08/08/2017 10:50AM

Keeneland boosts takeout across the board

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With takeouts of 17.5 percent on straight bets and 22 percent on most other wagers, Keeneland (above) will be on a par with Churchill Downs.

Keeneland Racecourse will raise its takeout for the October meet from 16 percent to 17.5 percent on win, place, and show wagers and from 19 percent to 22 percent on all other bets, the maximum allowed under state law, Keeneland officials confirmed on Tuesday.

Bob Elliston, Keeneland’s vice president of racing and sales, said on Tuesday that Keeneland has already informed the Kentucky Horse Racing Commission that it intends to exercise its right to raise the takeout rates for its fall meet, which is scheduled for Oct. 6-28. Elliston said that Keeneland plans to use the additional money to boost its purses, and that the new rates would be competitive with the blended takeout rates at tracks on other major circuits.

Elliston said that Keeneland will lower its takeout rate for the pick 5 from the existing 19 percent to 15 percent as part of the new rates.

“I hope the wagering public understands that this is going to our purses to keep us competitive, it’s not going into our pockets,” Elliston said. “You have to look at it comparatively. We’re going to be on par with New York, with Oaklawn, and we think we will continue to offer bettors a good product, if you look at depth of field and the quality of the fields.”

The decision will almost certainly be met with derision from horseplayers, many of whom called for a boycott of Churchill Downs in Louisville when the track raised its own takeout rates to the legal maximum in 2014. Despite the calls for the boycott and backlash over the decision, all-sources wagering on Churchill’s races has gone up slightly since the takeout hike, according to KHRC records, from $501.3 million in 2014 to $511.8 million the next year and $516.9 million in 2016, despite a reduction in six race dates from 2015 to 2016.

An increase in the takeout reduces payouts to players by reducing the amount of money that is returned to the betting public holding winning tickets. Many horseplayers consider high takeout rates to be one of the most pressing issues in the racing industry, and many economists believe that lower takeout rates would increase betting handle over the long-term. Though real-world experiments with lowered takeout rates over the past several years have produced mixed results, many of those experiments took place over the course of months, rather than longer terms that would be more likely to tease out harder results.

Kentucky law allows any track that handles below an average of $1.2 million a day on-track to adopt the higher takeout rates. On-track handle at Keeneland has averaged below the threshold for several years, according to KHRC records.

All racetracks in Kentucky with the exception of Kentucky Downs, a small track near Tennessee that uses revenues from a lucrative gambling parlor to boost purses to nearly $1 million a day, have the highest takeouts allowed by law. Kentucky Downs has a takeout of 16 percent for win, place, and show, and 19 percent for most other exotic wagers.

Elliston said that Keeneland has contributed $30 million over and above its contract with horsemen over the past five years to purses. Elliston also said that horseplayers have benefited from the track’s historically high field sizes and the quality of its racing.

“We have paid record purses in the spring and we paid record purses last fall,” Elliston said, referring to Keeneland's purses. “In order to continue to do that, we have to increase the price of our product.”

Several racetrack executives who spoke on the condition of anonymity because simulcast negotiations are confidential said over the past several days that Keeneland notified them last week that the new takeout rates would go into effect this fall. The executives said that Keeneland has offered to share the additional revenue with the simulcast outlets on a 50-50 basis.