Who Are You Talking To John?

[Dunbar]

Crist:

On the contrary, every single long-term experiment with takeout reduction has shown that it increases handle, participation, and customer satisfaction – not necessarily because players are consciously aware of higher returns, but because they find themselves with a bit more money on hand that they reinvest over and over. They stay in action longer, and they receive more positive reinforcement to keep playing the game because their money seems to last longer and go farther.

There have been some stunningly disappointing takeout reductions. When Ellis Park introduced a 4% Pick-4 in 2007, the response was extremely underwhelming. Pools rose briefly to a "whopping" $60K, but then settled into the $25-$40K range. My own modest bets represented 0.5% of the entire Ellis Pick-4 bets that summer.

Here's something I wrote in this thread on 8/1/07: http://www.derbytrail.com/forums/showthread.php?t=15567

...today's pool was an embarrassing $25,000. I say "embarrassing", because I find it embarrassing that the best bet in horseracing can only attract $25,053 worth of bets. Hell, my bet was 1/70th of the entire pool! Aren't there at least a couple hundred horseplayers in the entire country willing to pump some money into this pool?

Is any track going to think about lowering take when Ellis draws a whopping 25,000 with it's 4%?

About the same time, Laurel ran a 10-day meet with reduced takeout. 10% for WPS. A drf article said there was no increase in handle:
http://www.derbytrail.com/forums/showthread.php?t=16373

--Dunbar

[randallscott35]

Ellis and Laurel. 2 D+ racetracks. And also these were temporary situations. That's not how you create buzz.

[Dunbar]

Originally Posted by randallscott35

Ellis and Laurel. 2 D+ racetracks. And also these were temporary situations. That's not how you create buzz.

The Ellis reduction was for the entire meet. Granted, it's a low level track. But if reducing takeout will only help at the top tier tracks, then let's narrow the focus when talking about what will "help" racing.

I came away from the Ellis 4% pretty discouraged with horseplayers. In general they'd rather bet into a 25% takeout at a track they're familiar with than take the time to follow horses at another track where the takeout is 4%. And even given that, couldn't the serious players muster some action for the Pick 4, even if they were just throwing darts? It wouldn't have taken much to have sent a better signal to other tracks that reducing takeout helps handle. A $100 bet on random horses in a 4% takeout bet costs $4 on average. But almost all bettors would rather kid themselves that they are beating the 25% takeout at the home track than throw a few bucks at a 4% pick-4.

Even if horseplayers are not smart enough to flock to lower track takeouts, the 2nd part of what Crist wrote still makes good sense:

"...not necessarily because players are consciously aware of higher returns, but because they find themselves with a bit more money on hand that they reinvest over and over. They stay in action longer, and they receive more positive reinforcement to keep playing the game because their money seems to last longer and go farther."

Casinos learned this long ago. If they kept too much of the slot money, then customers didn't win often enough and stayed away.

--Dunbar

[blackthroatedwind]

Originally Posted by Dunbar

Casinos learned this long ago. If they kept too much of the slot money, then customers didn't win often enough and stayed away.

--Dunbar

Except doesn't the churn on slot machines negate the lower takeout aspect, in that you will go broke faster?

[Dunbar]

Originally Posted by blackthroatedwind

Except doesn't the churn on slot machines negate the lower takeout aspect, in that you will go broke faster?

BTWind, I'm not sure what you're comparing when you write "you will go broke faster". If you're comparing two slot machines with similar games but different takeout, then the churn rate is equal and you'll of course last longer on the game with lower takeout.

If you're comparing slot play to horseracing, it's hard to decide what "units" of bet would make the comparison useful.

An important factor for casinos is to create the "if I'd only quit when I was ahead" kind of thinking. When you have lower vig in a casino game, it usually means you will have a higher chance of having been ahead at some point during your play.

Compare two nearly identical "Jacks or Better" video poker slot machine games, one with a 98.4% return and the other with a 95% return.

If you play the 98.4% game at the $1 level betting $5/hand for about 2-3 hours (1000 hands), you have just a 29% winning. But you will have been $100 ahead 53% of the time. So in addition to having a solid chance to win, you also have a strong illusion that you could have won.

If you instead played the 95% game, your chance of winning drops to 12%. And you'll have had just a 38% chance of having been $100 ahead during your play.

The casino's minimum* expected win in the 98.4% game is 1.6% x $5 x 1000 = $80.
The casino's minimum* expected win in the 95% game is 5% x $5 x 1000 = $250.

(* it's "minimum" because these games involve decisions, and most players will make errors that create a larger expected win for the casino.)

Despite the much higher expected win for the casino, you rarely see the 95% game offered. There are plenty of oblivious slot players, yet even the oblivious ones realize when they are hardly ever winning. Even in the absence of nearby competition, casinos will usually offer a better version of Jacks or Better than the 95% game.

I think the same might ultimately hold true for horseracing if tracks would lower takeouts, creating a better chance to have the "I was ahead for awhile" mentality. But with the smaller number of bets (compared to casino games), it's not 100% clear to me that a small reduction in takeout would have a noticeable effect on either end result or the chance-of-being-ahead-at-some-point factor.

I may have totally missed the point of your comment, and if so, please clarify and let me have another shot at it!

--Dunbar

[cmorioles]

If I remember correctly, Ellis and Laurel lost a lot of ADWs and simulcast betting because people wouldn't take the bets at those low prices.

[randallscott35]

Originally Posted by cmorioles

If I remember correctly, Ellis and Laurel lost a lot of ADWs and simulcast betting because people wouldn't take the bets at those low prices.

I think I remember that is correct. Which means it is a poor example to begin with.

[3kings]

Originally Posted by Dunbar

Crist:

There have been some stunningly disappointing takeout reductions. When Ellis Park introduced a 4% Pick-4 in 2007, the response was extremely underwhelming. Pools rose briefly to a "whopping" $60K, but then settled into the $25-$40K range. My own modest bets represented 0.5% of the entire Ellis Pick-4 bets that summer.

Here's something I wrote in this thread on 8/1/07: http://www.derbytrail.com/forums/showthread.php?t=15567



About the same time, Laurel ran a 10-day meet with reduced takeout. 10% for WPS. A drf article said there was no increase in handle:

http://www.derbytrail.com/forums/showthread.php?t=16373

--Dunbar

These points are valid but I'm not going to just start playing a track I haven't been following and jump into multi-race sequences.