NEWS
Wagering innovations more effective than takeout reduction
Posted: Monday, September 17, 2007 6:34 PM
by Ed DeRosa
Maryland Jockey Club President Lou Raffetto had no trouble summing up the performance of Laurel Park’s “ten days at 10%” promotion this summer.
“It was a [public relations] bonanza but a financial bust,” Raffetto told attendees of the 15th annual International Simulcast Conference during Monday’s opening session in Kansas City.
The blended takeout rate was about 11.4% on the Laurel signal, resulting in payoffs up to 20.2% higher on multiple horse wagers such as trifectas and pick threes, but bettors did not respond favorably, as handle during a five-day period in mid-August this year compared with similar dates in 2006 declined 8.5%.
“Takeout doesn’t matter when you go against the big guys,” Raffetto said, referring to a summer simulcasting schedule that includes Saratoga Race Course and Del Mar. “We accomplished the goal of creating awareness and creating good will, but we did not increase handle.”
Ellis Park offered a 4% takeout on its daily pick four wager, and average handle increased on that wager 82% from $19,282 in 2006 to $35,085 this year, but the effect did not trickle down to individual races or pick threes on the card. Ron Geary, owner and president of Ellis Park, said handle was down across the board on all other wagers.
“The players got behind this, and we want to be known as a player-friendly track,” Geary said. “We raised awareness of the Ellis signal. We’ll decide early in 2008 if we’ll do it again.”
Both Geary and Raffetto referred to the innovations in takeout reduction as experiments. Laurel’s takeout has returned to standard levels for its fall meet.
“We viewed it as an experiment. We wanted to gather data and share it, and this our first time doing that,” Geary said, referring to the conference that runs through Wednesday.
One wagering innovation that during the past four years has moved beyond the experimentation stage into the nationwide implementation stage is lowering bet minimums.
The most popular vehicle for this has been the 10-cent superfecta, which began at dog tracks and first came to Thoroughbred racing via Sam Houston Race Park in February 2004. Since then, minimums on other bets such as 50-cent pick fours and trifectas have decreased.
The decreased minimum has resulted in increased handle on that particular bet, but the effect on overall handle is mixed.
Handle on superfectas at Sam Houston was up about 45% during the 2006-’07 meet compared to the ‘04-’05 meet, when the minimum was $1. Handle on exactas has declined about 5% in that time while handle on trifectas has decreased less than 1%.
Eric Halstrom, vice president of racing and simulcasting for Canterbury Park, said that while handle on superfectas increased dramatically when the track shifted to a 10-cent minimum, handle on all other wagers went way down. He also noted that the chance for churn is less because superfectas are more difficult to hit.
The Magna 5 is perhaps the most successful wager to debut in the past five years.
Aaron Vercruysse, director of business development for Santa Anita Park and a HorseRacing TV analyst, helped design the wager and said Magna Entertainment Corp. officials hotly debated the wager’s minimum, which they eventually set at $2.
“We heard the call to make it 10 cents or 25 cents, but we charge $2 and that helps us get a carryover,” Vercruysse said. “We wouldn’t get a carryover with a smaller denomination. We’re willing to sacrifice some handle on one day for a chance for a carryover when handle grows exponentially.”
Vercruysse said that the Magna 5 has succeeded where the Ellis pick 4 with a 4% takeout failed because handle increases dramatically on the individual races that comprise the Magna 5.
“The number one goal for any track is to get attention on its signal, and the Magna 5 leverages Magna’s multiple signals,” Vercruysse said.
Ed DeRosa is news editor of Thoroughbred Times
