07/18/2007 11:00PM

Two ideas that are on the right track


NEW YORK - Horseplayers usually flinch when the subject of parimutuel takeout makes headlines, because the story is typically a discouraging one about an effort to raise the game's already exorbitant rake even higher. This past week, however, it was two exciting innovations with lower takeout that were making encouraging news.

At Ellis Park, an experimental pick four with a stunningly low 4 percent takeout caught fire in its second week, peaking with a handle of $65,384 on the bet last Saturday, nearly triple what it was at a 19 percent takeout a year ago. Then on Wednesday, the Maryland Jockey Club announced that the 10-day meeting at Laurel beginning Aug. 10 will have a takeout of just 11.4 percent on all its bets, which are customarily taxed as high as 25.75 percent.

While blue-light specials and loss leaders are staples of American retailing, such tactics are practically unheard of at American racetracks, which generally prefer to pad their attendance figures by handing out free caps and shirts to flea-market patrons who barely bet and rarely return. The idea of actually handing out larger payoffs to existing customers is an overdue and welcome move from an industry that has seen its share of the gambling market sink steadily during the half-century in which it has gradually doubled its overall takeout rate from 10 to 20 percent.

The Ellis experiment was first proposed by Cary Fotias, a handicapping author and member of the National Thoroughbred Racing Association's Players Panel, who suggested it to Ron Geary, the track's new owner. Geary, a successful corporate turnaround specialist and a horseplayer who has qualified for three Daily Racing Form/NTRA Handicapping Championships, had been looking for ways to put Ellis back on the national summer racing map since privately purchasing the Henderson, Ky., facility from Churchill Downs Inc. last year. In addition to the pick four rate, Geary reinstated the track's traditional July 4 opening and succesfully bid to host this year's Claiming Crown, which will be run at Ellis Aug. 4.

Slashing the pick four takeout, which generally runs from 19 to 25 percent at other tracks, was a low-risk proposition. The bet was attracting a daily average of only $18,000, most of it from simulcast outlets paying the host track just 3 percent. For the first week of the Ellis meeting, it also looked like a low-return move. The first five Ellis pick fours of 2007 handled just $94,863, compared to $92,372 in 2006, still just a bit more than $18,000 a day.

Players, however, began talking up the new low rate on blogs and Internet forums, and a July 8 payoff of $19,948.90 from a pool of $20,787, taken down by a single winning ticket at the new lower 50-cent minimum (still disgracefully unavailable to New York bettors) attracted further attention. The second-week pools were $36,417 on Wednesday (up from $19,795 a week earlier), $37,438 on Thursday (up from $15,883), and $49,858 on Friday (up from $13,679), before Saturday's record $65,384. A power outage forced the cancellation of Sunday's bet, but players returned to send in $41,948 this past Wednesday.

Doubling or even quadrupling the pick four pools at a 4 percent takeout doesn't get Ellis back to where it was at 19 percent, but it accomplishes other things that Geary thinks are just as important. It gets people talking about and playing Ellis, raises awareness of the Claiming Crown, and creates a lot more goodwill than the insignificant lost revenue could have bought any other way. There's an additional benefit in getting bettors to look at the four races: Someone who gets knocked out in the first or second leg is now likely to play the later races, having put in the time and effort to handicap them. This generally underappreciated side effect can be seen with other popular pools: The pick six carryover frenzy at the beginning of the month at Hollywood Park also led to huge increases in the pick threes and pick four within the sequence, from players hedging their positions or starting fresh once eliminated from the chase for the big prize.

Ellis's experiment with one bet a day, and Laurel's upcoming one with a 10-day meeting, are in some respects not true tests of the trickle-through economic impact of lower takeout. Its strongest effects can be seen over longer stretches, when the additional money returned to bettors is repeatedly churned back through the windows, creating more revenue while also invisibly increasing customers' confidence and sense of being rewarded more generously.

The early results at Ellis, however, are highly promising and illustrate a key point. Horseplayers really do care about takeout, so much so that they will play an unfamiliar second-tier track just to send a message to other track operators. Here's hoping someone's listening.