Noting late pari-mutuel odds changes and high takeout rates in horse racing betting compared to fixed-odds wagering on sports, panelists issued recommendations to the equine industry in the first of three Dec. 11 afternoon sessions that closed out the Global Symposium on Racing in Tucson, Ariz.
Replying directly to a question from Gatewood Bell, Keeneland's vice president of racing, during the "TPA Mark Kaufman Workshop: How Do We Keep Racing Relevant in the Evolving Wagering Landscape," Rhodes College economics professor Dr. Marshall Gramm encouraged the Kentucky track to lower takeout. He said tracks like Keeneland and Del Mar in Southern California—power players within the industry but not owners of advance-deposit wagering companies—have the ability to experiment with lower takeout in a way that smaller tracks cannot.
"All you lose—right?—is the margin on your on-track player. The CAWs (computer-assisted wagering groups)? They're getting their rebates cut, but they're effective takeout is the same," he said. "And then if you go and advertise, (saying) hey, we have the lowest takeouts across every pool in the country. (The ADWs) may not like it, but they're not cutting your signal. So you and Del Mar have a unique opportunity to actually experiment with lowering your takeout, and you don't have to move your host fee along with it."
Host fees are negotiated payments to tracks for sharing their live racing with off-track wagering outlets and are typically highest for the most popular track signals.
Takeout at Keeneland is already lower than at many tracks. According to their website, straight wagers are taxed at 16%, and exotic bets range from 15% to 22%.
Takeout reductions have been tried elsewhere, typically smaller tracks, though such experiments have often been short-lived. In one notable example, Canterbury Park lowered takeout across pools in 2016, aiming to drive business. But the one-meet experiment did not work for the season. Though the handle rose more than 5%, its receipt of a smaller cut of wagering resulted in a sizable drop in revenue for Canterbury.
Since then, more tracks have typically opted for targeted takeout reductions in specific exotic wagers on the card.
The wagering landscape has also changed since 2016, which Gramm and three other panelists expanded upon following questions from moderator Jessica Paquette, track announcer at Parx Racing and the Turf Publicists of America vice president. The introduction of sports wagering across much of the country gives bettors more wagering alternatives, and the effective takeout on traditional single-game wagers in a football game, for example, is significantly lower than in racing.
Other sports also offer fixed-odds wagering, free of late odds changes often seen by retail gamblers, especially CAW groups known for hammering wagers in the closing seconds before the horses break from the gate. Many of these bets are not processed until a race is underway, resulting in odds changes taking place in graphics midrace, another frustrating experience for bettors.
Horse racing wagering is largely pari-mutuel, meaning bettors wager against bettors, though CAW groups (including those with ownership ties to track operators) have computer access directly to the wagering pools. New Jersey and Colorado have added fixed-odds wagering on horse racing, but other states have not embraced it in a tightly regulated industry. Gaming has instead drawn the most interest from regulators, tracks, and stakeholders.
Zach Taylor, North American director of sales for Global Tote, said fixed odds are more relatable for sports gamblers and allow bettors to feel satisfied by getting a "locked-in" price.
"They can believe they are going to feel like a winner, as opposed to making a win bet and feeling like a loser because I thought I was going to get this—instead, I got that," he said.
Nelson Clemmens, owner of AmWest Entertainment, said his ADW has begun offering tools to improve the wagering experience. One feature, a predictive algorithm called TRU Odds, is meant to forecast expected starting odds, even when a horse might be higher or lower than that price in early wagering.
"It takes away some real frustration. We also see it as a bridge—one of the bridges—that maybe we can use to attract sports bettors," he said.
The New York Racing Association, which requires CAW groups to submit their win bets no later than two minutes to post, was represented on the panel by NYRA Bets chief operating officer Matt Feig.
He, like Clemmens, noted the importance of providing tools and content to help players succeed.
"It's very important that we have retail customers—some weekend warriors, those that have as a hobby—to make the sport and wagering appeal to them," Feig said.
The horseplayer was also in focus during the symposium's final panel, "Structuring Handicapping Contests: Enhancing Bettor Experience While Boosting Bottom Line Results." The two betting-themed panels bookended a discussion titled "Safeguarding Equine Health: Biosecurity Strategies for Disease Prevention and Control."
