By Bill Finley
The price of a new Honda Civic is about $23,000. The price of making a bet at the racetrack is the takeout, the percentage extracted from the pool before winning bettors are paid. No matter the race, the size of the field, the class of the horses running, the takeout is about 17% for a win bet or 34 cents for every $2 wager you make. Using that same logic, the price of a new BMW should also be about $23,000. Absurd? Of Course.
Racing doesn’t seem to understand that it’s not any different than any other business that sells something to the consumer. If you give the customer a good product and price it fairly they will buy it. If you try to sell them junk and overprice it they won’t buy it.
Within the last few days we saw the sublime and the ridiculous when it came to what the racing industry sold to its customers. With the possible exception of the Breeders’ Cup, there is no better day of racing, for the fan and for the bettor, than Belmont Day. This year, NYRA put together an exceptional card that included 13 races, 10 of them stakes. Seven of the races on the card had 10 or more horses. The GIII Jaipur S. had 13 horses and a 7-2 favorite. The GI Longines Just A Game S. also consisted of 13 horses with the favorite sitting up on the board at 7-2.
Because of the popularity of Exaggerator (Curlin), the favorite in the GI Belmont S. was just 7-5, but the final leg of the Triple Crown was still another race that bettors had to love. It, too, had 13 horses and several longshots that looked perfectly logical on paper. Creator (Tapit), a Grade I winner, paid $34.80.
If this were champagne and not a racing card, it would have been Moet & Chandon Bicentary Cuvee Dry Imperial 1943. If this were a meal at a restaurant and not a racing card, it would be have been the best steak Peter Luger has to offer.
The takeout for all 13 races was the same, a fairly reasonable 16% for win, place and show, 18 1/2% for exactas and 24% for trifectas and superfectas.
The very next race run at Belmont after Belmont Day was Sunday’s first race, a $32,000 claimer that drew five horses. If this were champagne, it would have come in a cardboard box. If this were a meal, it would be White Castle. Yet the price of the product, the takeout, was exactly the same.
At least at NYRA, the worst you get isn’t nearly as bad at what some tracks offer. On Monday, I stumbled upon what might just have been the worst betting card in the history of the game.
Presque Isle Downs is not a racetrack. It is an excuse to have a casino and, honestly, should be allowed to pull the plug on what is a horrendous racing product that management no doubt wants nothing to do with. On Monday, 42 horses were entered on the entire eight-race card, for an average field size of 5.25 horses per race. The last two races on the card included four horses each, and there were no late scratches. When you’re selling the equivalent of a 1977 rusted-out Chevy Vega with 345,000 miles on it that needs a new transmission, shouldn’t it be priced accordingly?
Not at Presque Isle. Their takeout rate is actually higher than NYRA’s. It’s 17% for win, place, show, 20% for exactas and 25% for tris and supers. With a takeout that high and with races that bad, no one, at least no one in their right mind, is going to bet those races. In the second of the two four-horse races, Presque Isle handled $14,386 in the win, place and show pools and $12,279 in the exacta.
People will gladly pay the prices NYRA charged to make a bet on Saturday’s spectacular card. An all-sources total of $99,419,023 was bet Saturday at Belmont. Comparing Belmont Stakes Day to a Monday card at Presque Isle Downs is preposterous, but we’re going to do it anyway. Presque Isle handled $567,249 Monday. The customers spoke loud and clear: they’re not going to purchase a terrible racing product at the takeout prices Presque Isle charges.
As long as there are slot machines at racetracks, the Presque Isles of the world aren’t going anywhere. But that doesn’t mean racing can’t come up with a better system when it comes to how it charges its customers. To have the same takeout rates on all races, no matter the size of the field or the quality of the race is nuts. No restaurant charges the same for hamburger as it does for steak.
I don’t know exactly what the answer is, but this is something racing needs to figure out. Here are some suggestions:
• There’s no reason why tracks that have slot machines, especially smaller tracks, should have high takeout rates. Most handle next to nothing and the amount that goes from the betting to purses is minuscule. In Pennsylvania, the home of Presque Isle Downs, 89.6% of the money for purses comes from slots. It wouldn’t hurt Presque Isle, Parx or Penn National one bit to lower their takeout to 4 or 5% and the end result might be a dramatic revival of betting at those tracks. In one of the four-horse races at Presque Isle, the winner paid $15.20. Had the takeout been 4% she would have paid $19. That makes for a much more attractive betting proposition.
• Everyone knows that the more horses in a race the more people will bet. So why not have a sliding takeout scale to reflect the fact that a 14-horse race is a lot better product than a five-horse race? The bigger the field, the higher the takeout; the smaller the field the lower the takeout. If the takeout were 7 or 8% on a five-horse field, people would be much more inclined to bet on the race. Though I never want to see takeout raised on any race, upping the rake a point or two on races with big fields wouldn’t be that hard to swallow.
• Don’t treat every racing day the same. Again, one would like to see racing lower all takeouts across the board, but that’s not going to happen. But would anybody really mind if the takeout was raised a couple of points on Kentucky Oaks and Kentucky Derby Day if it was in turn lowered on the rest of the meet at Churchill, which often includes plenty of races that are unbettable?
• Most businesses tinker with prices, trying to find the optimal price point where they can maximize profits. Racing doesn’t even try. How about lowering takeout as an experiment on what is the worst day of racing during the week and seeing what happens?
Racing is doing something no other industry would dream of doing, charging the same price for all its products, no matter how good or bad. That can’t possibly be a smart way of doing business.