No matter what you think about it, it's been a system that has worked better than all others for a few reasons. It brings buyers and sellers together, sets prices and allows for a maximum number of transactions. People wanting to give you money helps you learn markets and pricing, allows you to serve that market and expand it worldwide better than any other company or industry can. The market doesn't have a degree from Wharton Business School, but it's smarter than any professor whose ever taught there.
David Purdon wrote an article at ESPN yesterday about "why do people hate DFS". It's a great article that talks about the New York Times, politicians and lawyers, activists and others telling you, a consumer, how stupid you are to play into it. It was twitter-shaming times ten.
A funny thing happened. The market gave them all the middle finger. DFS handle grew at an almost exponential rate in 2015. Why? Because users found value in the system, were having fun, and didn't believe any of the horror stories forwarded by an overzealous press and political class. Game, set and match to the market.
If you are running a business that provides some sort of value, the system employed will encourage people to give you their money. It's the way things work.
Yesterday, Gabe posted this on the twitter box:
Gabe's right. There were no ads on TVG, this was not Santa Anita before a big race where eyeballs were on the product; $46K of new money is about 20% of this tracks' entire nightly handle a year ago. This was huge money at a small handle harness track with a 12% take, on a Wednesday evening, with ten minutes to spare.My mind is still blown on how a $5k carryover can generate $46k new money with a 10 minute notice on a Wed night at 10:40 p.m.— Gabe Prewitt (@gabe_prewitt) February 18, 2016
Why does this work, because, like with DFS and just about everything else in our transaction way of life, money finds value. That 12% takeout rate, with a carryover, with expected pool size, hits players with bankrolls right between the eyes. If you add in their rebate, you have to be a complete moron not to want to play .
In racing, the braintrust wants you to believe takeout doesn't matter; that value in pools is a mystical thing that happens sometimes and seems good for whatever reason; that "look, my track lowered juice 3 points and lost money"; that expected pool value is trumped by floppy hats and Daughtry concerts, by high purses and race quality.
On a Wednesday evening at Pompano - and what we see time and time again, over and over again - price sensitive, bankrolled players are telling them they could not be more wrong.
When value is offered, and racing is built the right way to capitalize on it, the sky is the limit for this sport as a gambling game.