Can I really boycott horse racing (Churchill) even if they treat consumers, and horsemen, terribly? Just another conundrum in the disjointed racing industry.
Horse racing becomes stranger by the day and while North America becomes consumed with another possibility of a Triple Crown winner, a fascinating dynamic is playing out. Horseplayers are boycotting Churchill Downs because Churchill, which is a profitable publicly held stock company, has decided to make more profit by increasing their takeout rate.
A takeout rate is what racetracks remove from all the bets that come in from betters. For example, if $1,000,000 was bet of horses to win in a given day at Churchill last year, they took 16% of that money out, and only returned $840,000, back to the betters to pay off the win wagers. This is simply how pari-mutuel wagering works and the takeout represents profit, taxes and other expense costs. The odds you see constantly changing, factor the takeout rate in. In other words, the horse that is say 10 to 1 in odds would be about 12 to 1 if all the money betters had bet was actually returned to the winning betters.
This year Churchill raised the takeout rate for win bets from 16.0% to 17.5%, and to 22.0% for exotic wagers. This may not seem like much of a change but if you understand how these percentages average out against the Churchill profit margin, they are increasing their profit margin by 15% or more. So basically they raised prices. Interestingly, the chart on the left seems to indicate that on common betting days, not Derby or Oaks days of course, wagering handle is off significantly.
Churchill and the horse racing industry in general, has demonstrated little understanding or regard for consumers but it’s hard to tell if the Churchill data indicate a direct effect associated with the player betting boycott. Nevertheless, price increases designed to increase profit are often counterproductive particularly when an entertainment or wagering company ignores consumer feedback.
Personally, this is a tough issue for me. As a lifetime gambler, natural consumer behavior seems to dictate a full or at least partial boycott. Yet as a horseman, I find Churchill Downs “is” horse racing to the common public. Can I really boycott horse racing (Churchill) even if they treat consumers, and horsemen, terribly? Just another conundrum in the disjointed racing industry, but of course everything will be magically better if we get a Triple Crown winner, right?
Dave Astar is a race horse owner, stallion owner, breeder, 40 year business executive, and 50 year handicapper.