Canterbury cutting takeout to lowest in US

[philcski]

Originally Posted by Kasept

Phil..

Please don't perpetuate myths, or lies, here. CD raised takeout in an attempt to maintain their purse structure so as not to lose horses to other jurisdictions. While the decision was simplistic and myopic, it wasn't done just 'because they could'.

It's unbalanced that there is never an acknowledgement in discussions on this topic that they are surrounded by casino-fueled states (IN, OH, PA, WV) and are without the luxury of alternate revenues like KY Downs/Ellis (Instant Racing funding) or Keeneland (Sales Company funding).

And in terms of dollars and cents, their pricing remained rather fair. Their rates on WPS were industry low-ish (16%) and were raised to a middling 17.5%. Their multi horse and and multi rate rake was industry low-ish (19%) and went to a rather typical 22%, lower than NY and CA on most multis.

My opinion and my opinion only, however the below confirms the ability to increase takeout was based solely on the addition of the September meet- (not lies/myths)- diluting the on-track average to below the dividing line set by Kentucky law (clearly to separate CD/KEE from KD/Ellis/Turfway.)

Here's the thing... they can maintain purse levels without doing anything different, but it might have a negative impact on their stock price. Their 'corporate spin' is it's to protect the purse account but in reality that's a pittance relative to their total revenues. They did $1.2 billion in revenue in 2015, their net income was $65.5 million... a 2-3% increase in takeout for just Derby weekend nets them a cool ~$7 million without doing anything, thus increasing their net profits by 10% and theoretically their stock price the same. Their takeout was (and still is) reasonable because the state law says so, not because CHDN is a bunch of great guys.

There's also no reason they can't get Instant Racing set up at Trackside. The religious nuts have given up the fight in Kentucky so there is no potential legal battle looming. In addition, the neighboring states are not really offering similar condition books- Indiana Downs, for example, has raised it's product significantly but currently runs about 50% of their races for Indiana breds and several other low conditioned claiming races a week, which leaves maybe 5-10 crossover races a week- the same dynamic as NYRA versus Parx or Monmouth.

I love Churchill Downs as a venue and wagering option. The takeout difference is not going to prevent me from betting on their product when I like what they're offering. But this is just another misstep by a company more concerned with the bottom line than putting out a great racing product.


http://www.drf.com/news/churchill-do...-takeout-rates


"John Asher, a spokesman for Churchill, said the track’s management raised the takeouts to sustain current purse levels at the track. However, Asher acknowledged that Churchill and its horsemen will split the additional revenue raised by the maneuver under the terms of its existing live-racing contract, which gives horsemen 51 percent of wagering revenue and Churchill 49 percent."

"Churchill would not have been able to legally raise its takeout rates if the track had not held its first-ever September meet last year. Under Kentucky law, tracks with an average live ontrack handle of $1.2 million or more a day cannot charge a takeout higher than 16 percent on straight wagers and 19 percent on exotic wagers. Tracks under the $1.2 million average threshold can charge 17.5 percent and 22 percent.

Asher said the average did not dip below $1.2 million until last year, based entirely on the influence of the 12-day September meet."