and the player loses his/her budget faster and maybe plays less. It doesn't make that player any less profitable to the track from a betting standpoint. If the player stretches the budget, then the track makes a greater profit from the player. But, if the player gets discouraged from losing more often, then he/she just quits playing. There has to be a takeout rate that maximizes profits and retains the players. It is something the game should take a more serious look at.