Archives for April 2016


Canterbury Park in Shakopee, Minnesota, near the Twin Cities, has taken an admirable step toward making its pari-mutuel offerings more competitive with betting alternatives.  Following is an excerpt from the racetrack’s announcement:

“Canterbury Park racing officials today announced a sweeping reduction in pari-mutuel takeout that will result in [Canterbury Park] offering a wagering product priced lower, on average, than any track in the country.  With win, place, show takeout set at 15 percent and all exotic wagers at 18 percent, Canterbury Park will be the best horse racing wagering opportunity in the United States when its 69-day meet begins May 20.

Racing and gaming industry economists suggest that handle, the amount of money wagered, will increase substantially as takeout is reduced.  Canterbury officials are confident that bettors will embrace the lower takeout and continually improving quality of racing with field size that regularly exceeds the national average.”

Previously, Canterbury Park had takeout rates of 17% on win, place, show bets and 23% on exotics.  Thus the new takeout rates amount to an 11.8% reduction on win, place show bets and a 21.7% decrease on exotic wagers.

How do Canterbury Park takeout percentages stack up against takeout rates at some well-known racetracks?

Aqueduct and Belmont take 16% on win, place and show wagers and 24% on exactas and trifectas.  Churchill Downs charges 17.5% on win, place and show bets and 22% on exactas and trifectas.  Keeneland takes 16% on win, place, and show wagers and 19% on exactas and trifectas.  Santa Anita takes 15.43% on win, place, show bets , 22.68 on exactas, and 23.68% on trifectas.  Saratoga charges 16% on win, place, and show wagers, 18.5% on exactas, and 24% on trifectas.

A couple of Canadian racetracks have a slightly lower win, place, show takeout rate than Canterbury Park and a few U. S. racetracks come close.  However, no racetrack has lower takeout than Canterbury Park on both win, place, and show wagers and exotics.

It will be informative to see how Canterbury’s handle responds to reduced takeout rates in its upcoming season.  The keys are for track management to combine lower takeout rates with full fields…and to widely disseminate the information about the most bettor-friendly takeout rates to potential customers.

The view here is that it would require a takeout rate of 10%-11% on win, place, show wagers and 12%-13% on exotics to dramatically increase pari-mutuel wagering in the United States.  A significant empirical test of the effects of takeout rates on handle is about to ensue in New Jersey, which in mid-May is going to offer New Jersey residents exchange wagering.  The takeout rate will be 12%.  Bettors will be able to lock in fixed odds and will be able to place wagers while a race is in process.

Copyright © 2016 Horse Racing Business


Churchill Downs, Inc. released its 2015 report of operating results (SEC form 10K) at the end of February. At the close of 2015, Churchill Downs (Nasdaq symbol CHDN) did business in six commercial segments, as follows:

Casinos (“8,500 gaming positions in six states”)

Big Fish Games (“a global producer and distributor of social casino…games for PC, MAC, and mobile devices”)



Other (for example, United Tote systems for pari-mutuel wagering).

Corporate (miscellaneous)

The racing business segment encompassed four Thoroughbred racetracks: Arlington International Race Course in Illinois, Calder Race Course in Florida (the racing component is operated by the Stronach Group), Churchill Downs in Kentucky, and Fair Grounds Race Course in Louisiana. In addition, CHDN held a 25% equity position in Saratoga Casino Holdings, which owns Saratoga Casino and Racing in New York offering Standardbred racing. CHDN has a 50% equity investment in Miami Valley Gaming in Ohio, a Standardbred racino. CHDN owns 10 off-track-betting facilities in Illinois and 12 in Lousiana.

The TwinSpires business segment is CHDN’s advance deposit wagering operation. It is the largest of its kind in the United States.

CHDN had steadily declining revenues in 2011, 2012, 2013 and 2014. In 2015, CHDN revenues improved over a year earlier, with revenue of over $1.2 billion in 2015 compared to $812 million in 2014. Net income was $65 million in 2015 and $46 million in 2014 and earnings per share were, respectively, $3.71 and $2.64.

CHDN’s stock price was $94.25 on January 2, 2015 and $141.49 at the close of the year for an increase of 50% in a year in which the Nasdaq Composite rose by about six percent. This is unusual in that CHDN normally moves in concert with the Nasdaq index (i.e., CHDN has a beta of .93). CHDN’s free cash flow grew in 2015 to $233.5 million from $118.9 million in 2014, positioning it for investments in organic growth, small acquisitions, or an increase in the dividend.

At a price-to-earnings multiple of nearly 40, a dividend yield of less than one percent, and a recently soaring stock price, CHDN equity looks pricey.

Copyright © 2016 Horse Racing Business


The Kentucky Derby is three weeks away and the resale market for tickets is in full swing. Several companies are offering customers the chance to buy or sell tickets online and there can be considerable variation in prices among the various websites.

The website designated by Churchill Downs for resale tickets is run by Ticketmaster and is called Kentucky Derby Ticket Exchange. The website warns buyers that the prices asked may not be the original ticket prices. As one can imagine for big events like the Kentucky Derby, resale prices are usually vastly inflated by the original ticketholder.

Three weeks out from the Kentucky Derby, here are the most expensive and least expensive single-ticket prices listed on Kentucky Derby ticket Exchange in the various locations in the Churchill Downs complex. These prices, of course, can and usually do fluctuate by the moment and may change dramatically as the event nears. In addition, Ticketmaster adds a 16% service fee to purchases and is not included in the prices shown below.

Reserved Seat in Grandstand

Most expensive: $569
Least expensive: $196

Interior Premium Box

One price only: $522

Clubhouse Box

Most expensive: $486
Least expensive: $227


Most expensive: $3,675 (finish line)
Least expensive: $1,800 (1/16 pole)

Lounge and Walks

Turf Club: $690 (no seat)
Sonny’s Halo Lounge: $159


The Mansion: $8,269
Turf Club: $2,700 (Roses Lounge or Roses Terrace)

General Admission

One price only: $48 (no seat)


A seat in front of a television looks like a great bargain. Yet prices are relative: consider that the Kentucky Derby resale ticket prices seem inexpensive when compared to the ticket prices for a single seat to Kobe Bryant’s last game as a Los Angeles Laker:  $27,500 for a courtside seat and $700 for the worst view in the arena.

Copyright © 2016 Horse Racing Business