- The National Players Boycott of California Thoroughbred Racing. Recommendations for California Racing
September 01, 2013
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Recommendations for California Racing from

We believe that the implementation of these common sense recommendations can be leveraged by California Tracks and Horsemen to create heightened brand awareness that will drive increased handle/revenue based on increased Customer wagering. Optimal pricing of the California Racing product will lead to increased bottom lines for tracks and bigger purses for horsemen.

Some of our suggestions can be implemented quickly and some may take a few months. We believe these changes combined with the proper marketing plan will help California Racing lead the Horse Racing Industry into a new era of forward thinking, innovation, and integrity. We are currently getting input from other Horseplayers around the country. Horseplayers may not all agree on every issue. However, we do agree that without Customer intervention Horse Racing will continue to run itself into the ground.

Our recommendations are reasonable, timely, and designed to generate increases in total revenue for Tracks and bigger purses for Horsemen. We hope that Tracks and Horsemen will join us in support of these recommendations.

Changes in Breakage:

Nickel Breakage on WIN and PLACE (just like NYRA)
Nickel breakage means breaking to the nearest .05 in the odds. It means increased mutuel payoffs for bettors. It means making racing more attractive to gamblers from a value standpoint vs. the other forms of gaming (sports betting, slots, poker, lottery, etc.) with which racing competes for the player wagering dollar.

Going to Nickel breakage means an increase in customer goodwill and an increase in churn in the Win and Place pools.

Implementing this recommendation means increased total revenue (from the win and place pools) for tracks and bigger purses (from the win and place pools) for horsemen.

Nickel Breakage on WIN and PLACE (but not like NYRA)
Divide breakage withheld from pari-mutuel pools as follows:
  • 50% to the Disabled Jockeys Fund - Specifically: Permanently Disabled Jockey's Fund (P.D.J.F.) unless there is a California-specific equivalent organization.

  • 50% for Thoroughbred Race Horse Retirement - Specifically: California Retirement Management Account (C.A.R.M.A.).
We at believe implementation of this recommendation sends a message to fans everywhere: Racing cares about its athletes.

Implementing this recommendation means increased customer goodwill and increased likelihood the general public will embrace racing as both a sport and a gambling game. (Something that racing currently lacks.)

Half Cent Breakage on SHOW
Breaking to the nearest half cent (the nearest .005 in the odds) means that mutuel prices for show wagers will be paid out to the nearest penny. (Just like the dime super.)

We at, see this recommendation has having potential to generate instant improvement in customer goodwill and increased churn in your show pools.

Implementing this recommendation means increased total revenue (from show pools) for tracks and bigger purses (from show pools) for horsemen.

One side effect of this recommendation will be a reduction in the number of negative show pools.

16% Promotional Takeout for DOUBLE Wagers
California overreached when takeout for 2 horse bets was raised from 20.68% to 22.68%.

CA Double Takeout compared to other major tracks:
18.50% - NYRA (AQU-BEL-SAR)
19.00% - Kentucky (CDX-KEE)
19.00% - DEL-MTH
20.00% - GPX
21.00% - CRC
22.68% - DMR-HOL-SAX

The Double is a churn bet. Currently, the Double represents just 3.5% of total handle.

We at see very little downside risk involved in giving this recommendation a try. Conversely, we see tremendous upside.

It is our contention that TVG was on the right track when they ran a zero percent takeout promotion for wagers made through their ADW on the late double at Hollywood Park on Friday July 6, 2012.

According to a TVG spokesman, total handle for the late double that night came in at more than $230,000 whereas the late double on Friday nights over the previous five weeks at Hollywood Park had been averaging under $100,000. (They more than doubled handle that night by promoting a low takeout Double.)

We likewise believe that implementing a 16% promotional Double takeout can help you create brand awareness which you can then leverage to drive increased churn in your Double pools. This in turn will help you spark handle growth in the other pools of each two race Double sequence.

Implementing this recommendation means increased total revenue (from all of the pools in each two race Double sequence) for tracks and bigger purses (from all of the pools in each two race Double sequence) for horsemen.

We believe the promotional 16% Takeout Daily Double takeout should be shared equally between the tracks and the TOC.

California Exacta Takeout Out of Line Compared to Other Major Tracks:
18.50% - NYRA (AQU-BEL-SAR)
19.00% - Kentucky (CDX-KEE)
19.00% - DEL-MTH
20.00% - GPX
21.00% - CRC
22.68% - DMR-HOL-SAX

At pre SB1072 levels of 20.68%, California Exacta Takeout was already on the high side compared to the other major tracks in North America that Del Mar, Santa Anita, and Hollywood Park compete with for the player wagering dollar.

SB1072 which mandated the Exacta takeout in California be raised to 22.68% only made the problem worse. Players see 22.68% Exacta Takeout at Del Mar, Santa Anita, and Hollywood Park as the most egregious part of the SB1072 takeout increase. (You would know this had you bothered to run the idea of 22.68% Exacta Takeout before a player focus group before implementing it.)

We believe that the exacta takeout should be rolled back to 20.68% but we feel that a 1% reduction in exacta takeout is a reasonable starting point to finding optimal takeout for exactas. The 1% reduction will come from the TOC and not the tracks.

We at recommend the following:
Drop the Exacta Takeout by 1% down to 21.68% and closely monitor incremental changes in handle and revenue produced by this change for a period of 24 months.

But don't stop there. We also recommend that you run all future changes to the wagering menu in front of horseplayer focus groups before making them.

Base all of your future changes in takeout and to the wagering on customer response. (Operate California Racing the same way a Fortune 500 company would operate its business.)

The Exacta is a churn bet. Implementing even this tiny incremental adjustment in takeout will mean incrementally higher payoffs for exacta bettors, an incremental improvement in customer goodwill, and by year two, incremental increases in exacta pools (and total revenue from the exacta pool) for Tracks along with incremental increases in purses (from the exacta pool) for Horsemen.

We also contend that going forward, incremental takeout adjustments are one way you can reverse your own long term downward handle trend. Conversely, we also contend that failure to do this can only lead to continuation of California Racing's long term downward handle trend.

Un-Cashed Tickets (Use the money to grow your business)
We at recommend that money from un-cashed tickets be used to seed the pools of both the Early and Late Double on the last Sunday of the racing calendar each month.

Why Sundays? Track Management at Del Mar implemented a player suggestion when they began seeding non carryover Pick6 pools on Sundays. (Ask them about the role implementing this player suggestion played in their achievement of back to back successful meets.)

Why a churn bet? (And not a high end exotic like the Pick6?) Because you want players to re-bet (churn) the proceeds.

Why the Early Double? Because players already on track that day would then have the remaining races on the card to re-bet (churn) the proceeds - thus maximizing churn.

Why the Late Double? Because the Late Double falls in a good time slot - one that TVG has already proven can be successfully promoted.

Which is better, the Early Double or the Late Double?

We don't profess to know. However, once the idea is implemented (and being promoted) it is important that results be monitored. If results from the Early Double prove to be stronger in generating increased churn, then emphasis in promoting the "Un-Cashed Tickets Double" ahould be placed on the Early Double. If the Late Double proves to be stronger, then emphasis should be placed there.

Implementing this recommendation (and promoting it) will result in increased customer goodwill, heightened brand awareness, and an increase in handle and total customer spend on the product.

Implementing this recommendation (and promoting it) means increased total revenue for tracks and bigger purses for horsemen.

24 Hour Video Surveillance
We at recommend implementation of video surveillance of all horses entered to run for a period no less than 24 hours prior to the race. We see this as essential to the integrity of the sport. We believe the details of such a program should be worked out by Alan Balch and the CTT in conjunction with the Tracks.

Implementing this recommendation (and promoting it) means increased belief by current (and more importantly potential) racing fans that Racing is regulated in such a way that integrity of the game is important. Long term, this translates to a greater likelihood of Racing being embraced by the general public. If promoted properly, California Racing can leverage this to drive increases in on track attendance, handle, total revenue for Tracks, and bigger purses for Horsemen.

Borrow a Page from the CA Lottery:

CA Lottery Increases Total Revenue for Education through INCREASED PRIZE PAYOUTS
AB142, a bill authorizing the CA Lottery to LOWER the Takeout on Scratchers Games, was signed into law in 2010 by CA Governor Arnold Schwarzenegger.

Unlike horse racing (which took the opposite approach and raised racing takeout with SB1072) the CA Lottery has been able to leverage LOWER TAKEOUT to drive brand recognition and generate significant increases in both sales and total revenue for Education.

Here's a quote from Linh Nguyen, Acting Director, California Lottery:
"Increasing the prize payout percentage improves the product's value to the consumer, provides us with a powerful message that gets consumer attention, and gives us a tool to drive sales and profits.

A relatively small increase in prize payout percentage can be leveraged into a much more significant increase in top-line sales.

Although the increase in prize payout percentage leaves a smaller percentage to be transferred to education, the total dollars going to our beneficiary goes up. And at the end of the day, you can spend a dollar, but you can't spend a percentage. So these changes have resulted in increased funding to education and that's what our constituents care most about and the reason the Lottery was created in 1984."
Read more at the link: Public Gaming Interviews Linh Nguyen Acting Director, California Lottery

We at have to ask the obvious:

Given the success of the CA Lottery in using LOWER TAKEOUT prescribed by AB142 to drive significant increases in total revenue for Education, and given the significant fall off in racing handle as a result of the TAKEOUT INCREASE mandated by SB1072, and given the success of the 14% LOW TAKEOUT Pick5 in sparking racing handle and revenue growth in the non Pick5 pools in races 1-5 since its implementation:

How can Track Management at Del Mar, Hollywood Park, and Santa Anita, along with the Commissioners of the CHRB, the Board of Directors of the TOC, and the esteemed members of the CA Assembly and Senate possibly justify their continued collective FAILURE to implement further reductions in takeout for California Racing?

We at eagerly await an answer.

Copyright 2010