Zee Corporation

Good morning peeps!

Yesterday, Keeneland's handle was about flat from last year for their opener. That, as we postulated yesterday on the blog, doesn't mean much either way, but it was interesting, and the corporate types (strangely enough, some of them in the real world hate corporations) were pretty happy.

With my back of the napkin look at results (and help from Crunk posts that show racing outside Keeneland yesterday was up 18%), I surmise that those of you who played Keeneland last year, who did not play this year, totalled perhaps $300,000 in handle. We'll see how it goes the rest of the meet.

Another interesting discussion yesterday was about rebating. Rebating, something that I've been for on the blog since 2008 - mainly because it's the only equitable way to change the racing system and get handle to grow if done correctly - has certainly been bastardized.

Back when the corporations were out of dictating terms, there was an ample degree of both fairness mixed with pro-growth principles. We touched on this here.

In the past several years, when the corporate tracks started running it, it's been all downhill. Now a smaller player who wants to become an everyday player who used to get 5 points at Keeneland is lucky to get a half point. And he or she has to compete against someone getting 12 points. Racing doesn't think things through very well, and the inmates are running the asylum. It's just horrible business.

It's gotten so bad that apparently, signal fees of 9% are not for everyone. Some can get some as low as 5%. I can't express in strong enough terms how terrible this is for the wagering ecosystem.

Not all "corporations" are like this of course. Most outside racing, in fact, do the exact opposite, depending on their brand. Costco asks "how can we get the price of our $1.50 hot dog down", not up. Corporate bookmakers lower takeout, generally, and have few perks, and they pay racing and their shareholders through gross profit, not margin.  Pinnacle Sports looks at CDI or Magna or Keeneland, and shakes their head.

I suspect little can be done about this issue. The wagering side of horse racing itself goes in waves - wave one is the problem, wave two is ignoring the problem, wave three is trying to shut down the problem, and wave four is trying to fix the problem in a way that doesn't work. We're in wave four  with rebating.

That's not good for takeout rates, and not good for most of you. It's not good for the tracks either, but they just don't realize it yet. That's wave 5. It will probably start in 2021 or 2022.

I'm a free market dude. I went to business school, I consult with hundreds of companies in dozens of different businesses. I love curves and numbers and ROAS and ROI and CAPM's and LFTV and all kinds of neat businessey things. I'm as far from a Bernie Sanders guy when it comes to business as you'd ever meet. But I can, without equivocation, say this new corporate world - in racing and in some other businesses - is growing completely foreign to me.

Have a great Saturday everyone.


Eric Poteck said...

I have debated rebates in the past, with my belief that rebates bastardize the pari-mutuel model by creating an unlevel playing field. Pari-mutuel wagering is suppose to be a socialistic game (everybody is equal in terms of cost with luck and skill being the determining factors) and has been turned into a capitalistic game where the more widgets (wagers) you buy the lower the price you pay.

I believe that if regulators truly understood the pari-mutuel model, they would never have approved rebating. What is happening now with rebates is really just its logical maturity.

Offer one low takeout for all players and the game will be much healthier. To continue down this current path makes any Horseplayer who wagers a significant amount of money without a rebate a sucker.

Anonymous said...

If you take away the rebates without drastically lowering takeout for all, it makes EVERYBODY who wagers a significant amount of money a sucker.

Anonymous said...

If Keeneland were a Fortune 500 company, Thomason and Elliston would be fired by Friday and old takeout rates would return.


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