"Players Up" blogger Indulto is a retired computer programming residing in SoCal and has been betting Thoroughbreds since the days of Kelso, cashing his first ticket at Saratoga while in college.

Indulto is well known in racing's cyber world as a participant on the Ragozin Sheets message board, the PaceAdvantage Forum, Paulick Report, and has made important contributions to the industry's audience as an HRI Readers Blog contributor.

Indulto was active in the formation of the Horseplayers Association of North America and with former HANA colleagues worked on the Players' Boycott of California racing when takeout rates were increased by the legislature there.

Taking his nickname from the King Ranch color-bearer of the 1960s, Indulto now devotes his time to advocate for the recreational player and hobbyist, but prefers lower takeout rates for all rather than subsidized rebates for the few.

Indulto supports the creation of a centralized racing authority to establish uniform rules for racing and wagering and for those standards to be enforced consistently.

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Thursday, April 05, 2018

Will Keeneland’s Incremental Takeout Rollback Result in Handle Uptick?

With the opening of Keeneland’s spring 2018 meet tomorrow, racing industry observers will begin keeping a close watch on the extent to which its management has succeeded in rebuilding the track’s once fan-friendly image.

In February, the track announced it would lower takeout rates in some wagering pools. Great news, right?

Well, for many of us, not so much because this sudden "largesse" follows their infamous takeout increase in all pools but one at the fall 2017 meet.

Last year, Matt Hegarty reported, "Keeneland … will raise its takeout ... from 16 percent to 17.5 percent on win, place, and show wagers and from 19 percent to 22 percent on all other bets ..."

This year, he wrote, "Takeout rates on win, place, and show wagers will be reduced from 17.5 percent to 16 percent, the rate that preceded the increase. ... On exactas ... from 22 percent to 19.5 percent ... higher than the rate prior to the increase…

“All other takeouts on exotic wagers ... will remain 22 percent ... the pick five will remain at 15 percent … lowered last year with the takeout increases in several other pools…

“When Keeneland raised its takeout rates, it split the extra revenue from the increases with host sites. Most host sites that award rebates to their biggest customers then increased the size of the awards so that rebated players did not play against the full increase in the takeout rates."

So, then, the bottom line here is that exotic wagers, which offer small bankroll bettors, minnows, the biggest bang for their buck, remain at the higher rate.

But the resultant squeeze on the profitability of those wagers, however, doesn't affect big-bankroll bettors, whales, because they are subsidized with a rebated percentage of their wagers.

Win or lose -- that keeps their EFFECTIVE takeout rate at a much lower level.

The main advantage of this subsidy is derived from the strategy of accumulating significant profits as tax-free--unreported rebates despite varying degrees of break-even, minimal losses or gains on pari-mutuel payoffs.

Only a tiny, well-informed subset of the non-rebated majority of bettors can show a profit from straight bets; the more-predictable but lower-payoff option.

Minnows have a much better chance for a big day with the most popular and affordable exotic wagers; exactas, trifectas, superfectas, doubles, Pick 3s and Pick 4s. Only now the whales' advantage in those pools is even more pronounced.

Hegarty also pointed out that "Keeneland’s reputation as a fan-friendly venue was significantly tarnished by the decision, with players complaining that the racetrack had betrayed one of its core constituencies."

Indeed, the number of recreational players who boycotted the fall meet was sufficient to reduce handle by 8.5% even as the privileged rebatees continued on their predatory path to profits.

Although the decline in handle did not decrease Keeneland’s revenue from the increased takeout rates, the improved handle at other racetracks indicated that Keeneland missed out on the initial boon attributed to the tax law changes.

Is there any doubt that, as a result of the increase, Keeneland lost considerable business to its competitors?

Whatever the motivation, it was enough to make Keeneland have second thoughts about having sacrificed its fan-friendly brand.

By offering an insignificant rollback in rates that still victimizes 90% of players, who now contribute only 10-20% of handle, they managed to convince some horseplayer advocates into thinking their resistance produced meaningful results.

Gaining advocate support to repair its image was a shrewd move, but DON’T BE FOOLED! The figures above show that rank and file customers are the ones still bearing the brunt of Keeneland’s raised rates.

Indeed the game that many of us found so intriguingly entertaining through the millennium has been turned inside-out by simulcasting into a series of parallel puzzles where robots handicap people handicapping horses; rendering the toteboard useless to the latter.

The net result may be, in a fashion, that money is being laundered more than exchanged.

Keeneland is not the only provider of welfare for whales, but it is the ideal place for recreational bettors to start regaining equal opportunity for financial success. Their recent walk-back backtracking is a sign of weakness that should be exploited.

The nature of Keeneland’s short meetings doesn’t allow them to wait for a weakening of our resolve. Getting the playing field leveled has to be the customer’s top priority.

It’s not about takeout per se; it’s about EFFECTIVE takeout rates. High rebates for all should be the new mantra. Isn’t loyalty also based on how many gambling sessions a customer makes?

Shouldn’t rebates be also about how often a customer supports the game, and not just how much he wagers?

Written by Indulto

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