Handle Wars: The Bottom May Be Here, For Awhile At Least

One of the things we've noticed this year in U.S, thoroughbred racing, is that handles seemed to have bottomed. Wagering is up so far in 2012, and we finished the year a little better than we did in 2010.

Harness racing, perhaps the leading indicator for all of racing, seemed to hit bottom about a year ago. The average mutuel pool for example, has been up for quite some time, and total handle in 2011 saw the first green number since about 2003.

So far this year, harness racing has seen a resurgence. Where the only metrics are kept - Canada - handles are up over 18% in 2012.

Harness racing did a number of things that thoroughbred racing seems to have done, but they did it earlier. In 2009 and 2010 they started paying attention to the customer with lower takeout and guaranteed pools. They also consolidated: They carded better, deeper field races. Long gone were the 5 horse fields that no one bets.

In the thoroughbreds a similar thing started to appear in late 2010. Tracks began lowering rakes and looking towards bigger pools. They also have consolidated. Field size is up. The only major jurisdiction that raised takeout in 2011 was the California tracks, and they got totally spanked last year. If they would've stood firm, we probably would've had a much better year in 2011. It's ironic that after raising takeout, California tracks, starting with the Hollywood meet last year, went to a low takeout pick 5 to help stop the bleeding.

In 2012, we are seeing this momentum starting to firm. In addition to the scores of tracks who have lowered takeout and concentrated on carding deeper races like Charles Town, NYRA tracks, Woodbine, Calder, and even the Pennsylvania tracks who dropped rakes, we have some new developments.

NYRA is on the cusp of having a blowout handle year - their payouts went up, and they should be injecting more cash in the pools as they find people to pay back for the takeout debacle. Their field size should also improve, attracting dollars. California has begun rebating local players (which is a takeout reduction), which has lead, or should lead, to a handle explosion of rebate cash (60% of the handle is bet by only 5% of the players).

In addition, I think we'll see a few more things happen in the mammoth jurisdictions:
  • I expect Woodbine to give even more back this season & continue to work the landscape for dollars
  • In California, I expect by the Del Mar meet to see more takeout reductions. Joe Harper has to convince the TOC to do this, but I think with the new elections there with some new blood, he'll have an easier time of it this season
  • In New York, I expect more takeout decreases in 2012, and better racing
If the above three things happen, we are assured (mathematically) positive handle gains. No if's and's or but's about it.

For years, bettors and wagering economists have asked racing to concentrate on a few items: Card better, deeper races to attract betting dollars, consolidate to do so, and look to lower effective takeouts.

We're starting to see some results of that in thoroughbred racing, and I hope we see more of it.

Good things can happen when you concentrate on the main two metrics that relate to increased handle, and increased customer satisfaction. Pay out a bit more so people can have a little more fun and bet more, and card some races worth betting with your customer in mind. It's really not that difficult.

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