Broad Takeout Changes? Don't Hold Your Breath

Racing executives indicated Oct. 9 there is little chance of the Thoroughbred racing industry developing a comprehensive analysis of lower pari-mutuel takeout rates.

A panel at the International Simulcast Conference in Lexington discussed takeout rates and minimum bets. The latter was viewed as having upside, while takeout rates were said to have little impact on the general racing public.

"The blogs say this is a simple fix," said Chris Scherf, executive vice president of the Thoroughbred Racing Associations. "They can't understand why we're so stupid. They think we can lower takeout and watch hoards of people come to our facilities."

"I never hear anyone say anything about takeout rates unless I read it in a blog," said John Walsh, assistant general manager at Hawthorne Race Course. "We experimented lowering it, but then nothing happened. The biggest (issue) I think is quality of racing and exposure."

Kentucky Downs has had success lowering takeout rates to 16% to 19%, but track president Corey Johnsen stopped short of saying that was the only reason for handle growth. He cited quality racing and full fields—more than 10 horses per race on average—as other factors.

"We try to lower takeout rates as much as we can within business constraints," Johnsen said. "I don't think 18% versus 15% matters. It's a loss leader (designed) to get someone's interest in your races, and it works."

Lowering takeout rates has become somewhat taboo given the fact rebate outlets rely on a higher takeout rate so they can reward their biggest customers. It was said earlier during the simulcast conference that a shift of one-quarter of 1% can chase "whales" to other outlets for better deals.

As for minimum-price bets, New York Racing Association simulcast director Scott Finley noted pari-mutuel handle in all Pick 4 pools at the three NYRA tracks increased an average of 20% since the minimum bet was lowered to 50 cents in 2011.

"The pools continue to gain in popularity," Finley said.

Scherf, the moderator, asked the panel whether it would be productive to experiment with lower takeout rates on traditional win, place, and show bets. It was stated during the discussion that exotic wagers now account for about 80% of total handle on a given day.

Scherf's question went unanswered, though Finley said individual markets are a determining factor in setting takeout rates or tinkering with minimum amounts for certain wagers.

Johnsen noted that lowering takeout rates too much can financially damage simulcast receiving sites that may in fact drop signals. He said Kentucky Downs loses money on full-card simulcasts because of the "upside-down" model employed by the racing industry.

That model—the host track receiving far less revenue than the receiving site—has been discussed for more than 15 years but no effort has been made to change it.