Keeneland raises takeout rates

Keeneland Racecourse will raise its takeout for the October meet from 16 percent to 17.5 percent on win, place, and show wagers and from 19 percent to 22 percent on all other bets, the maximum allowed under state law, Keeneland officials confirmed on Tuesday.

Bob Elliston, Keeneland’s vice president of racing and sales, said on Tuesday that Keeneland has already informed the Kentucky Horse Racing Commission that it intends to exercise its right to raise the takeout rates for its fall meet Oct. 6-28. Elliston said Keeneland plans to use the additional money to boost its purses, and that the new rates would be competitive with the blended takeout rates at tracks on other major circuits.

Elliston said Keeneland will lower its takeout rate for the pick five from 19 percent to 15 percent as part of the new rates.

“I hope the wagering public understands that this is going to our purses to keep us competitive, it’s not going into our pockets,” Elliston said. “You have to look at it comparatively. We’re going to be on par with New York, with Oaklawn, and we think we will continue to offer bettors a good product, if you look at depth of fields and the quality of the fields.”

The decision almost certainly will be met with derision from horseplayers, some of whom called for a boycott of Churchill Downs in Louisville when the track raised its own takeout rates to the legal maximum in 2014. Despite the calls for the boycott and backlash over the decision, all-sources wagering on Churchill’s races has gone up slightly since the takeout hike, according to KHRC records, from $501.3 million in 2014 to $511.8 million the next year and $516.9 million in 2016, despite a reduction of six race dates from 2015 to 2016.

An increase in the takeout reduces payouts to players by reducing the amount of money that is returned to the betting public holding winning tickets. Many horseplayers consider high takeout rates to be one of the most pressing issues in the racing industry, and many economists believe that lower takeout rates would increase betting handle over the long term.

Though real-world experiments with lowered takeout rates over the past several years have produced mixed results, many of those experiments took place over the course of months, rather than longer terms that would be more likely to tease out harder results.

Kentucky law allows any track that handles below an average of $1.2 million a day ontrack to adopt the higher takeout rates. Ontrack handle at Keeneland has averaged below the threshold for several years, according to KHRC records.

All racetracks in Kentucky with the exception of Kentucky Downs, a small track near Tennessee that uses revenue from a lucrative gambling parlor to boost purses to nearly $1 million a day, have the highest takeouts allowed by law. Kentucky Downs has a takeout of 16 percent for win, place, and show and 19 percent for most exotic wagers.

Elliston said Keeneland has contributed $30 million over and above its contract with horsemen over the past five years to purses. Elliston also said horseplayers have benefited from the track’s historically high field sizes and the quality of its racing.

“We have paid record purses in the spring, and we paid record purses last fall,” Elliston said. “In order to continue to do that, we have to increase the price of our product.”

Several racetrack executives who spoke on the condition of anonymity because simulcast negotiations are confidential said Keeneland has offered to share the additional revenue with the simulcast outlets on a 50-50 basis.