KEENELAND’S TAKEOUT-RATE INCREASE

The Horseplayers Association of North America (HANA) ranks U. S. and Canadian Thoroughbred racetracks on the basis of bettor-friendliness.  The criteria employed in HANA’s algorithm include such factors as the level of takeout on various kinds of bets, field size, handle, and signal distribution.

Keeneland in Lexington, Kentucky ranked first among all racetracks on HANA’s 2014 list and second in 2015 and 2016 (Kentucky Downs was first in 2015 and 2016).  Prior to its fall meet in 2017, Keeneland raised takeout on win, place, and show bets from 16% to 17.5%.  The track increased exotic wagers (except for the Pick5) from 19% to 22%.  As a result, Keeneland dropped to 13th place in HANA rankings and HANA members overwhelmingly voted to boycott the Keeneland October 2017 meet.  At a minimum, Keeneland’s image is tarnished, at least in the short term.

HANA president Jeff Platt wrote in part on the organization’s website:

“As a horseplayer I’ve decided to join the boycott at the Players Boycott website because I believe higher takeout is harmful to the long-term health of thoroughbred racing.  As a horseplayer I believe sitting on the sidelines is not an option for me because everybody in the industry is waiting to see how players react to this.  I believe that if a clear message isn’t sent: Not just Keeneland–but other tracks–will have takeout increases too.

When we boycotted Churchill [Downs] in 2014 because of their takeout increase: They were down a solid 25% outside of the Derby.  How much of that was the market speaking and how much came from us drawing attention to the takeout increase is hard to say. But we sent a pretty clear message.  I expect Keeneland Fall 2017 numbers to mirror Churchill 2014 numbers–and be down a similar 25% to 30%.  But that may not be a strong enough message.  I believe that by getting the message out to as many horseplayers as possible–we can knock Keeneland numbers down significantly.”

Keeneland would breakeven on its takeout-rate increase decision on win, place, and show bets if handle declines by exactly -8.57%.  A smaller decline than -8.57% will yield a profit and a larger decline than -8.57% will yield a loss.

On exotics, Keeneland would breakeven on its rate increase if handle falls by precisely -13.64%.  A drop in handle of less than -13.64% will result in a profit and a drop of more than -13.64% will record a loss.

Through the first three days of the Keeneland 2017 fall meet (October 7, 8, and 9), handle was down by 14.61% compared to 2016.  The next raceday, on October 11th, handle plunged 20% from 2016.  Thus the track so far is less profitable on wagering than it was a year ago in spite of the significant boosts in takeout rates on straight wagers and exotics.

Whether Keeneland’s decision to raise takeout rates on its customers proves to be profitable or a mistake won’t be determined at its October 2017 meet.  A clearer picture will emerge toward the end of Keeneland’s spring 2018 meet, after time has passed since the takeout-rate increases and boycotters have either stayed away or come back.

Copyright © 2017 Horse Racing Business

Comments

  1. Actually their revenue is down much more than you are calculating. Their host fees to their simulcast partners were not raised equal to the takeout increases so they do not receive the full amount of increase but only about half. So a vast majority of their handle is losing double what you are calculating.

  2. Bill Shanklin says:

    Thanks for your correction. I used handle reported by HANA.

  3. No problem Bill. Other factors possibly in play here too regarding Kee revenue. When they raise host fees to other tracks those tracks almost always raise theirs to same level they are being charged. Since Keeneland will be paying a higher fee on those imported signals that they take bets on all year, it will reduce revenue from those also.

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