Churn — the act of a gambler betting his winnings over and over again — is an integral part of gaming, but one that most folks in the horse racing industry have lost sight of.
For a bet taker, high churn creates the large amounts of handle needed for profitability. A key part of maintaining high churn is keeping the takeout or hold low enough so that bettors can win money to stay in action.
Two types of gaming that follow this ideal are sports betting and video poker. The sports vig is 10 percent, and the payback in video poker is in the 95 to 98 percent range.
But in horse racing, it is popular to market high takeout wagers, like the Pick 6 and the Super High 5. Both bets are counterproductive to churn. These wagers take money from the wallets of many and put it into the hands of very few.
When horseplayers exhaust their bankroll, either it takes time to replenish their cash or they quit the game entirely.
At the recent California Horse Racing Board meeting, Magna boss Frank Stronach put forth the ”quadruple quadfecta” as a new idea to stimulate betting. I don’t know about you, but winning one superfecta, much less four in a row, is hard enough. His thinking, though, mirrors that of many in racetrack management.
In principle, betting primes the pump for everything good that happens in horse racing.
So here’s some free advice.
The racing industry should promote core betting products that create high churn. High churn will increase handle, thus raising purses to attract more owners, who will in turn buy more racehorses from breeders.
The cycle of growth always begins with the customer. If you want to sell more products, lower the price, don’t raise it.
Here are some things I’d like to see happen soon in racing:
I hope a racetrack would have the guts to reduce the takeout on win, place and show betting to 10 percent, as in sports betting. The lower hold should easily be made up in higher churn.
The idea of exchange betting has been introduced in New Jersey. Philosophically, many have trouble with the notion of betting on horses to lose. But there are safeguards in place, including a precise paper trail that will raise red flags.
And, finally, fractional wagering would make betting a lot simpler for newcomers. The software is already in place and in use in many other countries.
Richard Eng’s horse racing column is published Friday in the Las Vegas Review-Journal. He can be reached at firstname.lastname@example.org.