In a win for horseplayers, executives at Santa Anita will eliminate the jackpot provision on its pick six bet and revert to a traditional format with a $1 minimum at its forthcoming meet, according to a report published by the Daily Racing Form.
The move is pending approval by the California Horse Racing Board. Racing resumes at Santa Anita on September 29.
(UPDATE - September 27, 2023: Del Mar will be following Santa Anita's lead beginning with their Bing Crosby meet in November. Read Brad Free's story about the changes by clicking HERE.
The decision to eliminate the jackpot provision is strongly supported by the Thoroughbred Idea Foundation. Below, take note of a reprinted recommendation in TIF's June 2023 publication: "Sharks & Minnows."
3. Tracks must stop offering jackpot bets and shift wagering marketing tactics which have “successfully” driven bettors to low-churn bet types.
Jackpot bets have to go.
The very existence of the jackpot bet – one in which the accumulated jackpot is paid only when a single winning ticket exists – takes money out of circulation, defying the goal of the pari-mutuel wagering operator to keep gathering more commissions from bettors.
TIF acquired settlement data from the state of Florida which lists the total bet and returned to all bet-takers at Gulfstream Park on a given day. While the data was not divided by pool, it is still useful to garner a sense of how different customer segments perform on the day when a long-accruing jackpot bet, like Gulfstream’s Rainbow 6, is paid out to anyone with a winning ticket. These “mandatory payout days” are meant to attract players to come and get a share of the accumulated jackpot.
As TIF learned in the process, mandatory payout days are often major wins for CAWs at the expense of mass market customers.
Below is a sample of mandatory payout days from 2015 to 2021 at Gulfstream Park. The columns on the left reflect the total CAW play as a percentage of total handle and total winnings paid on those days, plus the return on investment for the CAWs. On the right, in the yellow-headed column, the data reflected are the combined returns of mass-market players through TVG, TwinSpires, Xpressbet and NYRA Bets.
Blended takeout rates are currently around 20% to 21%. On a mandatory payout day, where an accumulated jackpot is paid out, it is reasonable to expect overall blended takeout will be smaller than normal because the carryover is added to the total payout. Instead, mass-market ADW players get back less than normal, and lose well in excess of blended takeout.
Del Mar’s jackpot pick six operates with a daily effective takeout of 46%, while some other tracks’ offerings have daily effective rates rise into the 70% range. Retaining customers’ bets while paying out a small portion each day, and using the accumulated jackpot to attract more play is a long-term losing strategy.
Yet, for years, North American racetracks have relentlessly marketed their jackpot bets while also seeking to drive customers to other multi-race bets, reducing the ability of customers to churn winnings.
Just last weekend, when Santa Anita offered a mandatory payout on its jackpot pick six play, its parent company’s ADW, Xpressbet, sought to attract play by offering up to $20 back as a bonus if players staked $100 on the bet, both in the two days before the mandatory payout and on the day itself. The parent company of both Santa Anita and Xpressbet, 1/ST Racing, is the majority owner of Elite Turf Club.
The marketing has “worked,” as has the reduction of minimum bet amounts on such plays. Total handle for the pick six on their last mandatory payout day, June 18, was over $3.7 million. TIF observations of the accumulations of the pool suggest well more than 40% of that came from CAW play, chasing a carryover of just more than $346,000. These figures are similar to other mandatory payout day observations with smaller jackpots. When the carryovers balloon, so too does CAW handle.
While tracks and regulators generally do not identify what amount of mandatory winnings went to mass market players and CAWs, the Gulfstream data suggests these sorts of bets serve mostly as handouts to CAWs and as dumpster fires for mass market players.
Fortunately, a few tracks in recent years have recognized the jackpot disaster. NYRA and Keeneland abandoned their jackpot provisions in recent years, while Horseshoe Indianapolis eliminated its jackpot bet in 2023.