Thursday, January 10, 2013

The 5% On-Track Rewards Card & A Big Super High 5

It's a cliche, but racing has been "inside the box" for a long time. It's clung to the status-quo and can't seem to shake it.

Sure we've seen some ideas, like the "Beulah Fortune Six" or some good on track promo's, but none seem to grow the pie.

Recently California racing decided to try a 20% on track bonus for their pick 6. You have to bet your ticket at the track to get the bonus. That might help things a bit, so kudos for trying.

There is a recent push to help on-track wagering and the thinking is sound. The more that's bet on-track the more of the pie the track gets and the purses receive. There's nothing wrong with trying to increase on-track wagering.

However, most ideas (like the bonus for the pick 6) seem to be inside the box.

Here's an idea that's outside of it. The 5% on-track bet card.

Any customer who wants one gets one. There are some in existence today and this is nothing new, but this one has a twist. The customer signs up, he bets on track with this card for all his wagers for the day, but before the last race he is given 5% of his betting volume back. This, in effect is a 5% rebate, just like someone playing at an ADW would get at home.

These "virtual dollars" are not cash though. He can't swipe his card, take out out his $50 out and head out for a six pack and a steak. These dollars are simply a credit on this players card that he has to play on the last race of the day. A wagering credit.

He or she has to be on track and has to be present for the last race of the day to use this money.  If he or she wins his free bet, the virtual dollars are now real dollars and he or she can take them out to use them as he or she wishes. or the bettor can simply leave a balance on the card to come back tomorrow and play the races again.

This 5% back could be formidable for a number of reasons.
  • It allows you to sign up people for a card, so you can track their play and deliver better customer service. 
  • It gives the customer a better experience. Who doesn't want a rebate?
  • It increases handle. Isn't that what we're supposed to be doing?
  • It drives people to the track
  • It gives players a better chance to win. You might be able to beat a race but you can't beat the races. But it's a heck of a lot easier with 5% back. 
  • 5% back is not a lot of money. If the average takeout is 22%, this lowers it on track to 17%. Currently a signal fee is around 9% for these players at home. 
  • It gets people to stay to the end of that card. We're paying them to.
Example, Pete comes to the track and puts $200 on his betting card.

He plays 8 races, $10 WPS a race and a few ex's and doubles. He rolls his bankroll over four times for $800 in betting volume.

He then bets $40 in the last race via his rebate. Let's say a track gets really crafty (this is obviously less effective but it may make it easier to get by a horseman group) and they make the virtual dollars to be accepted into one pool, like a Super High 5.

There are (hopefully) thousands of Pete's at the track. The last race pool, if it was say a Super High 5, could be increased by over $150,000 (if $3M is bet on track with these cards).

And of course, that $150,000 is taxed back through takeout, and some people will hopefully win, and churn that back as well.

Even better though: What player in simulcast land will not want to take a shot at a huge Super High 5 pool at your track if all these on track people are flooding that pool? It's almost like a carryover. Instead of a $40,000 super high 5 pool the pool could be $400,000, the highest in all of horse racing.

The takeout share from simo money now comes into play, too. In the end giving a 5% takeout reduction through this card could actually end up increasing revenue, virtually overnight.

This might even change the on-track culture. People may end up betting more to get more of a rebate for the last race. They might play more into the WPS pools to churn in races 1 through the second last race. You might have scores of people betting the show pools to cash. Instead of them playing into hard to hit bets getting them annoyed because they lose so often, they cash some tickets.  This makes their day much more fun. It's always more fun to cash tickets.

We can't continue to nickel and dime horseplayers. We can't try to squeeze more from them at every turn by hiking takeout or killing their bankrolls. Be their partners, help them win more, make their day more enjoyable. Think outside the box and don't be conventional. You might find yourself better off.

15 comments:

R said...

The horsemen won't like it. Revenue might go down about $50 for a few months while they sign people up. That would be $20 or so less money per week for purses for at least sixty days........

R

Cangamble said...

Not sure how many tracks do 3 million in live handle a day these days:)
I like the idea, I think it is best to give the rebate next day though. The idea is to cultivate the customer, which means that player has to come back to use the rebate.

Anonymous said...

Rebates = Dirty Word

Marquez said...

Interesting idea. This could be tweaked so many ways (depending on the track). Like the idea of bringing them back the next day, or at least giving them an option to do so.

kyle said...

I'm not against anything that puts more money back in players' pockets. Wish you would have left out the "visions of Super-High Five riches" though. It's the game's worst bet - handles a realtive pittance nationwide (thankfully) and I suspect is a vehicle at times for the larcenous. That it was born of the maddening mis-conception that the 10 cent super had diminished payouts is sufficient reason alone to loathe it.

Pull the Pocket said...

Hey Kyle,

That was put in there for doability. You have to show something tangible when you do something, esp with horsemen groups.

Raise takeout and handle goes down, they blame it on the weather or economy. 5% players reward card and show a pool go up by $300,000, well then you have something to expand the meme.



PTP

Indulto said...

"Second Chance" rebates for returning on-track patrons have long been advocated without success.

Perhaps your "on-track bet card" (OBC) can make it happen, but what percentage of on-track players use "track rewards cards" now?

What would really sell this OBC concept would be its ability to verify an individual's total investment in a single pari-mutuel pool to determine whether an IRS signer was warranted when cashing.

The Cowboy Squirrel said...

;)

greg blanchard said...


I really like the concept. I think most of us are falling short in selling our product to our own customers. Most have reward cards and rebates but don't do enough with them. This could definitely take it a step further in the right direction.

Good stuff!







Eric Poteck said...

Pocket, say it aint so!

When I explain pari-mutuel wagering to the uninitiated I explain it as a competition among all the bettors. In order to break even on your wagering you must be 20% smarter/luckier (assuming a 20% average takeout) than your competitors.

By offering one competitor a 10% rebate, that competitor only has to be 10% smarter/luckier than their competition, thereby creating an unlevel playing field, creating a game that is not fair to all.

Simply put rebates change the probabilities of one player verse another. As such rebates pervert the beauty and fairness of the pari-mutuel model.

There is no place for the ’bakers dozen’ philosophy of sales in pari-mutuel wagering.

Pull the Pocket said...

My idealistic friend is back.

Stop being anti-bettor. Quit trying to get everyone to bet into your 22% takeout pools please. DO you work for a racetrack?

:)

PTP

Eric Poteck said...

LOL..I did read that Gural has given in to offering up rebates!...yikes.

For the record my position is that rebates should be offered to all players by lowering takeout for all. In the meantime I don't begrudge players for taking the rebates offered with both fists. I guess the shrewdest players wager offshore where there are some attractive rebates available???!



Marquez said...

Vegas has proven that a rewards card can work, especially for the average player. The key will be in implementing the program. Some race track execs don't believe in this type of promotion. Many race track execs are too afraid too implement something that will not show an immediate return for fear of getting ousted (Santa Anita?).

Indulto said...

Eric,
I assume we have the common goal of restoring a level playing field for bettors. I believe LOWER equal direct takeout applied to all participants of any pari-mutuel pool without any rebating is the fairest, simplest, most transparent, and lowest cost solution.

Is it reasonable to settle for equal effective takeout for all such participants through rebates? I’m not sure because I think equal rebates for all still give whales/professionals an incentive to crush contenders and further lower payoffs resulting in even smaller, low risk profits to the games detriment.

However, if this would provide a vehicle for equal treatment of on-track and off-track players of all bankroll sizes AND it were coupled with more reasonable and realistic IRS withholding practices, then I would support the compromise.

Marquez said...

I believe this article was promoting the idea of a "reward/rebate" for betting ON-TRACK. Somehow this has turned into a lower-takeout vs rebate debate.

Lowering the takeout across the board in Southern California is not going to happen anytime soon, I assure you.

I think we can all agree on the most important point made in this article " Be their partners, help them win more, make their day more enjoyable".

The horse-player friendly casinos (Las Vegas) adopted this attitude when pari-mutuel wagering was instituted in their race books and they were no longer "at risk".

Race Tracks need to do the same.