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The Prevailing Racing Pricing Thought

I glaced a little bit at the #simocon today. I've been on calls but caught a bit out of the corner of the eye.

Although I thought the discussion seemed fairly good, any chatter on pricing in racing seems to dissolve into the anecdotal.

An example of a prevailing thought I saw on twitter, that we've likely heard for generations in some form:

"Any "lower takeout!" argument is crippled by ~50% take in wagers w/ uniqueness clauses (ex: Rainbow6) that create large pools."

We hear this quite often. If a bet does well with high takeout, then people mustn't care about it.

In Vegas, people play Keno. A casino executive does not walk by the Keno corner and say "casino players are not thinking about takeout because this game with high takeout works". What he or she says is "this type of game, with this type of customer does not seem to avoid low payoffs". And then he or she moves on.

He or she would enter the poker room and see Daniel Negranhu playing, knowing that if he or she raked 20% out of the pot the place would be empty.

He or she would enter the sports book on football Sunday and know that offering Washington at Dallas as a 5.5 spread with -150 both sides would make the lines shrink faster than a polticians approval rating.

He or she would know that without offering more to some, less to others, and treating each person as a unique bettor, his or her's vacancy rates would be higher than the Bates Motel's.

High takeout bets can survive in racing for jackpot seekers and big players, if the bet is hard enough to hit. To broaden racings reach, other bets need to be priced differently. This is why the Scoop Six in the UK has a 25% takeout, but if you want to bet one of the horses to win on the exchange you can get 5% or less rake.Yes, people who play on a screen like this below are not a Keno or Rainbow Six player.



A dynamic, malleable pricing model that attacks many demographics and bettors is needed just about everywhere to maximize growth and betting volume. Racing has been making decisions on betting and bettors based a static, fixed and pigeon-holed system that was created in 1907. Racing has to, or should, begin to evolve, or at the very least purge the specious from its decision making process.



Comments

Anonymous said…
State lotteries have a 50% takeout (plus they discount jackpots) and lots of people play them. If the jackpot is large enough, people will not really notice takeout. They notice jackpot.
Pull the Pocket said…
Hello,

True.

As well, for lower stakes lotteries, the takeout matters differently. Massachusetts lowered their takeout on scratch tickets from 70% to 29% over the years and increased revenues by over 100%. Similar has happened in California.

Dynamic pricing is alive and well in thousands of gambling games. Different strokes for different folks.

PTP
Cangamble said…
Anon, people gamble for the rush. The difference between the lottery rush and horse racing rush, is that there a dream to retire, buy a huge home, etc. associated with each lottery ticket purchase, so takeout doesn't matter when dealing with million dollar jackpots. But for a horseplayer, the rush occurs in making a selection, placing a bet, watching the race, and keeping a bankroll active so that the rush components can be repeated (there is work involved in making picks and bets, so if a player goes bust too fast, they start to doubt if the work is worth it). Horse racing is closer to the rush a gambler has in slots, blackjack etc. Churn is needed to help satisfy the rush. Yet takeouts are 2.5-10 times more than those games.