In “The Balmoral Park Takeout-Rate Experiment” of May 11, 2012, I wrote that the inordinately high average or blended takeout rate in pari-mutuel wagering was, in my judgment, the principal reason that handle on horse racing has plummeted in the last decade. (Certainly, however, it is not the only reason.)

Today, May 14, the Horseshoe Casino opens in Cleveland, Ohio, the first of four casinos coming on line in the Buckeye state. The Horseshoe Casinos in Cleveland and Cincinnati are owned by Rock Ohio Caesars, which also owns Turfway Park racetrack in northern Kentucky and Thistledown racetrack near Cleveland.

Yesterday’s Cleveland Plain Dealer published an article that identified the games available at the Horseshoe Casino and the approximate house take (or rake) on each. Following is the list:

Blackjack, 0.5%
Roultette, 5.3%
Craps, 1.4%
3-Card Poker with 6-Card Bonus, 2.32%
Mini-Baccarat with Dragon Bonus, 1.2%
Poker, up to $6 on each pot
Fortune Pai Gow, 2.8%
Other Poker-based games, 2% to 5%
Slot Machines, maximum of 15%

Outside of Las Vegas, Nevada, sports betting is illegal in the United States. The house cut on sports betting is about 10%, with the losing side of the bet paying the charge.

For comparison purposes, click here to see takeout rates on various horse-racing bets at racetracks across the United States.

My contention is that the aggregate amount bet on horse racing in North America is highly sensitive to meaningful (obvious and sizeable) reductions in the takeout rate over a two-to-three year period of time. Further, unless the takeout rates on handle become far more competitive with the rake on sports betting in particular, handle will at best remain stagnant after accounting for inflation. The main reason for this is that horse-race wagering is supported by a very limited number of large-scale bettors, who are acutely aware of takeout rates.

Copyright © 2012 Horse Racing Business