In the spheres I follow, a major talking point as of late has been CDI’s takeout increase and its effect on handle. Before the Spring meet, CDI raised its takeout rates between 9.4% and 15.8% dependent on wager type to the Kentucky state maximum (17.5% on WPS or 22% on Ex and Tri)and some of the highest in the country. This caused a major backlash with a lot of handicappers who have been boycotting CDI tracks and have driven down the handle almost 12% for the spring meet.

In the professional handicapper world where people often wager millions of dollars over the course of a year looking to make a 5% ROI to live off, a 9% handle increase can take them from profitable to loss in an instant. Yet, to most casual handicappers, takeout isn't really on their radar. When you explain the concept to them they normally come back with a scrunched nose and reply “So how does that really affect me?”. So I wanted to look at some normal casual player scenarios and how increased takeout is detrimental for both player and track alike.

For the sake of simple math I’m going to assume my casual capper goes to the track 10 times in a year with a $100 budget each trip. Their plan is to wager $2 on 4 different 4 horse exacta boxes through the day for a total of $24 per wager. Now, lets assume our capper has a 50% hit rate and the average return is $100 with the old system, at the end of day one they walk away with a nice double for the day. But, with the new system those same wagers would each be respectively taxed at a 3% higher rate. This means that the players return would be lowered by $6 per day or $60 a year.

These numbers don’t sound like a lot and they really aren't when we assume our casual capper is as sane and logical as a professional; but they aren't. Your average capper is going to win his $100 on the first wager of the day and their roll winnings forwards. Maybe he doubles his wager amount to $4 an exacta, or he might play additional races, but those winnings get churned back through the system. This is the reason that per race handle almost always increases on a race by race basis through a day, those who missed continue their pattern and those who hit wager more.

Most casual cappers wager their entire allotment of cash every day, they keep playing until its gone. So the difference between the lower and higher takeout rates equates to that players having 2.5 more exacta wagers a year. Again, this doesn't sound like a lot assuming he had a total of 40 wagers through the year. But this is 2.5 more times for the track to tax him so the net result is the same.

The flawed logic on the tracks side is that they assume the money supply of the handicapper is endless, he will continue to play a set amount no matter what they do so why not increase the takeout and bring more of his dollars back to the track. When in actuality this is far from the case, the track is much better off to create money from churn, have this capper place more wagers so that they get more pieces and not larger ones.

If the net result is the same, why do i care? First off we’re placing short term returns ahead of long term profitability as a sport. Once that player has wagered his money, CDI is stating they no longer care about them as a player. What if that same player were to expand and play a P6 with that extra winning and win a large chunk of change. He would most likely tell everyone he knows and bring some additional fans to the game. Or, with that additional $60 winning maybe he plays and additional day a year because he does the math and likes his overall return a little better? Horse racing more than anything needs more people following it and by treating players how we do, we leave no chance of that ever happening.