By Bill Finley
As expected, Santa Anita’s attempt to simulate the casino game roulette as part of its wagering menu has not exactly been a roaring success. Track officials were not able to provide the TDN with exact handle figures on the bet, but it appears that the usual pools are somewhere between $1,500 to $3,000 per race.
On a busy night and if any big players have wandered over to one of the wheels, they might handle that much on a single spin of the wheel at any Las Vegas strip casino.
That tells you everything you need to know about why casino gambling is so much more successful than betting on horse racing. It will always come down to the price the two forms of gambling charge the customer, or the takeout.
The takeout rate on Santa Anita’s roulette bet is the same as it is on win, place and show bets–15.43%. By law, that’s the lowest amount they can charge. The retention, or takeout rate, on a Vegas roulette wheel is 5.26%. If a casino ever decided to play around with the roulette wheel to create a 15.43% take, no one would play the game. No one.
When it comes down to why racing lags behind virtually every other gambling game offered in this country, the answer is always the same–the competitors have a huge advantage because the price of making a casino, slots or sports bet is much lower than the price of making a bet on a horse. If the gas station on one side of the street charges $2.49 a gallon and the one on the other side charges $2.85, which gas station do you think is going to get the most business?
A roulette-based horse racing wager can never succeed with a 15.43% takeout. Yes, it was created to appeal to people who might be at the track for the first time and are confused by the pari-mutuel process. Anyone can understand roulette. A few small players and newbies might play it for fun, and, perhaps, it’s worth keeping around for that reason alone.
But no serious handicapper is going to go near a bet where the value is so poor. If $3,000 is bet on racing roulette, $2,537 is returned to the winners. Over the long-term, with a real roulette game that handles $3,000, $2,845 is paid back. That’s quite a difference.
The shame of this is that racing roulette, if it could be done properly, is actually an excellent idea.
In any race where there are six or more horses, they are grouped into three categories, red, black and green. The better horses are supposed to wind up in the red group, which would then make that bet the heavy favorite. The black group is supposed to consist of a slightly less attractive group of horses and the greens are supposed to be the longest shots on the board. That way there’s something for the chalk player, the guy looking to cash a $5 or $6 bet and the person hoping to nail a longshot with the green.
Not only could this be a good bet to introduce newcomers to the sport, but, if the takeout weren’t so ridiculously high, it could really catch on. Unlike with real roulette, you can use your brain and handicapping savvy to find good plays. The red could be 3-5, but if the group includes the 8-5 favorite, the 2-1 second choice and a 6-1 shot you might conclude that it is a great bet and a good value. There’s also no reason why it can’t be expanded to include exactas and trifectas. You could play a red-red-green tri or a red-black straight exacta. It would be something different. Most new gimmicks racing has introduced are bound to fail from the start and have a short shelf life, but this is one that could really catch on–if not for the takeout.
The Stronach Group, which owns Santa Anita, is behind the new bet and it is to be commended for trying something different.
“This sport has to try new things and we can’t be afraid,” said TSG Chief Operating Officer Tim Ritvo. “I have thick skin. I’m not afraid to be laughed at.”
One of the reasons Ritvo has risen to such a prominent role in racing is that he, perhaps more so than any other racing executive, understands and appreciates the betting customer. He knows the takeout on the bet is too high and that it is a serious impediment to its success.
When asked if he would be an advocate of dropping the takeout on the racing roulette bet, he replied, “I’m open to everything.”
The problem is, The Stronach Group cannot lower the takeout on its own. It first needs the approval of the Thoroughbred Owners of California, and that’s not going to happen.
“I don’t believe this is designed to be a major percentage of the total handle,” said Greg Avioli, the TOC’s president and CEO. “From my perspective, it’s more for the introductory experience. I welcome the innovation from Tim Ritvo and his team for trying things like this. The definition of innovation is failure. You have to try a bunch of things and some won’t work and some day you will land on something that will.”
While Avioli likes the bet, he likes it at 15.43%. His worry is that if the take on racing roulette were lowered to the 5% neighborhood, people would abandon the traditional win, place and show pools and put that money instead into the roulette bet. If so, that could mean less revenue for everyone.
“If we’re going to lower it to 5%, then you would likely see a cannibalization of the win pool,” he said. “What you’re really asking is do we want to lower the win, place, show takeout for the mature better? That’s pretty much what would happen. If you had a 10% differential in takeout, I think a lot of people would go with the 5% versus the 15%.”
He’s not wrong. But here’s the problem: betting on horse racing has dropped dramatically over the last 10 years or so. A total of $14.725 billion was bet on the sport as recently as 2007. In 2017, that figure had dropped to $10.909 billion. Without even accounting for inflation that’s a 26% decline. And now racing is facing a new threat, and it could be a calamitous one. With sports betting about to be legal throughout much of the country and available on the internet, racing will be facing a new competitor that has the potential to do serious damage to the sport.
Ritvo is right. The answer is not to sit back and do nothing, but to try bold ideas.
So why not do this? Lower the takeout on racing roulette to 5.26%, but just on an experimental basis. If Avioli is right, and he very well could be, and the result is less revenue because the traditional win, place and show pools drop, then cease the experiment and raise the takeout back to its old level. But this is a clever and intriguing bet and it’s something that could really take off. The slice of the pie will be lower, but how big might the pie be if bettors flock to what would be the best bargain that has ever been offered in racing? Isn’t it worth finding out?
Or we could just keep thinking inside the box and getting nowhere. Let’s add another Pick 5 to the betting menu and offer $1 hot dogs on Thursdays. That will change everything.