expert money in big pools vs small pools

[Stillriledup]

Does everyone think that tracks with smaller pools such as Charlestown, Delta, Penn National, Parx, etc have less sophisticated money than Santa Anita, Belmont and Gulfstream?

I know that some of the computer assisted teams are betting as many tracks as possible and they do bet money into the smaller tracks, but if i see a 20k pool at Charlestown in the 3rd race Trifecta on a rainy weekday, how much of that 20k is really money being bet by people who actually know something and have a good opinion?

OR, you can make the case that there's more dumb money at the bigger tracks and the small 20k pool at the smaller track has just the hard core players who really know that circuit well.

If there is ANY "dumb money" left, where is it? Is it at the big place or the small place?

Not every dollar in every pool on every day is "educated" there has to be some track, pool, time of year or day that you can find that pool where the bettors are just not all that smart.

Right?

[thaskalos]

During my entire betting life I've been searching high and low for this "dumb money"...but I haven't found it anywhere.

[Stillriledup]

During my entire betting life I've been searching high and low for this "dumb money"...but I haven't found it anywhere.

Hmmm. So, money in large pools and smaller pools at B tracks is equally smart? Or, maybe there is just such a small amount of "uninformed money" that the informed money just swallows that up like a whale swallowing a minnow.

[sjk]

I have not played evening tracks in years but it was my impression that there was a higher percentage of smart money at Mnr than at the larger daytime tracks.

[lamboguy]

I have not played evening tracks in years but it was my impression that there was a higher percentage of smart money at Mnr than at the larger daytime tracks.you might be right, but at The Mountain, you never know what your payoff is going to be until after they take the winner's circle picture. about 2 weeks ago i had an exacta that won, the odds on the horses were 2-1 over 5/2. i looked at the probables right after the race and they were calling for $18, the results go official and that exacta paid $45. since horse race betting is based around price, i don't know how you can separate smart money from dumb money when you have no idea prior to the race what your returns might be.

[Robert Goren]

There is no dumb money in racing (except at the sale ring). There is "stable" money that on occasion can be smart, other time not so much. The rest of time it is just a difference of opinion on how to read the DRF. If you start looking for smart or dumb money, then you are the dumb money.

[Saratoga_Mike]

There is no dumb money in racing (except at the sale ring). There is "stable" money that on occasion can be smart, other time not so much. The rest of time it is just a difference of opinion on how to read the DRF. If you start looking for smart or dumb money, then you are the dumb money.

Yeah, I don't agree. Tracks like CT are like the market for small-cap stocks (i.e., much less efficient than large-cap stocks due to the lack of depth to the markets).

[pondman]

Within my own play at Finger Lakes and Beulah , which I consider C level tracks, when the crowd makes a mistake, it's a bigger mistake, than at an A or B level track.

A comparable play (identical framework) at a B level track, such as at Churchill, when it wins will earns an extra 35% over the morning line. While a similar play will earn an extra 55% over the morning line at Finger lakes.

[mountainman]

I have not played evening tracks in years but it was my impression that there was a higher percentage of smart money at Mnr than at the larger daytime tracks.

Our players are pretty sharp, but they have chronic blindspots that I frequently point out to viewers. Their mistakes tend to be repetitive, predictable, and exploitable.

[BlueShoe]

As a long time tote watcher, will say that the larger and medium level tracks are much better for catching so called smart money winners than are the small tracks. The main problem with smaller tracks is twofold. First, the small pools are rough to work with, with relatively small bets distorting the pools and indicating false betting action, that is not smart at all. Some guy that bets $200 on a nag because it has a similar name to his wife or brother, for example, will drop the odds if bet early. The main problem is that the true wise money is bet very, very late. This is the 3-1 shot at the break that crosses the wire first at 8-5, the sort of stuff that is common at the small tracks. Yes, we see this at the big tracks sometimes, too, but not quite as flagrant or as often. Usually the live-on-the-board runners at the majors will show up sooner, with heavy early money or with pools that stay out of line until they are filled late in the wagering.

[Stillriledup]

Question for Seabiscuit AR and a few others who have taken the anti rebate stance.

A track like Tampa who doesnt allow rebate shops into their pools, should have better "value" in the betting pools...have any of you seen that there is some advantage to wager on this place because of that? If not, if its not any "easier" than maybe the arguments about rebate players hurting the small bettor are unfounded? Tampa is a good case study, right?

[ronsmac]

Question for Seabiscuit AR and a few others who have taken the anti rebate stance.

A track like Tampa who doesnt allow rebate shops into their pools, should have better "value" in the betting pools...have any of you seen that there is some advantage to wager on this place because of that? If not, if its not any "easier" than maybe the arguments about rebate players hurting the small bettor are unfounded? Tampa is a good case study, right?Tampa Bay Downs doesn’t say an outright “no” to CRW players, but the track deters them by offering unappealing “discounts.”

“For the most part, when we do that calculation to come up with the price, most of the computer betting outfits decline to accept that price,” said General Manager Peter Berube. “So we effectively keep them out of the pools by pricing our product beyond what they think is reasonable.”

Berube said one or two groups are betting into Tampa’s pools, but they are paying a relative premium to do so. He believes the computer gamblers distort pools by betting so many combinations, and they drive away other bettors who represent the daily churn.

[Stillriledup]

Tampa Bay Downs doesn’t say an outright “no” to CRW players, but the track deters them by offering unappealing “discounts.”

“For the most part, when we do that calculation to come up with the price, most of the computer betting outfits decline to accept that price,” said General Manager Peter Berube. “So we effectively keep them out of the pools by pricing our product beyond what they think is reasonable.”

Berube said one or two groups are betting into Tampa’s pools, but they are paying a relative premium to do so. He believes the computer gamblers distort pools by betting so many combinations, and they drive away other bettors who represent the daily churn.

So essentially, they are saying no outright. Got it.

Berube sounds like a real piece of work, saying that computer gamblers are are betting "so many combinations"? Isnt that what you want if you are a 2 dollar player? Don't you want a rebate bettor boxing "the field" in the tri and sticking 1 dollar on every combo in the race?

Maybe i'm missing what he's saying, i dont know why anyone wouldnt want big bettors spreading money around on a lot of combos. Maybe he means he doesnt want "winners" in the pools but is afraid to say so.
Maybe

[fasteddied]

I have personally observed what I believe to be "smart or stable" money coming in at philly and laurel in the exacta pool only about 9-12 minutes before post as one or two large punches on the board. It eventually goes up but has been profitable for me even if the exacts misses the $horse that is used does extremely well.

[OTM Al]

During my entire betting life I've been searching high and low for this "dumb money"...but I haven't found it anywhere.

First Saturday in May, Louisville. It's there.

[lamboguy]

First Saturday in May, Louisville. It's there.
and most other stake races especially in the show pools.

[AndyC]

First Saturday in May, Louisville. It's there.

That may be true but then there is also more smart money to counteract the dumb money.

[Stillriledup]

First Saturday in May, Louisville. It's there.

I also love the idea that the supers are a 1 dollar base on those days, its the only day i can take advantage of not getting "Watered down" if a hit one of them.

[Stillriledup]

That may be true but then there is also more smart money to counteract the dumb money.

True too.

I think extremely large pools are more important than whether the money is "dumb" or "Smart". I dont care how many smart alec's betting a race if there are millions in the pools. Hopefully i don't have to move to Hong Kong and the USA will co-mingle them at some point.

[thaskalos]

I also love the idea that the supers are a 1 dollar base on those days, its the only day i can take advantage of not getting "Watered down" if a hit one of them.
To salivate at the payoffs of the $1 superfectas on Derby day is one thing.

To actually cash on one of them is something else entirely. :)

[Stillriledup]

To salivate at the payoffs of the $1 superfectas on Derby day is one thing.

To actually cash on one of them is something else entirely. :)

I cash them all the time...of course, you have to bet a ton to catch them, hard to hit them with 24 dollar tickets. ;)

[Hoofless_Wonder]

So essentially, they are saying no outright. Got it.

Berube sounds like a real piece of work, saying that computer gamblers are are betting "so many combinations"? Isnt that what you want if you are a 2 dollar player? Don't you want a rebate bettor boxing "the field" in the tri and sticking 1 dollar on every combo in the race?

Maybe i'm missing what he's saying, i dont know why anyone wouldnt want big bettors spreading money around on a lot of combos. Maybe he means he doesnt want "winners" in the pools but is afraid to say so.
Maybe

SRU, love ya man, but when it comes to rebates and the basics of a balance sheet, you do miss the point. Your conclusion is the exact opposite of what Mr. Berube is stating.

Ask the question why does Tampa (and a few other tracks) refuse to deal with the whales? The answer is simple - in the long run it doesn't make good business sense to drive away the smaller players with lower payouts.

The proof-in-the-pudding would be to have the statistics on ROI across the spectrum of players for rebate tracks versus non-rebate tracks. In theory, the pools without whale's rebates being siphoned off add to the payoffs, more players have a chance at winning or get closer to break-even, a positive feedback loop is created - and handle will rise.

We do not have access to this data, so we can only speculate as to the question of whether or not there is better "value" in the Tampa pools...

[Charli125]

In theory, the pools without whale's rebates being siphoned off add to the payoffs, more players have a chance at winning or get closer to break-even, a positive feedback loop is created - and handle will rise.

See, this is what so many people misunderstand, there is no siphoning. And I'm not trying to insult you here, just trying to explain rebates, which are very misunderstood.

The rebates come out of the PROFIT that the ADW's take. They aren't in addition to takeout. If a horse pays $10 to a person not receiving rebates, it'll pay $10 to a person that does receive rebates rebates. For the person receiving rebates, they'll then receive a rebate, which comes directly from what the ADW has leftover after paying the signal fee and taking their profit.

Overall, the track, makes less if they kick the big players out of their pools. The minnow makes more when the whale would've been wrong, and makes less when the whale would've been right.

[Hoofless_Wonder]

See, this is what so many people misunderstand, there is no siphoning. And I'm not trying to insult you here, just trying to explain rebates, which are very misunderstood.

The rebates come out of the PROFIT that the ADW's take. They aren't in addition to takeout. If a horse pays $10 to a person not receiving rebates, it'll pay $10 to a person that does receive rebates rebates. For the person receiving rebates, they'll then receive a rebate, which comes directly from what the ADW has leftover after paying the signal fee and taking their profit.

Overall, the track, makes less if they kick the big players out of their pools. The minnow makes more when the whale would've been wrong, and makes less when the whale would've been right.

If rebates come out of "ADW profits", then why do some TRACKS offer lower rebates? The track drives the rebate level via signal fees, not the ADW. Also, are you assuming ALL rebates come only from wagers placed via ADWs?

At the end of the day, "rebate" is a bit of a confusing term, and just one part of the takeout, signal fees, taxes, breakage, etc., that result in "effective takeout". When effective takeout varies within the parties wagering at a particular track, it's BASIC accounting that demonstrates how money is siphoned from the smaller player to the whales.

[Stillriledup]

SRU, love ya man, but when it comes to rebates and the basics of a balance sheet, you do miss the point. Your conclusion is the exact opposite of what Mr. Berube is stating.

Ask the question why does Tampa (and a few other tracks) refuse to deal with the whales? The answer is simple - in the long run it doesn't make good business sense to drive away the smaller players with lower payouts.

The proof-in-the-pudding would be to have the statistics on ROI across the spectrum of players for rebate tracks versus non-rebate tracks. In theory, the pools without whale's rebates being siphoned off add to the payoffs, more players have a chance at winning or get closer to break-even, a positive feedback loop is created - and handle will rise.

We do not have access to this data, so we can only speculate as to the question of whether or not there is better "value" in the Tampa pools...


There seems to be some confusion with this issue. If Berube and Tampa wanted to say "we are keeping rebate players out of the pools because rebate bettors tend to be better horseplayers and more informed" than i would have not as much of a problem with that. But, if they say "rebate players arent any more skilled than our average on track patron, and i'm not keeping them out because they're better, but because their rebate is what comes out of the pockets of our horseplayers" i would have to disagree with that stance.

[Dave Schwartz]

See, this is what so many people misunderstand, there is no siphoning. And I'm not trying to insult you here, just trying to explain rebates, which are very misunderstood.

Actually, there is "siphoning."

It occurs whenever a consistent winner withdraws money from his wagering account and spends it making it unavailable to be re-churned.

Winning players do not hurt the player in terms of REDUCED PAYOUTS. What it does is cut down the available handle.

[Hoofless_Wonder]

There seems to be some confusion with this issue. If Berube and Tampa wanted to say "we are keeping rebate players out of the pools because rebate bettors tend to be better horseplayers and more informed" than i would have not as much of a problem with that. But, if they say "rebate players arent any more skilled than our average on track patron, and i'm not keeping them out because they're better, but because their rebate is what comes out of the pockets of our horseplayers" i would have to disagree with that stance.

I understood they're keeping the rebate players out to give the smaller players a an increased chance to win, and insure loyal patronage - which in turn leads to long-term health. The rebates are a cost - no matter how you look at the balance sheet, they're a cost. If that cost is removed, then higher payouts are possible.

What track does better in the long run? The track with 15 winners out of 10,000 or the track with 300 winners out of 10,000?

The tricky part of the argument, regardless of what side you're on, is that the "effective takeout" of around 20% is right on the edge of being profitable - for skilled players and whales and whale-want-to-bes. The rebates appear to take payouts out of my pocket, but the juicer payouts could also be achieved by lowering the tax rates - another drag on the cost of the sport with no value add.....

[thaskalos]

Actually, there is "siphoning."

It occurs whenever a consistent winner withdraws money from his wagering account and spends it making it unavailable to be re-churned.

Winning players do not hurt the player in terms of REDUCED PAYOUTS. What it does is cut down the available handle.
A consistent winner may withdraw money from his wagering account...but I would venture to guess that he would leave enough money in there to continue playing at his normal clip. And if the account were to ever be depleted...he would most likely replenish the account and continue playing.

Otherwise, he wouldn't be a "consistent winner"...IMO.

The money in a "consistent winner's" wagering account is not necessarily his entire playing bankroll...and it doesn't say much about his "churn".

[Dave Schwartz]

Thask,

We'll have to disagree on this one.

My contention is that it is the same as a poker table. The money winds up in the box. Winning players are just another box that take money from the table.

Of course, normal-sized winners take a relatively small amount from the game. The primary whales take around $150m out of racing. It never comes back.

[Stillriledup]

Thask,

We'll have to disagree on this one.

My contention is that it is the same as a poker table. The money winds up in the box. Winning players are just another box that take money from the table.

Of course, normal-sized winners take a relatively small amount from the game. The primary whales take around $150m out of racing. It never comes back.

But, if whales actually lose money at the windows and only "win" on the rebate, doesnt that mean that if there was theoretically no rebate, their "adw" would take the 150M out of racing instead? Its not like that money was coming back to racing anyway, it was going to pay for the takeout that small minnow bettors agree to pay when the make a bet in the first place.

[Robert Goren]

If there is more money in the account at night than there was in the morning, the money had to come from some place. The ADW isn't losing money on a customer, so it had to come the pools. Only the Fed and a few skilled counterfeiters can make money out of thin air.

[thaskalos]

Thask,

We'll have to disagree on this one.

My contention is that it is the same as a poker table. The money winds up in the box. Winning players are just another box that take money from the table.



I know a little something about poker and safety deposit boxes...and I know for a fact that cash can come OUT of a box just as easily as it went in.

Gambling isn't a smooth ride for anyone...

[Vigorish]

I have been playing with substantial rebates for a couple months and I have made some personal observations. First, I had a completely distorted perception of how much I would get back in rebates. For one thing, I greatly overestimated how much money I would get back.

In my case, I give a large chunk of my handle to the California tracks. When I read the news about the new 18% double, I had mixed feelings. The double is one of my favorite bets, and now I only have three shots at it. With the takeout reduction, my existing rebate is probably two-tenths of one percent! Does the roughly 5% I get back on California exotics really harm other players? Probably not in my case. I have noticed that I often recklessly gamble my rebates compared to my regular money. The rebate becomes the equivalent of 'found money'. Again, not all players who play with rebates are winners (I would wager the vast majority are losers). The rebates are simply not substantial enough to convert losing players into winning ones.

Although I agree that lower across-the-board takeout is better than rebates, I think the trend in casino gambling (brick and mortar and online) is to utilize rebates instead of lower takeout. Rebates have the ability to increase brand loyalty, enhance churn, and ensure repeat visits. Plus, it is more obvious to the consumer that they are getting rewarded as the rebate is visible. My local race track gives a 1% cash bonus for every wager made on-track. Does this rebate, although small, handicap people who play without the incentive? What about the rebates instituted through NYRA rewards. There are some tracks where I get a higher rebate through NYRA (most notably on WPS) than I get through my ADW.

With respect to the size of the rebates, players will be sadly disappointed if they expect juicy double digit rebates on every track. Where you get most of your benefit is in the high-takeout exotics, especially trifectas, superfectas, and multi-race wagers. In terms of my own wagering, the rebates biggest effect is to greatly increase my handle at low quality, high-take out tracks. For example, I now play Sunland Park, Penn National, and Turf Paradise with surprising frequency. Where I used to wager four days a week, focusing on two or three tracks, now I make wagers every day, on a variety of different tracks. In this sense, my action is 'found money' for otherwise undesirable tracks.

The real problem with rebates, in my opinion, is not that they exist. The problem is a lack of a free market where competition makes them available for everybody. Before I did my homework, I had this illusion that rebates were only for mysterious high rollers. Furthermore, I felt overwhelmed by the choices and thought the software platforms and customer service would be horrid. Thus, I clung to Twin Spires (I still give them action) and gave them 100% of my action. After all, they did have an awesome interface, live programming, and some neat bonuses.

When attacking rebates, we should be very careful for what we wish for. Do you enjoy live programming you get from TVG? How about that Daily Racing Form that is comped to you? Are you getting free dinners, admission, programs, wagering credits, or other rewards from your local track? Are any of you playing on regulated OTB's that have a rewards program?

The road some people want to go down, with the intention of creating 'fairness,' is the implementation of a universal takeout scheme with no or severely curtailed rewards. I have seen this played out with online poker sites and online bookmakers. What happens is that the business, under the guise of protecting the smaller players, imposes taxes, fees, or access restriction to winning players. They may drastically reduce rakeback, institute a 60% winners tax, or refuse business outright. This makes it harder and harder for all of us to realize our ultimate dream: to become extremely successful horseplayers.

Many online poker rooms and international racebooks would like nothing more than to ensure that people are paying roughly the same amount of takeout over a long period of time. This protects the fish from being preyed on by the sharks and whales. Unfortunately, it converts the game into one that mirrors roulette or craps instead of a skill game.

What we should all be advocating for is an open market. One that increases competition and consumer choice. The problem is not that some people get meaningful rebates, rather, the problem is that not enough people have access to sites that offer them. The tracks have proven time and time again that they will resist meaningful takeout reductions. Ask yourself this: in the absence of rebates, would tracks institute meaningful takeout reductions, or any reduction at all?

[Hoofless_Wonder]

But, if whales actually lose money at the windows and only "win" on the rebate, doesnt that mean that if there was theoretically no rebate, their "adw" would take the 150M out of racing instead? Its not like that money was coming back to racing anyway, it was going to pay for the takeout that small minnow bettors agree to pay when the make a bet in the first place.

I don't think all whales "lose money" on betting and make it up and then some in rebates, but it appears some of them do.

You bring up a good point about the "excess" money leaving racing - whether it's the whales taking it, or the ADWs, the money ($150M) is gone from the sport. But, if the tracks and ADW had more incentive to direct some of that $150M to the pockets of all bettors, that would be enough to push quite a few of the little guys into the black. Wouldn't it be nice to live and wager in Britain, along with thousands of other blokes, who make a living off racing? Outside of the whales, you can probably count on three hands and a foot the number of pros in the U.S.

What we really need is a detailed balance sheet and optimized business model to better understand how to grow the sport, or at least reverse the negative trend. Handle is down about 33% from 2006, it appears.

$150M is more than all purses paid out in California, which is almost 30 percent of total U.S. handle. Check out page 48 for a nice pie chart on where the money goes - lots of overhead for simulcasting it seems....

http://www.chrb.ca.gov/annual_reports/2012_annual_report.pdf

[AndyC]

I understood they're keeping the rebate players out to give the smaller players a an increased chance to win, and insure loyal patronage - which in turn leads to long-term health. The rebates are a cost - no matter how you look at the balance sheet, they're a cost. If that cost is removed, then higher payouts are possible.

What track does better in the long run? The track with 15 winners out of 10,000 or the track with 300 winners out of 10,000?

The tricky part of the argument, regardless of what side you're on, is that the "effective takeout" of around 20% is right on the edge of being profitable - for skilled players and whales and whale-want-to-bes. The rebates appear to take payouts out of my pocket, but the juicer payouts could also be achieved by lowering the tax rates - another drag on the cost of the sport with no value add.....

Is there any evidence whatsoever that payoffs are lower at rebate tracks?

Rebates are a cost only to the payor and not to the tracks. The tracks cost is the commission it pays the ADWs for the bets placed. The ADWs can spend their commissions on higher salaries, new computers, holiday parties, rebates, etc. So if the rebates are taking money out of your pocket it is a magic trick.

[Hoofless_Wonder]

Is there any evidence whatsoever that payoffs are lower at rebate tracks?

Rebates are a cost only to the payor and not to the tracks. The tracks cost is the commission it pays the ADWs for the bets placed. The ADWs can spend their commissions on higher salaries, new computers, holiday parties, rebates, etc. So if the rebates are taking money out of your pocket it is a magic trick.

I'd hardly describe my higher effective takeout, in part due to rebates, as a magic trick. I'd describe it more as racketeering, since the details are buried well out of sight of public scrutiny. And how can you state in the same paragraph that "rebates are a cost only to the payer" and the "track's cost is the commission to the ADW (payer)" and not draw the conclusion that the rebates are a cost to the track? :confused:

The problem is with the business model and the current incentives. The ADWs are working on percentages, which for some reason the "pro-rebate" player believes they earn and deserve. My opinion is that the ADWs have a "fixed price" cost, as there is little difference in their costs whether they're handling $100M in bets or $300M in bets. Obviously, they're motivated to handle more money, as their margin rises as handle goes up. I'd argue that the "excess profits" of the ADWs should be returned to all players in higher payouts - which in turn results in them staying on as a loyal fan of the sport.

The evidence I'd present is overall U.S. handle dropping off - sure, much of that is due to the economy, but there are places outside of the U.S. where racing is flourishing.

http://www.jockeyclub.com/factbook.asp?section=8

When negative churn by the whales is introduced to the equation and supported via the back-door process of secret rebates, the net result is the death spiral we're in now. Sure, there will always be a group of chronic, degenerate gamblers and public squares to fleece from - but we're on the road to how they race ponies in South America (see second to last paragraph), and I'd rather not go there....

http://www.washingtonpost.com/wp-dyn/content/article/2011/02/28/AR2011022804046.html

[davew]

what I do not understand is the rake pulled (siphoned) off of every bet.

Do live tracks pull a much lower rake from bets coming in from cyberspace/other racebooks? I do realize the live track has a much lower cost of acquisition of these bets than the ones they get at their track with the self service kiosks and the live tellers. Or do they actually pay the other sites a percentage of the bet to receive the bet?

My understanding of the rebates is that they are not just on winning bets, but actually all bets - so the big bettors still need to cash tickets. Although if the rebate is high enough, they could spread most of the race - keeping the 'overlays' to such a small level/frequency that the typical bettor does not have a chance of coming out ahead long term... almost need inside info like the odds on favorite does not have a prayer today.

A few years ago, I remember reading that the NYRA tracks frequently had days were the actual amount paid out ontrack was more than the actual amount bet ontrack - due to the 'dead money' coming in from other locations. An amazing feat considering the 'rake' must average near 25%.

[Hoofless_Wonder]

Nice post Vigorish. Since rebates are only part of the problem, it's worth it to keep the bigger picture in mind. I'm not totally opposed to rewarding the players that push more dough through the windows - there is definitely a case to be made for the fan that bets 50 or 250 racing days per year getting some sugar versus the fan who bets just on Derby Day.

But right now the sugar bowl is being cleaned out by the whales and the taxman, and that's not good for the long-term health of the sport. Unless racetracks and state governments reverse the trends, and look to grow the sport with more winning players (or at least players that don't lose as fast), we're all in deep doo-doo. Since the player has almost no voice in the argument and no stick to hit the tracks with, HANA withstanding, I'm pretty sure I know where we'll end up...

[Vigorish]

Nice post Vigorish. Since rebates are only part of the problem, it's worth it to keep the bigger picture in mind. I'm not totally opposed to rewarding the players that push more dough through the windows - there is definitely a case to be made for the fan that bets 50 or 250 racing days per year getting some sugar versus the fan who bets just on Derby Day.

But right now the sugar bowl is being cleaned out by the whales and the taxman, and that's not good for the long-term health of the sport. Unless racetracks and state governments reverse the trends, and look to grow the sport with more winning players (or at least players that don't lose as fast), we're all in deep doo-doo. Since the player has almost no voice in the argument and no stick to hit the tracks with, HANA withstanding, I'm pretty sure I know where we'll end up...

Greetings Hoofless Wonder,

When I first read your post, I felt a bit defensive. After all, I am currently receiving rebates (after receiving a pitiful half of a percent for the last four years). That being said, I would not mind forfeiting some or all of my rebates if it meant lower direct takeout for everybody.

The most annoying situation I can think of is what happens with computer-batch bettors who operate offshore and receive maximum rebates for their high volume wagering activity. Many of these people do not even handicap races. They use bots that rapidly detect market inefficiencies. This is analogous to the presence of illegal 'bots' in online poker, that use special algorithms to make decisions for the player. Some tracks laud these relationships, claiming they improve pool size, which allows their players to make larger wagers. Furthermore, they claim they have tapped into a 'non-traditional market' that would otherwise not participate in the game. Unfortunately, they effectively raise takeout for most players by diminishing returns on logical combinations. This lowers the level of reinforcement for average players.

The existence of the lop-sided rebates, afforded to the most elite customers, is a necessary condition for these players to operate. The thoroughbred industry created this problem. They know that their highest volume customers are extremely price sensitive and they fear losing them to other forms of gaming. Unfortunately for the thoroughbred industry, it's no longer just whales who demand and expect rebates. There is an entitlement mentality, which is sparked in part by the track's own casino operations.

Today's players (with the exception of the hardcore traditionalist who is oblivious to takeouts) simply expect more value. When the racing industry says, 'we can't afford lower takeout,' players in states like Texas, Arizona, California, and Illinois see that this is patently false. A cursory analysis of all the legal domestic ADW's reveals that rebates are available, provided you live the right state or have a high betting volume.

The truth is that the thoroughbred industry cannot afford not to cut takeout for EVERYBODY, especially for newer and inexperienced players. The slot subsidies simply delay the day of reckoning, when the tracks find that the bulk of their players have left the game. Putting on a show has become a perfunctory exercise in obtaining a lucrative slot subsidy. Thus, the tracks and horsemen are insulated from normal market forces. The states need to work together to ensure a leveler playing field that works for the benefits of all participants in the sport: the horseplayers, horsemen, and tracks.

[Stillriledup]

Greetings Hoofless Wonder,

When I first read your post, I felt a bit defensive. After all, I am currently receiving rebates (after receiving a pitiful half of a percent for the last four years). That being said, I would not mind forfeiting some or all of my rebates if it meant lower direct takeout for everybody.

The most annoying situation I can think of is what happens with computer-batch bettors who operate offshore and receive maximum rebates for their high volume wagering activity. Many of these people do not even handicap races. They use bots that rapidly detect market inefficiencies. This is analogous to the presence of illegal 'bots' in online poker, that use special algorithms to make decisions for the player. Some tracks laud these relationships, claiming they improve pool size, which allows their players to make larger wagers. Furthermore, they claim they have tapped into a 'non-traditional market' that would otherwise not participate in the game. Unfortunately, they effectively raise takeout for most players by diminishing returns on logical combinations. This lowers the level of reinforcement for average players.

The existence of the lop-sided rebates, afforded to the most elite customers, is a necessary condition for these players to operate. The thoroughbred industry created this problem. They know that their highest volume customers are extremely price sensitive and they fear losing them to other forms of gaming. Unfortunately for the thoroughbred industry, it's no longer just whales who demand and expect rebates. There is an entitlement mentality, which is sparked in part by the track's own casino operations.

Today's players (with the exception of the hardcore traditionalist who is oblivious to takeouts) simply expect more value. When the racing industry says, 'we can't afford lower takeout,' players in states like Texas, Arizona, California, and Illinois see that this is patently false. A cursory analysis of all the legal domestic ADW's reveals that rebates are available, provided you live the right state or have a high betting volume.

The truth is that the thoroughbred industry cannot afford not to cut takeout for EVERYBODY, especially for newer and inexperienced players. The slot subsidies simply delay the day of reckoning, when the tracks find that the bulk of their players have left the game. Putting on a show has become a perfunctory exercise in obtaining a lucrative slot subsidy. Thus, the tracks and horsemen are insulated from normal market forces. The states need to work together to ensure a leveler playing field that works for the benefits of all participants in the sport: the horseplayers, horsemen, and tracks.

To add to the Bots, i would say that the bots making the market incredibly efficient is much more of a detriment to a big rebate that someone is getting who does NOT bet with bots. The tracks who accept rebates but don't permit bots to enter their pools are tracks worth betting (if there is such a thing).

[Dave Schwartz]

The most annoying situation I can think of is what happens with computer-batch bettors who operate offshore and receive maximum rebates for their high volume wagering activity. Many of these people do not even handicap races. They use bots that rapidly detect market inefficiencies.

Sorry, but none of this exists.

[Vigorish]

Sorry, but none of this exists.

I suppose the argument will devolve into semantics as to what constitutes 'bot wagering' or something along those lines. Yes, there is a human component to computer-assisted wagering, but it's often very minimal and amounts to choosing between sets of probabilities. We routinely see this argument in online poker, with people who use data-mining and Heads-Up Displays, which enable them to simultaneously grind 24-36 tables. Many play a negative ROI game because it is more than offset by juicy high-volume rebates. The games have suffered to the point that many sites have adopted new countermeasures including elimination of screen names, limiting tables, prohibiting software, and banning data mining and table-opening applications.

http://www.paulickreport.com/news/ray-s-paddock/i-robot-the-future-of-horse-race-wagering/

http://www.wired.com/wired/archive/10.03/betting_pr.html

http://sports.espn.go.com/sports/horse/news/story?id=4430490

http://www.thorograph.com/phorum/read.php?1,61775,61780

[traynor]

Sorry, but none of this exists.

In many circles it would be considered polite to preface such statements with the caveat, "To the best of my knowledge (whatever) does or does not exist."

[Vigorish]

In many circles it would be considered polite to preface such statements with the caveat, "To the best of my knowledge (whatever) does or does not exist."

It would have been more helpful if Mr. Schwartz would have showed me how I was wrong. Simply stating that 'X' is wrong isn't very convincing. However, demonstrating I was using a flawed premise or had an unsound argument form could clear up a misconception.

[Pensacola Pete]

So if the rebates are taking money out of your pocket it is a magic trick.

They take it out of players' pockets because their existence allows bettors who get the rebates to play horses that wouldn't be profitable without them and to do so for more money that they would otherwise.

For example: suppose that the "G" rating of some program has a long-term ROI of 1.03. The grinder who plays $20 per race can play that, and it won't hurt the ROI much. If William the Whale wants to bet his $200-1,000 on it (depending on pool size), it will lower the ROI to 0.97. Without a rebate, William won't use the "G" rating, because it would produce a loss But with a 7% rebate, he bets his $200-1,000 and lowers the ROI to 0.97, which ends up as 1.04 with the rebate. So William is happy. The players without rebates aren't happy, because the "G" rating now loses money for them. Even those with the same rebate will see their ROI go down from 1.10 (with the rebate) to 1.04, so it does take money out of their pockets.

That's just a hypothetical example, but it shows what I'm trying to say.

[Stillriledup]

They take it out of players' pockets because their existence allows bettors who get the rebates to play horses that wouldn't be profitable without them and to do so for more money that they would otherwise.

For example: suppose that the "G" rating of some program has a long-term ROI of 1.03. The grinder who plays $20 per race can play that, and it won't hurt the ROI much. If William the Whale wants to bet his $200-1,000 on it (depending on pool size), it will lower the ROI to 0.97. Without a rebate, William won't use the "G" rating, because it would produce a loss But with a 7% rebate, he bets his $200-1,000 and lowers the ROI to 0.97, which ends up as 1.04 with the rebate. So William is happy. The players without rebates aren't happy, because the "G" rating now loses money for them. Even those with the same rebate will see their ROI go down from 1.10 (with the rebate) to 1.04, so it does take money out of their pockets.

That's just a hypothetical example, but it shows what I'm trying to say.

But when William's horse is at .097, you have the option to bet another horse as some other horse will go UP in price. Also, what's to say that some other "William" out there won't get the same exact idea at the same exact time and make that .097 horse into an 094 horse?

[Track Collector]

But when William's horse is at .097, you have the option to bet another horse as some other horse will go UP in price. Also, what's to say that some other "William" out there won't get the same exact idea at the same exact time and make that .097 horse into an 094 horse?

While it is true that over-betting one type of handicapping factor will cause the ROIs of other factors to go up, the problem is that it is distributed over ALL other factors.

For example with WPS wagering:
Factor A is 1.03
Factor B is 0.89
Factor C is 0.91
Factor D is 0.87
Factor E is 0.83

Let's say Factor A becomes overbet and now returns 0.95. (For illustration purposes, I'm ignoring the possibility that 0.95 might still be profitable with a rebate.).

Let's also, for simplicity, say that the 8% decrease in factor A goes only to the improvement of the other 4 factors. (I reality, we know that it impacts tons of different factors.).

What is more likely to happen, the entire 8% going to one other single factor (like C, which BTW already happens to have the highest ROI relative to the other factors), or some type of shared distribution. Praxis seems to bear out that it is the later. With that, the new ROIs of the other factors might become:

Factor B --> 0.89 + 0.030 = 0.920
Factor C --> 0.91 + 0.005 = 0.915
Factor D --> 0.87 + 0.020 = 0.890
Factor E --> 0.83 + 0.025 = 0.855

All the other factors saw improvements, but all were still far away from helping us get to profitville.


.

[Dave Schwartz]

Sorry, I thought it was obvious.

It would have been more helpful if Mr. Schwartz would have showed me how I was wrong. Simply stating that 'X' is wrong isn't very convincing. However, demonstrating I was using a flawed premise or had an unsound argument form could clear up a misconception.

I apologize for being so direct without providing more.

The whales beat us with "good handicapping." Not bots that find market inefficiencies.

They simply build better models, including estimating final odds and pool sizes.

[Vigorish]

Sorry, I thought it was obvious.



I apologize for being so direct without providing more.

The whales beat us with "good handicapping." Not bots that find market inefficiencies.

They simply build better models, including estimating final odds and pool sizes.

Fair enough. I need to do more research on how "computer-assisted wagering" works in the context of high volume betting. Another poster on this board, in a telephone conversation, TRIED to clear up some misconceptions I had. Apparently, I had cotton balls in my ears. There is so much misinformation on the internet that it's hard to know how the biggest whales really operate. I'm willing to be humbled and continue to learn.

[classhandicapper]

The whales beat us with "good handicapping." Not bots that find market inefficiencies.

They simply build better models, including estimating final odds and pool sizes.

I find this shocking if you are implying they don't gain a big edge by finding market inefficiencies also.

In the mid 80s I wrote a program that calculated the "likely" exacta/double price, the "break even" exacta/double price etc... for every combination of odds. Id walk around the track with a printout looking for inefficiencies between the win, exacta, and double pools so I could bet my target horse in the correct pool.

I eventually stopped because it was so tough to flip pages while on line and the odds the were changing late.

However, given modern technology and the ability to get live odds feeds, I would have bet anything that more than a few people have created a ticket maker that creates a batch of bets of "overlays only" based on their odds line and their live odds feed and send them out.

I was making a killing when "e-horse exchange" first opened up because there were huge inefficiencies between the prices there and at the tracks. Eventually, the inefficiencies started declining and I could tell I was competing with other players doing the same thing. Soon after that I could tell they were being picked off by computer because no one could work that fast manually.

I see the same thing in the place pool now. I used to make a lot of plays in the place pools because of inefficiencies. Now they typically evaporate on the last flash with a single large punch on the last flash even when it's multiple horses. It seems too neat to not be automated.

Handicapping almost has t be part of it, but if you can identify inefficiencies in an automated way and batch the bets out, you have a huge edge. If someone isn't doing that, they should be.

[alydar]

I find this shocking if you are implying they don't gain a big edge by finding market inefficiencies also.

In the mid 80s I wrote a program that calculated the "likely" exacta/double price, the "break even" exacta/double price etc... for every combination of odds. Id walk around the track with a printout looking for inefficiencies between the win, exacta, and double pools so I could bet my target horse in the correct pool.

I eventually stopped because it was so tough to flip pages while on line and the odds the were changing late.

However, given modern technology and the ability to get live odds feeds, I would have bet anything that more than a few people have created a ticket maker that creates a batch of bets of "overlays only" based on their odds line and their live odds feed and send them out.



I was making a killing when "e-horse exchange" first opened up because there were huge inefficiencies between the prices there and at the tracks. Eventually, the inefficiencies started declining and I could tell I was competing with other players doing the same thing. Soon after that I could tell they were being picked off by computer because no one could work that fast manually.

I see the same thing in the place pool now. I used to make a lot of plays in the place pools because of inefficiencies. Now they typically evaporate on the last flash with a single large punch on the last flash even when it's multiple horses. It seems too neat to not be automated.

Handicapping almost has t be part of it, but if you can identify inefficiencies in an automated way and batch the bets out, you have a huge edge. If someone isn't doing that, they should be.

You are right. While the whale bettors have built programs that pick winners well, clearly they are looking at inefficiencies and betting accordingly. Just looking at pool activity in the final cycles prove that.

[Robert Goren]

The days of people betting their house numbers or the jockey silks's color is over. Those people have gone to slots and/or lotteries. There may be some less smart money in the pools, but there is no random money in them anymore.

[AndyC]

I'd hardly describe my higher effective takeout, in part due to rebates, as a magic trick. I'd describe it more as racketeering, since the details are buried well out of sight of public scrutiny. And how can you state in the same paragraph that "rebates are a cost only to the payer" and the "track's cost is the commission to the ADW (payer)" and not draw the conclusion that the rebates are a cost to the track? :confused:

To say that rebates paid by an ADW is a cost to the track is like saying that your mortgage is a cost to your employer. What you do with your wages once paid by your employer has no bearing on their costs. What an ADW does with their commissions has no bearing on the costs of the track. If the tracks were directly paying rebates then I would concur with your position.

[baconswitchfarm]

To say that rebates paid by an ADW is a cost to the track is like saying that your mortgage is a cost to your employer. What you do with your wages once paid by your employer has no bearing on their costs. What an ADW does with their commissions has no bearing on the costs of the track. If the tracks were directly paying rebates then I would concur with your position.




Correct. :ThmbUp:

[AndyC]

The problem is with the business model and the current incentives. The ADWs are working on percentages, which for some reason the "pro-rebate" player believes they earn and deserve. My opinion is that the ADWs have a "fixed price" cost, as there is little difference in their costs whether they're handling $100M in bets or $300M in bets. Obviously, they're motivated to handle more money, as their margin rises as handle goes up. I'd argue that the "excess profits" of the ADWs should be returned to all players in higher payouts - which in turn results in them staying on as a loyal fan of the sport.

The evidence I'd present is overall U.S. handle dropping off - sure, much of that is due to the economy, but there are places outside of the U.S. where racing is flourishing.

http://www.jockeyclub.com/factbook.asp?section=8

When negative churn by the whales is introduced to the equation and supported via the back-door process of secret rebates, the net result is the death spiral we're in now. Sure, there will always be a group of chronic, degenerate gamblers and public squares to fleece from - but we're on the road to how they race ponies in South America (see second to last paragraph), and I'd rather not go there....

http://www.washingtonpost.com/wp-dyn/content/article/2011/02/28/AR2011022804046.html

You have not made a case for why rebates are causing a decline in handle. I know many people who have moved out of racing to other forms of gambling be it sports or poker. Rebates was not the reason they changed.

I don't buy the premise of negative churn, in fact, I think it is just the opposite. Rebates create much more churn.

[AndyC]

They take it out of players' pockets because their existence allows bettors who get the rebates to play horses that wouldn't be profitable without them and to do so for more money that they would otherwise.

For example: suppose that the "G" rating of some program has a long-term ROI of 1.03. The grinder who plays $20 per race can play that, and it won't hurt the ROI much. If William the Whale wants to bet his $200-1,000 on it (depending on pool size), it will lower the ROI to 0.97. Without a rebate, William won't use the "G" rating, because it would produce a loss But with a 7% rebate, he bets his $200-1,000 and lowers the ROI to 0.97, which ends up as 1.04 with the rebate. So William is happy. The players without rebates aren't happy, because the "G" rating now loses money for them. Even those with the same rebate will see their ROI go down from 1.10 (with the rebate) to 1.04, so it does take money out of their pockets.

That's just a hypothetical example, but it shows what I'm trying to say.

In theory you are correct, in reality all of the rebate players are simply not that smart nor that precise in determining overlays and underlays. I would guess that there are almost as many opportunities created do to overbetting than those lost to precise targeted betting.

[Dave Schwartz]

I find this shocking if you are implying they don't gain a big edge by finding market inefficiencies also.

Technically, ALL profit is driven by market inefficiencies.

However, horse racing is not a good example of this because there is no arbitrage. Without good handicapping and final odds estimation, one would not know an "inefficiency" if it bit them in the ass.

[AndyC]

While it is true that over-betting one type of handicapping factor will cause the ROIs of other factors to go up, the problem is that it is distributed over ALL other factors.

For example with WPS wagering:
Factor A is 1.03
Factor B is 0.89
Factor C is 0.91
Factor D is 0.87
Factor E is 0.83

Let's say Factor A becomes overbet and now returns 0.95. (For illustration purposes, I'm ignoring the possibility that 0.95 might still be profitable with a rebate.).

Let's also, for simplicity, say that the 8% decrease in factor A goes only to the improvement of the other 4 factors. (I reality, we know that it impacts tons of different factors.).

What is more likely to happen, the entire 8% going to one other single factor (like C, which BTW already happens to have the highest ROI relative to the other factors), or some type of shared distribution. Praxis seems to bear out that it is the later. With that, the new ROIs of the other factors might become:

Factor B --> 0.89 + 0.030 = 0.920
Factor C --> 0.91 + 0.005 = 0.915
Factor D --> 0.87 + 0.020 = 0.890
Factor E --> 0.83 + 0.025 = 0.855

All the other factors saw improvements, but all were still far away from helping us get to profitville.


I agree that your above analysis is probably correct. I don't agree that somehow rebate players are only able to zoom in on the overlays thus narrowing the possibilities of the non-rebate players.

[traynor]

I find this shocking if you are implying they don't gain a big edge by finding market inefficiencies also.

In the mid 80s I wrote a program that calculated the "likely" exacta/double price, the "break even" exacta/double price etc... for every combination of odds. Id walk around the track with a printout looking for inefficiencies between the win, exacta, and double pools so I could bet my target horse in the correct pool.

I eventually stopped because it was so tough to flip pages while on line and the odds the were changing late.

However, given modern technology and the ability to get live odds feeds, I would have bet anything that more than a few people have created a ticket maker that creates a batch of bets of "overlays only" based on their odds line and their live odds feed and send them out.

I was making a killing when "e-horse exchange" first opened up because there were huge inefficiencies between the prices there and at the tracks. Eventually, the inefficiencies started declining and I could tell I was competing with other players doing the same thing. Soon after that I could tell they were being picked off by computer because no one could work that fast manually.

I see the same thing in the place pool now. I used to make a lot of plays in the place pools because of inefficiencies. Now they typically evaporate on the last flash with a single large punch on the last flash even when it's multiple horses. It seems too neat to not be automated.

Handicapping almost has t be part of it, but if you can identify inefficiencies in an automated way and batch the bets out, you have a huge edge. If someone isn't doing that, they should be.

In the late 1970s a group of bettors from New York used a strategy of dutching exactas to take advantage of market inefficiencies. That took so much out of the pools at the old Bay Meadows summer harness meet that the locals were drowning in red ink doing what they had done (successfully) for years. It was illuminating.

They had a chart about the size of a playing card that they occasionally referred to in wagering. Bear in mind that at the time, there were no multiple tickets--each combination had to be punched out individually. When the announcer said, "Here they come" (just berfore the off), the $50 window was all theirs, and if you were in line or at the window, a security guard would move you back a respectful distance so no one had a chance to see their chart up close. More than a few feathers of the "serious bettors" were ruffled.

To imagine that anyone with a computer could not code (or has not coded) it to leverage such market inefficiencies to gain an (often substantial) advantage seems odd. And perhaps more than a bit out of touch with the realities of creating (and coding) such analytical algorithms. Place pools are no different (and no, I am not referring to Ziemba).

[traynor]

Technically, ALL profit is driven by market inefficiencies.

However, horse racing is not a good example of this because there is no arbitrage. Without good handicapping and final odds estimation, one would not know an "inefficiency" if it bit them in the ass.

Of course. That is what modeling software does. And does very, very well.

[traynor]

I agree that your above analysis is probably correct. I don't agree that somehow rebate players are only able to zoom in on the overlays thus narrowing the possibilities of the non-rebate players.

It is fairly simple to run a data mining app that isolates (and extracts) those "winning factors." There are so many doing it that it is a continual battle between deceptive small sample models that are misleading, and large sample models that have peaked and are in decline.

Fortunately, there seem to be enough handicappers out there sitting on their rears in front of a computer searching for The Answer that fail to understand the realities of computer handicapping (and computer modeling) to make even (relatively) simple data models productive.

The trick is in discovering when a model is predictive (based on enough races to be predictive) rather than only descriptive, and employing that model before everyone else has discovered whatever patterns emerged and eaten up all the profit.

Its a great life. I love it!

[davew]

Technically, ALL profit is driven by market inefficiencies.

However, horse racing is not a good example of this because there is no arbitrage. Without good handicapping and final odds estimation, one would not know an "inefficiency" if it bit them in the ass.

Each pool is a different market - how can there not be some arbitrage going on when many are related?

[Dave Schwartz]

Each pool is a different market - how can there not be some arbitrage going on when many are related?

LOL - So, you figure you can buy in one and sell in the other? How does that work, please?

[TJDave]

LOL - So, you figure you can buy in one and sell in the other? How does that work, please?

Is it not possible to influence one while betting into another?

[Hoofless_Wonder]

You have not made a case for why rebates are causing a decline in handle. I know many people who have moved out of racing to other forms of gambling be it sports or poker. Rebates was not the reason they changed.

I don't buy the premise of negative churn, in fact, I think it is just the opposite. Rebates create much more churn.

None of us can make a "solid" case for or against rebates without the details of the balance sheets. And even with that information, the rebates are only a small part of the problem - the overall problem is that the effective takeout is too high, thus making other pursuits like sports, poker and the stock market more attractive as a means to make a profit.

Or, is there some other reason players have left the game?

Without being privy to the balance sheets of the tracks, ADWs and the state, all I can do is look at the overall trend of the sport and see disaster looming.

As for your other posts about rebates not being a cost to the track, I'm looking at the bigger picture. If the ADWs have excess profits that they can refund to select players as rebates, then my opinion is the cost of the ADW for the track is too high. Ideally, the track could return money "saved" from lower ADW costs to all bettors, on and off track.

I refer to the churn of the high volume bettors not in the context of overall handle, but rather in terms of the quality of handle. Quality is determined by whether the wagering model grows the business in the long-term, or shrinks it by cutting back play to the minimum. The whales who receive the highest rebates will only wager in those pools as long as profits are to be made - and my opinion is that the higher rebate tracks will eventually drive most of the square money out, which in turn will require the track to lower rebates, which in turn will lower handle - a death spiral. The short-term game of whale "churn" increasing handle leads to longer term declines in handle, as there are fewer winners.

Please tell us how racing is not like slots, where the "optimum" balance between takeout and handle to gain maximum profits was found to be closer to 97% payback versus 90% or 92% payback....

[AndyC]

None of us can make a "solid" case for or against rebates without the details of the balance sheets. And even with that information, the rebates are only a small part of the problem - the overall problem is that the effective takeout is too high, thus making other pursuits like sports, poker and the stock market more attractive as a means to make a profit.

Or, is there some other reason players have left the game?

Without being privy to the balance sheets of the tracks, ADWs and the state, all I can do is look at the overall trend of the sport and see disaster looming.

As for your other posts about rebates not being a cost to the track, I'm looking at the bigger picture. If the ADWs have excess profits that they can refund to select players as rebates, then my opinion is the cost of the ADW for the track is too high. Ideally, the track could return money "saved" from lower ADW costs to all bettors, on and off track.

I refer to the churn of the high volume bettors not in the context of overall handle, but rather in terms of the quality of handle. Quality is determined by whether the wagering model grows the business in the long-term, or shrinks it by cutting back play to the minimum. The whales who receive the highest rebates will only wager in those pools as long as profits are to be made - and my opinion is that the higher rebate tracks will eventually drive most of the square money out, which in turn will require the track to lower rebates, which in turn will lower handle - a death spiral. The short-term game of whale "churn" increasing handle leads to longer term declines in handle, as there are fewer winners.

Please tell us how racing is not like slots, where the "optimum" balance between takeout and handle to gain maximum profits was found to be closer to 97% payback versus 90% or 92% payback....


I don't understand your use of the term "effective takeout", please explain.

ADWs do not have excess profits from which they choose to refund a portion of in the way of rebates. That would be silly. Rebates are a marketing tool used to entice a player to bet more. The money made from the additional betting would presumably exceed the amount of the rebates given or the rebates would serve no purpose.

All handle is good handle. Most players prefer playing bets where the pools are the biggest. Whether new players decide to bet is not a function of what other players are betting.

Big players will naturally be attracted to pools where there cost of play is lower. Who wouldn't? Don't most businesses give their biggest customers discounts?

Square money has no idea about rebate money, hence they are squares.

Racing is definitely not like slots. Totally different clientele with different expectations. Optimal pricing is much easier in slots because there are far fewer variables to consider. If there was, in fact, an optimal price in racing, wouldn't that price already be in place? Instead it has been a theory for the last 50+ years.

[Stillriledup]

Its possible that we currently have the "optimal" price and the reason you can make that case is that there are still many people betting live on track money with 0 rebate. The track's takeout ensures that smarter players get rebates, not as smart players continue to wager into the high takeout. They need the high takeout incase someone wants to wager into it. Its like a store selling a bottle of water for 20 dollars, put a fancy label on the water, say its from a Beverly Hills "Spring" and make the bottle look really snazzy and charge 20 bucks.....someone might buy it and if someone might buy it, you "arent wrong" for putting them in a position to do so. Same with 23 and change exacta takeouts in So Cal.

[Dave Schwartz]

Is it not possible to influence one while betting into another?

Not in a way that results in profit. At least none that I am aware of.

That would not be arbitrage as I understand it.

But the original contention as I recall had to do with how the whales play. I said it was not about "bots finding market inefficiencies."

People seem to forget that in order to find inefficiencies one must have a strong handle on "true probabilities." Once you have found "true probabilities" you have conquered the game.

[AndyC]

Its possible that we currently have the "optimal" price and the reason you can make that case is that there are still many people betting live on track money with 0 rebate. The track's takeout ensures that smarter players get rebates, not as smart players continue to wager into the high takeout. They need the high takeout incase someone wants to wager into it. Its like a store selling a bottle of water for 20 dollars, put a fancy label on the water, say its from a Beverly Hills "Spring" and make the bottle look really snazzy and charge 20 bucks.....someone might buy it and if someone might buy it, you "arent wrong" for putting them in a position to do so. Same with 23 and change exacta takeouts in So Cal.

I would agree with your assessment. The problem is that "optimal pricing" might be in place for the seller but it doesn't make it optimal for me.

[traynor]

Not in a way that results in profit. At least none that I am aware of.

That would not be arbitrage as I understand it.

But the original contention as I recall had to do with how the whales play. I said it was not about "bots finding market inefficiencies."

People seem to forget that in order to find inefficiencies one must have a strong handle on "true probabilities." Once you have found "true probabilities" you have conquered the game.

One does not need Truth-with-a-big-T. One only needs a better grasp of the "true probabilities" in a given race than that of the other bettors in that race to earn a nice profit. Because the evaluation of "true probabilities" is based on historical data, it is still only descriptive of that which happened in the past, with the (possibly erroneous) assumption that the past events and past sequences will be perfectly replicated in the future.

Whatever "true probabilities" are discovered will only exist at the points in time in which their discoveries are made. They might suggest possible trends, but could not really be considered "conquering the game." Virtually everything "discovered" (in analyzing horse races) is based on sequences of events in which those discoveries have not been made.

I think the "whales" face pretty much the same problems as the bettors who wager lesser amounts, and require continual adjustment and modification of their approaches to continue earning profits. Whatever is discovered, one can rest assured that someone else has also discovered it, or will discover it within a very short span of time.

[Hoofless_Wonder]

I don't understand your use of the term "effective takeout", please explain.

ADWs do not have excess profits from which they choose to refund a portion of in the way of rebates. That would be silly. Rebates are a marketing tool used to entice a player to bet more. The money made from the additional betting would presumably exceed the amount of the rebates given or the rebates would serve no purpose.

All handle is good handle. Most players prefer playing bets where the pools are the biggest. Whether new players decide to bet is not a function of what other players are betting.

Big players will naturally be attracted to pools where there cost of play is lower. Who wouldn't? Don't most businesses give their biggest customers discounts?

Square money has no idea about rebate money, hence they are squares.

Racing is definitely not like slots. Totally different clientele with different expectations. Optimal pricing is much easier in slots because there are far fewer variables to consider. If there was, in fact, an optimal price in racing, wouldn't that price already be in place? Instead it has been a theory for the last 50+ years.

Effective takeout is simply factoring in the rebate with respect to the wager. If a track has a 20% takeout on a pool, and ignoring breakage:

a. whale gets 10% rebate, effective takeout is: 10%
b. out-of-state regular player gets 1% ADW rebate, effective takeout is: 19%
c. on-track patron with no rebate - effective takeout is: 20%

This obviously means the players with small or no rebates have to be sharper handicappers to stay afloat - which would be okay if the playing field was level and everyone was shooting for an effective takeout of say, 12%.

I refer to "excess" profits for ADWs as they are able to offer rebates to SOME customers for increased wagering - as opposed to the track being charged less for the ADW service, and being able to increase payouts for everyone.

All handle is not good handle if it doesn't grow the game and/or keep the sport healthy. There are some tracks which prefer to price rebates low to prevent a negative effect. It is true players like bigger pools for having less effect on their wagers, and potential big hits. But the trend for pool size is DOWN, so something is not good here. What's wrong?

I'm not totally opposed to interests that bet more getting a small edge in "rebates" or pricing, but the model today is totally out of whack. Oddly enough, it's opposite the model of the "progressive" tax structure, where the little guy does get a break (at least in theory) over the higher income earners.

There is more to a square than lack of rebates - and rebates are not anywhere close to being freely available to all players everywhere.

The fact that racing has more variables and is more complex does not prevent an optimum pricing model from existing. I'd argue that the biggest obstacle today is the collusion and back-room deals going on, as each interest (horsemen, track owners, politicians, racing boards, etc.) jockey for the best deal. Since the small player is by the far the least represented in any of this, it's not surprising what we have today.

[Dave Schwartz]

I think the "whales" face pretty much the same problems as the bettors who wager lesser amounts, and require continual adjustment and modification of their approaches to continue earning profits. Whatever is discovered, one can rest assured that someone else has also discovered it, or will discover it within a very short span of time.

Exactly!

:ThmbUp:

[AndyC]

Effective takeout is simply factoring in the rebate with respect to the wager. If a track has a 20% takeout on a pool, and ignoring breakage:

a. whale gets 10% rebate, effective takeout is: 10%
b. out-of-state regular player gets 1% ADW rebate, effective takeout is: 19%
c. on-track patron with no rebate - effective takeout is: 20%

This obviously means the players with small or no rebates have to be sharper handicappers to stay afloat - which would be okay if the playing field was level and everyone was shooting for an effective takeout of say, 12%.

I refer to "excess" profits for ADWs as they are able to offer rebates to SOME customers for increased wagering - as opposed to the track being charged less for the ADW service, and being able to increase payouts for everyone.

All handle is not good handle if it doesn't grow the game and/or keep the sport healthy. There are some tracks which prefer to price rebates low to prevent a negative effect. It is true players like bigger pools for having less effect on their wagers, and potential big hits. But the trend for pool size is DOWN, so something is not good here. What's wrong?

I'm not totally opposed to interests that bet more getting a small edge in "rebates" or pricing, but the model today is totally out of whack. Oddly enough, it's opposite the model of the "progressive" tax structure, where the little guy does get a break (at least in theory) over the higher income earners.

There is more to a square than lack of rebates - and rebates are not anywhere close to being freely available to all players everywhere.

The fact that racing has more variables and is more complex does not prevent an optimum pricing model from existing. I'd argue that the biggest obstacle today is the collusion and back-room deals going on, as each interest (horsemen, track owners, politicians, racing boards, etc.) jockey for the best deal. Since the small player is by the far the least represented in any of this, it's not surprising what we have today.


The effective takeout is the price each bettor is willing to accept when making a bet. Just like a consumer buying a product at a store whereby one store might sell for less than another store. So what you end up with is your "optimal pricing" for each level of player.

Rebates are a cost of business for the ADWs. They increase the ADWs profits and allow them to survive. Without the opportunity to increase their own business many would have very little profits whatsoever.

All handle is good handle because the tracks make money from handle. Arguably some handle is better than other handle for the reasons you mentioned.

There is nothing remotely similar between income taxes and takeout. Income taxes are not voluntary. People who earn more money pay more taxes, not because it is fair, but because it is pragmatic. The government needs X amount of money so they get it from the people who have it. A mutuel pool is a marketplace that bettors voluntarily participate in. Some bettors won't participate unless they get to use double coupons.

I agree that there are far to many groups involved in the decision making for racetracks. The government is probably the biggest obstacle to any meaningful changes. The players can always be heard by voting with their wallets as any good consumer should.

[lansdale]

This is kind of a strange thread where people seem to be talking past each other. I realize that it's gotten away from the OP's question, but it seems like some axioms which are being ignored. Assuming players of equal ability (ROI) a player with a larger rebate has an innate (unfair) advantage. Further, given Bettor A, one with a large enough bet size to shape final odds, and a larger rebate than a given Bettor B, the former has an innate (unfair) advantage over the latter.

So HW is correct about the similarity of a rebate to a regressive tax like those on gas or cigarettes - they hit the little guy harder. But, in this case of reverse Robin Hood, the HDW/track is giving to the already rich instead of stealing (directly) from the poor. HW is also right that the key effect of the rebate is on bet-sizing, although I would use the familiar ROI as a benchmark. As Pensacola Pete also noted, with the rebate, the larger bettor is able to force the smaller bettor out through his ability to stlll make a profitable bet at lower odds. And Andy C. is wrong that 'effective takeout' (or ROI) is determined by the price the smaller player is 'willing' to accept, since, as I mentioned the smaller player has no good choice - he either cancels his bet (if already made) or loses money.

However, I agree with Andy's take on the big picture. Nothing will change. The track and ADW want max handle, and are much more likely to achieve it through catering to whales than trying to increase the ranks of average bettors in a shrinking market.

Any feedback appreciated.

Cheers,

lansdale

[Maximillion]

This is kind of a strange thread where people seem to be talking past each other. I realize that it's gotten away from the OP's question, but it seems like some axioms which are being ignored. Assuming players of equal ability (ROI) a player with a larger rebate has an innate (unfair) advantage. Further, given Bettor A, one with a large enough bet size to shape final odds, and a larger rebate than a given Bettor B, the former has an innate (unfair) advantage over the latter.

So HW is correct about the similarity of a rebate to a regressive tax like those on gas or cigarettes - they hit the little guy harder. But, in this case of reverse Robin Hood, the HDW/track is giving to the already rich instead of stealing (directly) from the poor. HW is also right that the key effect of the rebate is on bet-sizing, although I would use the familiar ROI as a benchmark. As Pensacola Pete also noted, with the rebate, the larger bettor is able to force the smaller bettor out through his ability to stlll make a profitable bet at lower odds. And Andy C. is wrong that 'effective takeout' (or ROI) is determined by the price the smaller player is 'willing' to accept, since, as I mentioned the smaller player has no good choice - he either cancels his bet (if already made) or loses money.

However, I agree with Andy's take on the big picture. Nothing will change. The track and ADW want max handle, and are much more likely to achieve it through catering to whales than trying to increase the ranks of average bettors in a shrinking market.

Any feedback appreciated.

Cheers,

lansdale

I would consider it "unfair" if these same (large) rebates were not available to
the smaller player able to gradually scale his wagers up to whale-like status.

Im only speaking from the perspective of a smaller bettor trying to be profitable in this game.....but imo the "whales" have earned the right for the larger rebate.

[lansdale]

I would consider it "unfair" if these same (large) rebates were not available to
the smaller player able to gradually scale his wagers up to whale-like status.

Im only speaking from the perspective of a smaller bettor trying to be profitable in this game.....but imo the "whales" have earned the right for the larger rebate.

How is the rebate, large or small, 'earned'? It's a promotion, a loss leader. When you rip a blackjack coupon out of a coupon book in Vegas do regard that as 'earned' money?

[AndyC]

This is kind of a strange thread where people seem to be talking past each other. I realize that it's gotten away from the OP's question, but it seems like some axioms which are being ignored. Assuming players of equal ability (ROI) a player with a larger rebate has an innate (unfair) advantage. Further, given Bettor A, one with a large enough bet size to shape final odds, and a larger rebate than a given Bettor B, the former has an innate (unfair) advantage over the latter.

So HW is correct about the similarity of a rebate to a regressive tax like those on gas or cigarettes - they hit the little guy harder. But, in this case of reverse Robin Hood, the HDW/track is giving to the already rich instead of stealing (directly) from the poor. HW is also right that the key effect of the rebate is on bet-sizing, although I would use the familiar ROI as a benchmark. As Pensacola Pete also noted, with the rebate, the larger bettor is able to force the smaller bettor out through his ability to stlll make a profitable bet at lower odds. And Andy C. is wrong that 'effective takeout' (or ROI) is determined by the price the smaller player is 'willing' to accept, since, as I mentioned the smaller player has no good choice - he either cancels his bet (if already made) or loses money. lansdale

Does a person have an advantage at the windows by betting larger amounts? If someone bets enough they will cannibalize their own winnings. Is that an advantage? If you are a rebate player and I am not, your advantage does not affect me. My results are solely determined by how my bets come out based on whatever takeout rate is in affect when I make a bet. What does affect me is your skill at picking winners.

Does a large rebate player always bet the "right" horse? If not, aren't they making payoffs better for the smaller player?

Presumably people are rational when deciding whether or not to bet. So if somebody accepts a 25% takeout rate, the bet is fair to the bettor. There is always a choice, don't bet or try another track.

[AndyC]

How is the rebate, large or small, 'earned'? It's a promotion, a loss leader. When you rip a blackjack coupon out of a coupon book in Vegas do regard that as 'earned' money?

From a business standpoint, it makes no sense to give a rebate unless it results in more revenue and profit. Isn't that what promotions do? Don't most people "earn" points using a credit card? Racing simply uses a model that is prevalent in many businesses.

[Maximillion]

How is the rebate, large or small, 'earned'? It's a promotion, a loss leader. When you rip a blackjack coupon out of a coupon book in Vegas do regard that as 'earned' money?

Apples and oranges.

I could be wrong,but Im going on the assumption that the "large" rebates are only available to players with the required betting handle.(makes sense to me)

If this is correct,its not a "promotion"......its a reward.Seems pretty cut and dry to me.

[therussmeister]

I would consider it "unfair" if these same (large) rebates were not available to
the smaller player able to gradually scale his wagers up to whale-like status.

Im only speaking from the perspective of a smaller bettor trying to be profitable in this game.....but imo the "whales" have earned the right for the larger rebate.
But there exists the possibility that smaller bettors can no longer scale up their wagers, because without the whale's rebate there are no profits to reinvest. If that is not true now, it may be in the future.

[Maximillion]

But there exists the possibility that smaller bettors can no longer scale up their wagers, because without the whale's rebate there are no profits to reinvest. If that is not true now, it may be in the future.

I know what your saying.....maybe a "sliding scale" of rebate,in terms of handle would be a great help to a lot of players.

I just dont see it (yet) as a total doom-n gloom scenario.If the player indeed has what it takes to grow his/her profits the opportunities would appear to be there for them.

Like I said before,Im not claiming to be one of those.

[lansdale]

Does a person have an advantage at the windows by betting larger amounts? If someone bets enough they will cannibalize their own winnings. Is that an advantage? If you are a rebate player and I am not, your advantage does not affect me. My results are solely determined by how my bets come out based on whatever takeout rate is in affect when I make a bet. What does affect me is your skill at picking winners.

Does a large rebate player always bet the "right" horse? If not, aren't they making payoffs better for the smaller player?

Presumably people are rational when deciding whether or not to bet. So if somebody accepts a 25% takeout rate, the bet is fair to the bettor. There is always a choice, don't bet or try another track.

Hi Andy,

I never said that there was an innate advantage to being a large bettor. And, of course, any larger bettor may need a risk-aversion formula to keep from overbetting a given pool. The average player only needs a floor on his bet - the big player needs a ceiling and a floor. But, yes, if you understood my example, the large bettor with the rebate does have an advantage in that he can afford to take a lower price on a given horse, thus driving the small or non-rebate player out of the pool. Even assuming the smaller bettor can afford to stay in, even after a thousand races of betting the identical horse, the larger bettor will still be proportionally better off by the amount of the rebate. It's not an even playing field.

In the long run, of course, the larger, rebated player has to be skilled enough to hang in or the title 'whale' would just make him a huge fish. But this isn't a game of whack-a-mole as you and other posters have implied; as in all gambling, only the long-run matters. I think it's clear to everyone that there are very sophisticated and well-financed players in the game who have contributed to making mutuel pools much more efficient in recent years, and it they who we are discussing in this thread.

I would agree with you about the bettor making the final choice to bet or not, but I would hardly call that choice 'rational'. If you take a look at the thread on economic behaviorism, there's a good discussion of how irrational such choices usually are.

Cheers,

lansdale

[lansdale]

From a business standpoint, it makes no sense to give a rebate unless it results in more revenue and profit. Isn't that what promotions do? Don't most people "earn" points using a credit card? Racing simply uses a model that is prevalent in many businesses.

I understand the thinking behind the business model, although I would say the term 'earn' in this context is adspeak. But I'm looking at this from the POV of the average player not the track or the ADW, who generally treat their customer-base like scum.

[lansdale]

Apples and oranges.

I could be wrong,but Im going on the assumption that the "large" rebates are only available to players with the required betting handle.(makes sense to me)

If this is correct,its not a "promotion"......its a reward.Seems pretty cut and dry to me.

I won't argue about semantics. My main point, with which you don't disagree, is that the use of rebates makes the playing field for handicappers uneven.

[Vigorish]

Apples and oranges.

I could be wrong,but Im going on the assumption that the "large" rebates are only available to players with the required betting handle.(makes sense to me)

If this is correct,its not a "promotion"......its a reward.Seems pretty cut and dry to me.


Your assumption is wrong. I get very good rebates and do not wager extremely massive quantities - although I have been playing MORE now that I get rebates.

I find myself amused by some of the convoluted arguments in favor of rebates for the select few. In fact, I have often rationalized my own rebate by telling myself I worked hard to obtain the requisite knowledge. The mental gymnastics people play when trying to justify or preserve their advantage, whether horsemen, tracks, or players, are amusing (but predicted by cognitive dissonance theory).

Rebates are not an optimal situation for the long-term growth of the game. They might be used strategically as part of broader takeout reform, but I would argue that rebating preserves an unfair, unhealthy status quo. In the context of fixed odds games like roulette or craps, rebates make a lot of sense as they build brand loyalty and create incentives for more play. When I go to Vegas, I get a free suite, cigarettes, food, beverages, and gaming coupons, which are based on my theoretical expected loss.

By way of comparison, horse racing is not a fixed odds game where you stand in opposition to the house. It is a parimutuel system where you compete against other players. The rebate distorts the market and effectively gives different players different odds. Imagine that you are backing the Patriots, who are favored, and betting $60 on a money line of -120. The guy right behind you, who bets $5,500, is given a -110 money line because he is giving the book more action. This scenario would make it exceedingly difficult for the smaller player to survive, yet alone increase his handle to get a better deal.

When I returned to racing, after a 11 or 12 year hiatus, I opened an account with Twinspires.com The reason I did not immediately seek out rebates was because I could not imagine they existed. It would have seemed almost incomprehensible that different players were paying different prices in a parimutuel system. The majority of horseplayers are ignorant of what rebates are available, and this certainly is not an accident.

Nevertheless, I still support rebates, but only because I think it's the lesser of two ugly realities. The racing industry has demonstrated that it is hellbent on retaining suffocating takeout rates. Sadly, many of the tracks with lucrative slots subsidies are ranked lowest on HANA's chart, both in terms of takeout and overall quality. Some takeout relief is better than none, especially since many ADW's have enough flexibility to give the smallest players a little bit of takeout relief. Unfortunately, it seems that the current trend is to annihilate meaningful rebates for smaller players.

All players should welcome universally low takeout, without all the relief going to a select chosen elite. Today's younger players demand more value for their gaming dollar. Horse racing has an especially high opportunity cost for younger and inexperienced players. This sport will not experience a poker-like renaissance with anything resembling the current pricing scheme.

[Seabiscuit@AR]

Some good posts in this thread by Vigorish, Hoofless Wonder, Track Collector and lansdale

Rebates are bad for racing as they are unfair and they do impose a cost on the non rebated players (despite what AndyC says). Rebates drive the odds towards efficiency. So in a market without rebates most horses might have ROIs between +5% and -50% but in a rebated market most horses might have ROIs between 0 and -40%. The rebaters will pile lots of money on horses with ROIs of between 0 and +5% (if the market was without rebates) and drive them below 0% ROI making them losing bets for the non rebate player. The fact that the horrible ROI bets at -50% become slightly less horrible at -40% is no help to those without a rebate as -40% will still send you bankrupt. Playing an efficient market against -20% takeout makes it near impossible to win and destroys the whole nature of the horse racing betting game (where you can win unlike slot machines and casino games)

Because rebates are unfair this of course means that some players are advantaged if they are receiving rebates. This means that there will always be those who strongly favour rebates

Betfair have a product which is in the run betting on horse racing. Here you bet on the races "live" after they jump and up to the finish line. I have not read the Betfair UK racing forum for the last 6 months. But last I read the turnover on in the run racing was falling. And people seemed to agree what the reason was. You see with "in the run" betting some players have an unfair advantage thanks to time delays with broadcasts. Some players are at the track watching live as the race unfolds while others are at home watching on TV with several seconds delay. Those players on course can clean up thanks to their time advantage of several seconds over the TV players. Over time though the TV players are getting sick of playing an unfair game and always losing to the on course players. So betting turnover on in the run horse racing has been dying. The same is happening with rebated tote turnover which is also falling

Below is a link to a submission to the UK Gambling Commission by a player called the Magician who posts on the Betfair forum. He points out that in the run betting is inherently unfair due to the time delays. The same issues of fairness relate to rebate betting

http://www.gamblingcommission.gov.uk/pdf/16%20Consultation%20response%20from%20The%20Magici an.pdf

[AndyC]

Some good posts in this thread by Vigorish, Hoofless Wonder, Track Collector and lansdale

Rebates are bad for racing as they are unfair and they do impose a cost on the non rebated players (despite what AndyC says). Rebates drive the odds towards efficiency. So in a market without rebates most horses might have ROIs between +5% and -50% but in a rebated market most horses might have ROIs between 0 and -40%. The rebaters will pile lots of money on horses with ROIs of between 0 and +5% (if the market was without rebates) and drive them below 0% ROI making them losing bets for the non rebate player. The fact that the horrible ROI bets at -50% become slightly less horrible at -40% is no help to those without a rebate as -40% will still send you bankrupt. Playing an efficient market against -20% takeout makes it near impossible to win and destroys the whole nature of the horse racing betting game (where you can win unlike slot machines and casino games)


Your entire argument rests with your assertion that rebates drive the markets towards efficiency. That is not true. Betting on overlays drives the market towards efficiency be it by rebate players or non-rebate players.

Doesn't an inefficient market happen because underlays are overplayed? Isn't that a quicker way to bankruptcy than playing in an efficient market?

[Stillriledup]

Your entire argument rests with your assertion that rebates drive the markets towards efficiency. That is not true. Betting on overlays drives the market towards efficiency be it by rebate players or non-rebate players.

Doesn't an inefficient market happen because underlays are overplayed? Isn't that a quicker way to bankruptcy than playing in an efficient market?

He's been told 50 times in 50 different threads that rebates are not "unfair" and his wins or losses have nothing to do with other people profit sharing with an ADW and yet, the same stuff gets posted, as if he's not reading what we are telling him. He doesnt seem to "get" that when a dollar enters into the pari mutuel pool, that dollar isnt "earmarked" as a rebate dollar or a non rebate dollar...they're all treated the same, a dollar is a dollar and that the "rebate process" takes place after the race is run, not before hand.

[lansdale]

Some good posts in this thread by Vigorish, Hoofless Wonder, Track Collector and lansdale

Rebates are bad for racing as they are unfair and they do impose a cost on the non rebated players (despite what AndyC says). Rebates drive the odds towards efficiency. So in a market without rebates most horses might have ROIs between +5% and -50% but in a rebated market most horses might have ROIs between 0 and -40%. The rebaters will pile lots of money on horses with ROIs of between 0 and +5% (if the market was without rebates) and drive them below 0% ROI making them losing bets for the non rebate player. The fact that the horrible ROI bets at -50% become slightly less horrible at -40% is no help to those without a rebate as -40% will still send you bankrupt. Playing an efficient market against -20% takeout makes it near impossible to win and destroys the whole nature of the horse racing betting game (where you can win unlike slot machines and casino games)

Because rebates are unfair this of course means that some players are advantaged if they are receiving rebates. This means that there will always be those who strongly favour rebates

Betfair have a product which is in the run betting on horse racing. Here you bet on the races "live" after they jump and up to the finish line. I have not read the Betfair UK racing forum for the last 6 months. But last I read the turnover on in the run racing was falling. And people seemed to agree what the reason was. You see with "in the run" betting some players have an unfair advantage thanks to time delays with broadcasts. Some players are at the track watching live as the race unfolds while others are at home watching on TV with several seconds delay. Those players on course can clean up thanks to their time advantage of several seconds over the TV players. Over time though the TV players are getting sick of playing an unfair game and always losing to the on course players. So betting turnover on in the run horse racing has been dying. The same is happening with rebated tote turnover which is also falling

Below is a link to a submission to the UK Gambling Commission by a player called the Magician who posts on the Betfair forum. He points out that in the run betting is inherently unfair due to the time delays. The same issues of fairness relate to rebate betting

http://www.gamblingcommission.gov.uk/pdf/16%20Consultation%20response%20from%20The%20Magici an.pdf

Hi Seabiscuit,

Rebates may be unfair, but they're not the primary source of the efficiency of mutuel pools. The horserace betting public is already very good. Even without rebates, they would produce a marketplace that would be close to being efficient. Not perfectly efficient, of course, but efficient enough that ca. 99% of participants are incapable of winning long-term. And, as has oft been discussed on this site, these pools have become much more efficient in the last decade, and especially the last few years.

Many blame whales and especially whales with rebates as the primary source of this increased efficiency. How could this be? As I said above, incompetent whales with rebates are no threat to anyone, and certainly aren't increasing the efficiency of the pools. And even before the rebate era, the bigger players always had access to the best information, but the mutuel pools didn't display their current level of efficiency. As many have noted, the recent great increase in efficiency of the pools seems to be a product of the increased used of the computer in handicapping and the resulting proliferation of increasingly accurate information, along with its rapid dissemination via the internet. And of course, for well-financed individuals or teams with highly accurate models which allow them to identify and exploit inefficiencies (overlays) in the racing marketplace, their efficiency is increased, as you say, by the use of rebates. As a result, there is less and less left on the table for the average player.

Cheers,

lansdale

[Seabiscuit@AR]

AndyC

Betting on overlays does drive the market towards efficiency I agree with you there

But rebates allow the rebate player to bet the overlay down into an underlay yet still profit themselves. Not only that by pouring more money onto this horse their total profit for the race in dollar terms is either unaffected or increased. At the same time the non rebate player is faced now with backing an underlay if they play the exact same horse. Their best play now is not to bet at all. This is the very definition of unfair

So rebates can encourage rebate players to turn overlays into underlays as they can bet more dollars on the horse for a greater total return than they would get in a pool free of rebates. Also by doing this they can eliminate other good players who are seeking to win. Optimal strategy for a rebate player is to bet the horse down to a negative ROI for the other non rebate players to knock them out of the game

[Stillriledup]

AndyC

Betting on overlays does drive the market towards efficiency I agree with you there

But rebates allow the rebate player to bet the overlay down into an underlay yet still profit themselves. Not only that by pouring more money onto this horse their total profit for the race in dollar terms is either unaffected or increased. At the same time the non rebate player is faced now with backing an underlay if they play the exact same horse. Their best play now is not to bet at all. This is the very definition of unfair

So rebates can encourage rebate players to turn overlays into underlays as they can bet more dollars on the horse for a greater total return than they would get in a pool free of rebates. Also by doing this they can eliminate other good players who are seeking to win. Optimal strategy for a rebate player is to bet the horse down to a negative ROI for the other non rebate players to knock them out of the game

The underlay concept is just perception, the market is very tight, if a horse is 4-5, the market says its 4-5 and if you believe the horse should be 1-1, than you either skip it or bet someone else. With a takeout of 15 and change (using Calif as example) there will always be more underlays than overlays. The same exact process happened before rebates ever existed, there were mostly underlays and a few overlays. In order to be a winning player, obviously, you have to bet on overlays.

Also, you're turning this into a "cut and dried" situation where Joe Rebate guy turns a 1-1 shot into a 4-5 shot and because he does that, it hurts you, but it only hurts you if the horse would otherwise be 1-1. Now, if there is a horse sitting on the board at 1-1 and someone thinks 1-1 is "value" that person will place a wager on that runner and the runner will go down in price.

You've been told countless times to go out and get your own rebate instead of crying about it.....maybe you're in the wrong betting game, you should bet sports, you bet 11 to win 10 and you can bet whatever you want to bet, and its still 11 units to win 10.

With all this talk about "unfairness" i don't seem to remember you ever writing about the "unfair" situation that occurs when a large bettor sticks a few grand to win on a horse and knocks his own price down. Do you think its fair that a large bettor's bet crushes his own win price? If you were making 2k win bets on 5-1 shots, would you be happy getting 4-1 or 9-2 on that "5-1 shot"? Do you think a big bettor who lost his rebate (if you had your way) is not only paying full freight, but paying "Extra" because he's destroying his own price.

[Seabiscuit@AR]

AndyC

just using some numbers to work out a rough example

Imagine a horse which is an exact 2-1 chance so a 33.33% chance to win

Win betting pool of $125000 with a 20% takeout rate so there is $100000 to distribute amongst the players

In a pool free of rebates the horse will need to pay 2.10-1 to be a profitable play if the tote plays to the nearest 10 cents

If the horse does play 2.10-1 then it has an ROI of about +3%. A big punter might look to bet $625 on it (0.50% of the pool). For the horse to return 2.10-1 the maximum that can be bet on it is $32260 total. With our big punter betting $625 of that it means the rest of the pool bets $31635. If the horse wins our big punter gets back the $625 bet plus $1312.50 in total winnings

But let’s say the big punter approaches track management and convinces them to give the punter a 10% rebate with the promise the big punter will grow the track’s turnover

With the same situation above this big punter can now bet this horse down to odds of 1.80-1 and still make it a profitable bet for themself. The horse will pay 2.08-1 for the big punter at 10% rebate for an ROI of +2.67% which is almost the same as before in the non rebated pool. The maximum that can be bet to return odds of 1.80-1 is $35710 if the pool stays at $125000 but remember this big punter is going to “grow” the pool thanks to the rebate so now the pool can swell by a few grand more up to $128000 or $129000. The other players are all playing without a rebate and won’t see the big punter’s money till the last flash of the tote after the jump. So the rest of the pool will still bet $31635 on this horse as before. Now if the pool were to stay at $125000 the big punter can now bet $4075 instead of $625 and so grow the pool by $3450. In fact the big punter can now bet a bit extra than this as the pool is bigger so there is more leeway to pile even more on now that the pool is $128450. But let’s say the punter leaves the bet at $4075 to ensure the horse’s odds don’t drop to 1.70-1 thanks to breakage. The big punter will get now be getting on $4075 at odds of 2.08-1 (about a 2-1 chance). If the horse wins they get back their $4075 bet plus $8476 in total winnings

$8476 in total winnings at almost the same ROI is a miles better result than $1312.50

The non rebate punters meanwhile go from sharing in a winning bet if the horse paid 2.10-1 to either backing a -6% to -7% ROI horse at 1.80-1 or having to pass on the race after wasting their time doing that form study for nothing

Now obviously these days the situation is more complex as multiple players are getting rebates to varying degrees. But the general theme remains the same. Rebates offer every incentive to the rebate player to slam that +3% ROI horse down to a -5% ROI horse as they win lots more total money. In fact not betting to the maximum is just leaving money on the table

[Seabiscuit@AR]

BTW if the big punter sticks to betting only $625 even with the rebate they will get odds of 2.41-1 if the horse stays at 2.10-1 for everyone. If the horse wins the big punter gets back their $625 bet plus $1506.25 total winnings

$1506.25 total winnings is not much better than $1312.50 and fails to grow the pool as promised

Clearly as long as the big punter has a big enough bank roll to support bets in the thousands rather than the hundreds then the big punter is much better off pouring lots of money on these positive ROI horses and driving them into underlay territory for the non rebate players

[Stillriledup]

BTW if the big punter sticks to betting only $625 even with the rebate they will get odds of 2.41-1 if the horse stays at 2.10-1 for everyone. If the horse wins the big punter gets back their $625 bet plus $1506.25 total winnings

$1506.25 total winnings is not much better than $1312.50 and fails to grow the pool as promised

Clearly as long as the big punter has a big enough bank roll to support bets in the thousands rather than the hundreds then the big punter is much better off pouring lots of money on these positive ROI horses and driving them into underlay territory for the non rebate players

But we need the game to grow....big bettors need incentive to be big bettors. Are we saying that we don't recommend anyone to bet more than 600 bucks on a horse race?

When they drive a selection into underlay territory, that means some other selection goes up in price and becomes an overlay (or, a higher price that it was before the big bettor made his bet)

[Seabiscuit@AR]

Stillriledup

The big player who bets more in a non rebated pool gets rewarded by winning more. If a player bets $10 on a 2-1 shot they win $20. If the big player bets $1000 on the same 2-1 shot they win $2000 which is 100 times as much as the smaller player. But both get paid fairly at the same odds. Sure the big player might want to bet a million not just $1000 but offering rebates is not the way to do it

I want players to be able to bet big and not be restricted to betting in the hundreds. But you need to bring the result about by playing fairly. Lowering the overall takeout for everyone is a much better path than rebates

I can see why people who get rebates defend them. They are a brilliant scam for anyone getting big rebates. Your bets can increase massively and so can your winnings. At the same time you are able to destroy your competition in the pools by turning their positive ROI bets into negative ROI bets. And finally at the beginning the pools do increase in size so that track management buy the argument that the rebaters are "growing" the pools (in the same way a bank thinks a loan to a bad risk is a good idea at the time it is made)

The problem is that rebates have not grown the pools as promised. Instead the pools are going backwards in the same way the UK in running Betfair markets are going backwards. Offer an unfair game and in the long run it will slowly die. You are much better off sharing smaller wins amongst lots of players instead of having a few unfairly advantaged players scoring massive wins

While rebates are great for the rebaters, the price for them is paid by the non rebate players. Rebates are bad for the non rebate players and once they quit the game the rebaters will have nobody to play against

[Hoofless_Wonder]

I'm not sure if we ever addressed SRU's question about sharp and dumb money versus pool size, but the thread is interesting.

The effective takeout is the price each bettor is willing to accept when making a bet. Just like a consumer buying a product at a store whereby one store might sell for less than another store. So what you end up with is your "optimal pricing" for each level of player.

...

There is nothing remotely similar between income taxes and takeout. Income taxes are not voluntary. People who earn more money pay more taxes, not because it is fair, but because it is pragmatic. The government needs X amount of money so they get it from the people who have it. A mutuel pool is a marketplace that bettors voluntarily participate in. Some bettors won't participate unless they get to use double coupons.

I guess we have different definitions of "effective takeout". Yours is more what I would describe as a "value line". I believe you and SRU share the view that the takeout/rebate disadvantage can be overcome by more disciplined wagering, and limiting those wagers to higher overlays. Perhaps, but that's far beyond the casual player's capabilities (to calculate an accurate 'true odds' line), and is a challenge for all bettors with late odds fluctuations. We not only have to handicap the race, the odds, and wagering strategies, but now we have to handicap the late odds movement as well.

All I know for sure is that if I bet $100, I can only expect to get back $80 to start, and overcoming that hill is getting more difficult.

I did not state that racing and the income tax system are similar - I simply pointed out that the "little guy" is at opposite ends of the playing field for one versus the other. Perhaps voting does make a difference.

I agree wholeheartedly that nobody is holding a gun to my head and forcing me to bet a horse at 4-1 that I think really should be 5-1. But over time, as I'm grinded down into the dust via the outstanding example provided by Seabiscuit, I will eventually choose not to participate - or worse, will not be able to participate due to lack of funds.

Goodbye dumb money.

[Stillriledup]

Stillriledup

The big player who bets more in a non rebated pool gets rewarded by winning more. If a player bets $10 on a 2-1 shot they win $20. If the big player bets $1000 on the same 2-1 shot they win $2000 which is 100 times as much as the smaller player. But both get paid fairly at the same odds. Sure the big player might want to bet a million not just $1000 but offering rebates is not the way to do it

I want players to be able to bet big and not be restricted to betting in the hundreds. But you need to bring the result about by playing fairly. Lowering the overall takeout for everyone is a much better path than rebates

I can see why people who get rebates defend them. They are a brilliant scam for anyone getting big rebates. Your bets can increase massively and so can your winnings. At the same time you are able to destroy your competition in the pools by turning their positive ROI bets into negative ROI bets. And finally at the beginning the pools do increase in size so that track management buy the argument that the rebaters are "growing" the pools (in the same way a bank thinks a loan to a bad risk is a good idea at the time it is made)

The problem is that rebates have not grown the pools as promised. Instead the pools are going backwards in the same way the UK in running Betfair markets are going backwards. Offer an unfair game and in the long run it will slowly die. You are much better off sharing smaller wins amongst lots of players instead of having a few unfairly advantaged players scoring massive wins

While rebates are great for the rebaters, the price for them is paid by the non rebate players. Rebates are bad for the non rebate players and once they quit the game the rebaters will have nobody to play against

Lowering the takeout vs rebates is a separate argument.

Blaming rebates for the pools going backwards is a bit short sighted, who's to say that the pools wouldnt have dropped much more and rebates are actually keeping the pools from free fall. Looking at the drop doesnt tell the entire story because you don't know how far they would have dropped had rebated never been invented....there isnt enough data or any study that i know of that can prove the pools wouldnt have dropped even more if there was no such thing as rebates.

[Hoofless_Wonder]

Lowering the takeout vs rebates is a separate argument.

Blaming rebates for the pools going backwards is a bit short sighted, who's to say that the pools wouldnt have dropped much more and rebates are actually keeping the pools from free fall. Looking at the drop doesnt tell the entire story because you don't know how far they would have dropped had rebated never been invented....there isnt enough data or any study that i know of that can prove the pools wouldnt have dropped even more if there was no such thing as rebates.

Not having all the facts or the figures hasn't prevented me from taking a stand before on various issues, so why start now?

BTW - does SRU Downs offer rebates? Might need to expand my boycott, even though I do love their "pay the winners" policy. :)

[JustRalph]

Been avoiding this thread on purpose. I hate this shit. It takes the fun out of the game. But to have any sense of what you are playing into, a guy like me has to read these threads.

This is a perfect example as to why there are no new players.

Any Newbies logging in to this thread are going to realize real fast there are better options for their money, and they are going to have a hell of a lot more fun doing something else.

This is the state of the game............and it sucks.

[lamboguy]

ralph is right, i have never been so bored with this game my entire life. the racing game is just a small segment of what has happened in this country over the last 20 years because of very poor leadership. what i think has happened is that the guys that should have been running this country have taken up other avenues like my favorite man Frederick Smith founder of Fedex. also brilliant people like Bill Gates and Steve Jobs have decided to leave their marks on the world with their innovations in the tech industry.

a real breath of fresh air lately in the racing game has been timeform us. i have studied that product and it is really awesome. its the kind of thing that could get young people interested in racing. unfortunately i have the feeling that the guys running that company might be needed a whole lot more now running the whole of racing. that is the type of product that has a strong potential to bring new people into this game. but getting them to the game and keeping them there is another story.

[AndyC]

Stillriledup

The big player who bets more in a non rebated pool gets rewarded by winning more. If a player bets $10 on a 2-1 shot they win $20. If the big player bets $1000 on the same 2-1 shot they win $2000 which is 100 times as much as the smaller player. But both get paid fairly at the same odds. Sure the big player might want to bet a million not just $1000 but offering rebates is not the way to do it

I want players to be able to bet big and not be restricted to betting in the hundreds. But you need to bring the result about by playing fairly. Lowering the overall takeout for everyone is a much better path than rebates

I can see why people who get rebates defend them. They are a brilliant scam for anyone getting big rebates. Your bets can increase massively and so can your winnings. At the same time you are able to destroy your competition in the pools by turning their positive ROI bets into negative ROI bets. And finally at the beginning the pools do increase in size so that track management buy the argument that the rebaters are "growing" the pools (in the same way a bank thinks a loan to a bad risk is a good idea at the time it is made)

The problem is that rebates have not grown the pools as promised. Instead the pools are going backwards in the same way the UK in running Betfair markets are going backwards. Offer an unfair game and in the long run it will slowly die. You are much better off sharing smaller wins amongst lots of players instead of having a few unfairly advantaged players scoring massive wins

While rebates are great for the rebaters, the price for them is paid by the non rebate players. Rebates are bad for the non rebate players and once they quit the game the rebaters will have nobody to play against

First of all your math is wrong. A big player betting $2,000 to win on a 2-1 horse into a pool of $100,000 (before making the bet) would reduce the winnings by nearly 7.5% by lowering the payoff from $6 to $5.70. So a big bettor is always getting hurt far more than a small bettor. Is it unfair that a big bettor should have to take a hit just for betting more?

Rebates don't turn positive expectation bets into negative ones for people not getting rebates. Only bets made on overlays can do that.

What is never discussed is the limits inherent in the so-called rebaters advantage. There is only so much smart money that a pool can take before all advantages are eliminated even with bettors getting rebates. But from personal observation I almost never see a race where all rebate bettors are on the same horse. So I am really skeptical as to how much the overlays are actually being reduced for a non-rebate player.

[showonly]

Thask,

We'll have to disagree on this one.

My contention is that it is the same as a poker table. The money winds up in the box. Winning players are just another box that take money from the table.

Of course, normal-sized winners take a relatively small amount from the game. The primary whales take around $150m out of racing. It never comes back.
Your are right on . Players with a positive ROI in the pari-mutels and the poker arena bring only an implied return.In the perfect world for the race tracks and card rooms only small winners would exist.

[showonly]

ralph is right, i have never been so bored with this game my entire life. the racing game is just a small segment of what has happened in this country over the last 20 years because of very poor leadership. what i think has happened is that the guys that should have been running this country have taken up other avenues like my favorite man Frederick Smith founder of Fedex. also brilliant people like Bill Gates and Steve Jobs have decided to leave their marks on the world with their innovations in the tech industry.

a real breath of fresh air lately in the racing game has been timeform us. i have studied that product and it is really awesome. its the kind of thing that could get young people interested in racing. unfortunately i have the feeling that the guys running that company might be needed a whole lot more now running the whole of racing. that is the type of product that has a strong potential to bring new people into this game. but getting them to the game and keeping them there is another story.
I think what has happened in the last twenty years is the we have all gotten twenty years older. TimeformUSA is certainly innovative but in terms of elevating entry level participation It is not what racing needs. Del mar, Keeneland, Saratoga and Oaklawn show us every year what it is going to take to recruit new blood. 99% of the current race tracks make a morgue like exciting.

[Seabiscuit@AR]

AndyC

my maths is not wrong. When I referred to a 2-1 shot returning $2000 in winnings for a $1000 bet I was considering a case where the horse had a declared dividend of 2-1 in a tote pool with no rebates so there was no maths to be done apart from multiply odds and bet size

As for the argument that a big player will reduce their odds more than a small player (often raised by Stillriledup) and this is unfair on the big player I don't buy this argument at all. Let's consider the world of fixed odds betting for the moment. All bookies set limits on how much money you can bet on a horse or a sporting team. There is no bookie out there who will let you bet an unlimited amount. You can bet up to the limit and then the bookie has a chance to change the odds down before you can bet again. These limits are quite small in most cases. So the bookie has a limit to lose $1500, you bet $750 at 2-1 (liability of $1500 for the bookie meaning the limit has been hit), the bookie takes your bet and then changes the odds down to 7-4. If you want more on you can now take 7-4 up to 1500 limit and so on and reduce your own odds with your own bets. Bookies have no problems taking the small players bets at the full 2-1 price as these bets are well within their limit

You can see it even more clearly on Betfair. Someone might have $2000 up there at 3.00 fixed. If another player takes the whole $2000 then routinely the other layers will move back their offers to say 2.90 and see if they can get matched at 2.90. If there is more money wanting to back than lay the price will likely move downwards, supply and demand and all that. Big players on Betfair might start backing a horse at 3.20, then get some on at 3.10, some on 3.00, more at 2.90 and some at 2.80 if the money is coming for it for an average price of around 3.00

On the other hand, small players on Betfair will have no trouble getting set. If they want to back this same horse as the big player they should be able to fill their order at 3.20 if the price is dropping. And so they will get a better price than the big player but I don't hear any big players complaining about this aspect on Betfair as this is how it should be. Supply and demand and if you want to bet big you have to cop the fact you will have to burn your way through a number of layers to accommodate your big bet. The small player is not asking for much so can fill their orders more easily. A small backer only needs to find one small layer to match their bet. But a big backer needs to a find either another big layer or 4 or 5 medium sized layers or 50 to 100 small layers to accommodate their big bet (or a combination of small and medium layers)

Rebates pervert these natural laws of supply and demand. They allow the big player to dump a big bet on and not drop their own odds. But instead the other non rebated players backing the same horse pay the price instead and are the ones who cop the reduced odds. This is totally upside down, wrong and unfair and I cannot believe that racetrack management ever agreed to this scheme

[Seabiscuit@AR]

Stillriledup

I agree that you can argue that the pools might have fallen even more without rebates. But you can equally argue the opposite (i.e. without rebates the pools might have soared to 30 billion and racing would be enjoying a new golden age)

All I know is that the level of the pools has been disappointing with rebates and the fact that racetracks are raising takeout levels and signal fees tells us that they are not happy with the current turnover levels

I can only see the pools getting smaller if rebates persist as all these syndicates that have won millions have no million dollar pools they can bet to the maximum in except for races like the Kentucky Derby. So they have their chips stacked higher than Mount Everest but can only bet into 50K pools. The other players cannot bet any more as the rebaters have stripped them of their money

[AndyC]

AndyC

my maths is not wrong. When I referred to a 2-1 shot returning $2000 in winnings for a $1000 bet I was considering a case where the horse had a declared dividend of 2-1 in a tote pool with no rebates so there was no maths to be done apart from multiply odds and bet size

As for the argument that a big player will reduce their odds more than a small player (often raised by Stillriledup) and this is unfair on the big player I don't buy this argument at all. Let's consider the world of fixed odds betting for the moment. All bookies set limits on how much money you can bet on a horse or a sporting team. There is no bookie out there who will let you bet an unlimited amount. You can bet up to the limit and then the bookie has a chance to change the odds down before you can bet again. These limits are quite small in most cases. So the bookie has a limit to lose $1500, you bet $750 at 2-1 (liability of $1500 for the bookie meaning the limit has been hit), the bookie takes your bet and then changes the odds down to 7-4. If you want more on you can now take 7-4 up to 1500 limit and so on and reduce your own odds with your own bets. Bookies have no problems taking the small players bets at the full 2-1 price as these bets are well within their limit

You can see it even more clearly on Betfair. Someone might have $2000 up there at 3.00 fixed. If another player takes the whole $2000 then routinely the other layers will move back their offers to say 2.90 and see if they can get matched at 2.90. If there is more money wanting to back than lay the price will likely move downwards, supply and demand and all that. Big players on Betfair might start backing a horse at 3.20, then get some on at 3.10, some on 3.00, more at 2.90 and some at 2.80 if the money is coming for it for an average price of around 3.00

On the other hand, small players on Betfair will have no trouble getting set. If they want to back this same horse as the big player they should be able to fill their order at 3.20 if the price is dropping. And so they will get a better price than the big player but I don't hear any big players complaining about this aspect on Betfair as this is how it should be. Supply and demand and if you want to bet big you have to cop the fact you will have to burn your way through a number of layers to accommodate your big bet. The small player is not asking for much so can fill their orders more easily. A small backer only needs to find one small layer to match their bet. But a big backer needs to a find either another big layer or 4 or 5 medium sized layers or 50 to 100 small layers to accommodate their big bet (or a combination of small and medium layers)

Rebates pervert these natural laws of supply and demand. They allow the big player to dump a big bet on and not drop their own odds. But instead the other non rebated players backing the same horse pay the price instead and are the ones who cop the reduced odds. This is totally upside down, wrong and unfair and I cannot believe that racetrack management ever agreed to this scheme

Your math is wrong because a bettor in a mutuel pool doesn't have a "declared dividend". In the real world, a large bet lowers the payoff.

Also in the real world, bookies make accommodations for their clients. A bookie may have a $1,500 limit for you but not for me.

Rebates show clearly how the laws of supply and demand work. ADWs offer rebates which lowers the cost to the bettors resulting in more betting and more profits for the ADW. Rebates are really the only tool available to deal with the market given that pricing changes done at the take-out level are nearly impossible to do without an extensive process involving anyone who knows how to spell horse.

[Vigorish]

As a disclaimer, I currently receive near industry-high rebates and really have no vested interest in promoting or condemning their existence. Of course, our motivations work on both conscious and subconscious levels, so I am not necessarily objective. When I read these posts, it is as though both groups of posters are talking past each other.

When thinking about the game, we need to move beyond one's individual vested interest and look at the game from a larger perspective. In the parimutuel system, one decision has implications (from extremely trivial to very significant) with wide-ranging consequences. Too often, the pro-rebate crowd acts as though rebates are extra-parimutuel and have limited or no impact on Joe Six-Pack, who is betting from Penn National or Trackside Rockford OTB. The anti-rebate contingent overestimates the negative impact of rebates, possibly oblivious to the fact that value will be sucked out of the pools by opportunists irrespective of whether Bob Bigshot at RGS is receiving an average of 12 cents back per dollar wagered.

There are so many variables at play that we cannot literally know whether rebates do more good than harm in the aggregate. However, they do have the capacity to undermine the game in ways that are not always obvious. Conversely, they also benefit players, including non-rebated players, in ways that are not necessarily obvious. To promote some discussion of the pro's and con's, and move away from black and white dichotomous views, I thought I would make a list that people could either add to, remove, refute, or defend.

Pro:
1) Rebates stop price conscious players, especially high volume players, from leaving the pools
2) Rebates stimulate churn by allowing players to make otherwise marginal or inadvisable plays.
3) Rebates are a reminder to the industry that it's pricing model does not work (i.e. your best players won't play at your current price)
4) Rebates make the game more analogous to poker, where the very brightest have a chance to beat the game
5) Rebates incentive players to increase their current handle, as higher handle typically translates into even better rebates
6) Rebates are available to everybody, that is, nobody is discriminated against because of sex, gender, political views, sexual orientation, race, ethnicity, religion, etc. If you have the money and the desire to move to a rebate-friendly state, you too can receive the best rebates.
7) Rebates attract money that would otherwise have nothing to do with the sport of horse racing.
8) Rebates are widely used in the gaming industry to reward loyal players and encourage repeat business. They have been around for many years, which suggests that they are effective in building brand loyalty, ensuring regular patronage, and bolstering a person's experience with the gaming product
9) The industry that it is hellbent against meaningful takeout reform. Yes, some tracks implement gimmicky promotional bets like a token 15% high-five, but the core wagers have pretty much been untouched.

Negatives:

1) Rebates are often covert and the best ones are often obtained by word-of-mouth advertising. This lack of transparency creates the perception of an unfair game that gives hidden advantages to the chosen few
2) Rebates are used disproportionately by better horseplayers. This enables them to further exploit their advantages over their lesser skilled cohorts.
3) Rebates, used in the context of a parimutuel system, create a scenario whereby one player is getting 11/10 on a horse while another is getting even odds. This is not obvious by looking at the tote board. However, the rebate changes the effective takeout rate for different players, ensuring they have unequal payoffs after the rebate. How would you feel walking into a sport's book and finding out that the money line is -120 for a $10 wager or -110 for a $1,000 wager.
4) Finding out that other players have rebates is often demoralizing to players who do not have them. They feel like the game is further fleecing them.
5) Rebates create a disincentive for takeout reform that benefits everyone. If a track tries to make significant reductions in its takeout rate, they have to worry about losing heavily rebated customers. Furthermore, I have spoken with rebate shop owners who growl at takeout decreases as they cut into their profits. If takeouts are reduced too far, the tracks might lose some of their simulcast partners.



Personally, I think the best policy is one where everybody pays the exact same takeout rate. This a parimutuel game that is more analogous to sports-betting than to casino games (which typically rebate a portion of one's theoretical loss). With respect to rebates, I do not like the idea of higher rebate percentages for players who create more volume. It is a major mistake to think that all volume has the same value. Bad and modest players leave their money in the ecosystem, while efficient rebate pro's take it out of circulation. It's not that I oppose professional gambling and getting rich at the game, it's opposing outrageous hidden advantages. When online poker experienced its heyday, rebates were extremely modest and relatively flat. There was a constant influx of new fish and the sites started to reward high volume play. If one looked at the rewards policy of Pokerstars (the largest online poker site), one could see that large disparities in rebates between the highest and smallest volume players. The high volume players started playing not to maximize ROI, but to maximize their rebates. They would simultaneously play 17 or 18 tables with the assistance of computerized technology known as Heads Up Displays. Furthermore, the best poker strategists were not necessarily the most profitable players. It was the dataminers and "Hud-Bots" who changed the poker landscape. Instead of 40% of players seeing a flop, you would start seeing games where 14 or 15% might make it past the blinds. The newcomers who entered the game were quickly annihilated, if not simply bored to death, with the composure of the new game. To make matters worse, the sites have raised the rake to help make up for lost revenue and to pay for rebate programs. I fear this scenario is analogous to what we're seeing with horseracing.

An ideal game is one that is fair, transparent, and attractive to newcomers. Disparities in skill should ultimately determine the winners and losers, not the ability to exploit some mysterious, top-secret rebate package. Furthermore, an increasingly popular game will produce infinitely more value than elite rebates for a select few. Instead of advocating for the small contingent of elite rebate players, horseplayers should never forget the casual, inexperienced, or unskilled enthusiast. Our interests are inextricably aligned.


Final note: I reluctantly support rebates over no rebates as the industry has proven itself thoroughly unreliable and unwilling to make meaningful, lasting changes to takeout rates. Without rebates, I would not play. However, if effective takeout was reduced by 5% across the boards (or somewhere in that neighborhood), I would gladly forfeit my rebate. Many players would not make that trade-off. Sometimes I think we focus so much on our own personal position, that in our selfishness we actually act against our best interests. For example, if we would have sustained our boycott against CA racing a little bit longer, and with a bit more gusto, we might have not only rescinded the takeout hikes but created momentum that would influence other tracks in a more dramatic fashion, above and beyond 15% pick 5's.

*In my world view, an ideal takeout scenario would be 10% on WPS, 14% on two horse wagers, 17% on all exotics (except national lottery type wagers with a 25% takeout). Every player who bets over $1000/mo would get a 1% bonus that is not capped. Furthermore, on track bettors would receive an additional 1% rebate irrespective of their handle.

[Seabiscuit@AR]

AndyC

Seriously. Every tote pool in the world has declared dividends every race they run. For the USA you find them in the Equibase charts. Maybe you don't use the phrase "declared dividend" but that is just playing with words. They will tell you what a bet paid for a base unit of $2 or $1 etc or what the odds to 1 were

Bookies do have different limits for different players. In the UK & Ireland the big bookies have a limit of 0 or close to it for any player with an ROI of -7 or better. A bookie will mostly have higher limits for the players they expect to have big negative ROIs. So your differing limits theory will see better players facing smaller limits in general

The fact is that if betting fixed odds with bookies or on an exchange like Betfair it is hard work for a big player to get their bet on without having to average down their bet. You place your first bet at 3.00 but the rest of the market sees this bet and so adjusts back to 2.90 or even 2.80. Other backers now see the price move and read this as a positive move and start backing the horse at the lower price so the big player now has to take a lower price. "Averaging down" the odds of your bet is a fact of life for big players and a basic cost of doing business

If 2 players have the same info, same strategy and both enter the fixed odds market at the same time but one is a big player and one is a small player then the small player will obtain better average odds in the long run. The tote works in a similar way, weight of money determines the odds. And this is all perfectly natural. What is not natural is rebating where the big player transfers the cost of doing business on to the small players backing the same horse

[Seabiscuit@AR]

Vigorish

good post

I did not know the story about the poker sites and rebates but it sounds exactly the same as rebates and the horses

I like your ideal world scenario. While I think it is best to have no rebates, capping them at 1% is OK as then the rebaters cannot really impact the other players with their bets

One of the big problems with rebates is this. Horse racing is supposed to be a game or contest of skill. But with rebates 2 players can exhibit equal skill (i.e. make the same selections) but the rebater walks away with a +3% ROI bet while the non rebater walks away with a -6% ROI bet when backing the same horse or same exotic combinations. In the long run the rebater makes a fortune while the non rebater goes broke. So the game is no longer a game or contest of skill, it is a game of who has the biggest rebate. And the early rebates were all secret giving a massive headstart to those doing these secret deals

To add to this if you don't back the same combos as the big syndicates then you go broke even faster as these bets will be worse than -10% ROI to start with. So there is no escape for the non rebater and no way to fight back. Back the same horses/exotic combos as the big syndicate and you go broke. Back different horses/exotic combos and you go broke even faster

The other aspect to this is that rebates are skewed towards more experienced older players who are comfortable with betting big after years in the game. New younger players to the game will bet small mostly. But if they come into a game where 99.9% of available bets are negative ROI bets then they will leave the game early and never come back. And this is the smart play as rebates have completely corrupted the game. So racing will struggle to find new players to replace the old players leaving

[Sapio]

Of course. That is what modeling software does. And does very, very well.

Hi all. New guy to the board.

Best advice I ever received (in horseracing) came from a betting syndicate member in 1971 (He guided me for years, but never spoon-fed me):

"To properly handicap a race you require two models; the race model and the horse(s) model. The race model is always done first and the horse(s) model is done second."

The race model is more descriptive and the horse(s) model is more predictive (relative to the descriptive race model)

Happy New Year to all,
Thomas Sapio.

[AndyC]

One of the big problems with rebates is this. Horse racing is supposed to be a game or contest of skill. But with rebates 2 players can exhibit equal skill (i.e. make the same selections) but the rebater walks away with a +3% ROI bet while the non rebater walks away with a -6% ROI bet when backing the same horse or same exotic combinations. In the long run the rebater makes a fortune while the non rebater goes broke. So the game is no longer a game or contest of skill, it is a game of who has the biggest rebate. And the early rebates were all secret giving a massive headstart to those doing these secret deals.


In the long run, the player losing 6% will still lose 6%.


To add to this if you don't back the same combos as the big syndicates then you go broke even faster as these bets will be worse than -10% ROI to start with. So there is no escape for the non rebater and no way to fight back. Back the same horses/exotic combos as the big syndicate and you go broke. Back different horses/exotic combos and you go broke even faster

The other aspect to this is that rebates are skewed towards more experienced older players who are comfortable with betting big after years in the game. New younger players to the game will bet small mostly. But if they come into a game where 99.9% of available bets are negative ROI bets then they will leave the game early and never come back. And this is the smart play as rebates have completely corrupted the game. So racing will struggle to find new players to replace the old players leaving

Huh? If you don't back the same combos as the big syndicates you go broke faster. What kind of perverted logic is that? Don't your odds get better when there is more money bet on horses that you aren't betting?

[lamboguy]

Hi all. New guy to the board.

Best advice I ever received (in horseracing) came from a betting syndicate member in 1971 (He guided me for years, but never spoon-fed me):

"To properly handicap a race you require two models; the race model and the horse(s) model. The race model is always done first and the horse(s) model is done second."

The race model is more descriptive and the horse(s) model is more predictive (relative to the descriptive race model)

Happy New Year to all,
Thomas Sapio.

that sounds like great advice, i will try it and let you know how i do

[Hoofless_Wonder]

In the long run, the player losing 6% will still lose 6%.

If this player is betting BIGREBATE Downs which removes 20% from the pools, he's showing he's really gained 14% on the little old lady betting her grandkid's birthdays. In other words, he's a winning handicapper in a world of true odds.

If he then decides to boycott the track above and only play at NOREBATE Race Course which has a takeout of 14%, he breaks even for the year. He's chirping like a bird, and plays the races every weekend.

Then the state where he lives introduces a signal fee hike, with ADW "surcharges" galore, which end up in the pockets of the whales, the harness horsemen, and the politicians. His effective takeout is now back to 20%.

He takes up bird watching as his new hobby of choice..... :p

[Stillriledup]

Didnt want to start a new topic, but do any of you guys think that because the "price" to wager on racehorses is SO high, that it actually keeps out a segment of intelligent human beings who would otherwise be betting into the pools?

Maybe the high takeouts work to our benefit as our competition is not as smart is it might otherwise be?

[Seabiscuit@AR]

AndyC

it is not perverted logic. It is perfectly sound logic

In a pool with no rebates the long term ROIs of the runners might play out like this when the pools close

Ghostzapper +5% ROI
Zenyatta -15% ROI
Big Brown -20% ROI
Blame -25% ROI
Curlin -25% ROI
Saint Liam -30% ROI
Tiznow -35% ROI
Volponi -40% ROI
Rachel Alexandra -50% ROI

Now if you are holding a Ghostzapper ticket well done you are holding a long term winning ticket. Of course this means all those really smart players we hear about will all be holding Ghostzapper tickets. All those world beating syndicates with their armies of form analysts and computer programmers will be backing Ghostzapper (well they would if they existed but they probably don't exist in a world without rebates but you get the point - Ghostzapper would be the horse they would be backing if they were around as it is the "correct" answer to this race)

Now if you back any other horse you will go broke long term although backing Rachel Alexandra will send you broke faster than backing Zenyatta

Now let's change this race to the world of big rebates. Now the ROIs for the race when the pools close will look like this

Ghostzapper -6% ROI
Zenyatta -13% ROI
Big Brown -18% ROI
Blame -23% ROI
Curlin -23% ROI
Saint Liam -28% ROI
Tiznow -33% ROI
Volponi -38% ROI
Rachel Alexandra -48% ROI

Now Ghostzapper is the only horse worth playing for the big rebate syndicates as even they are not getting 15% rebate in the win pool to turn any of the other horses profitable after rebate. So the big rebaters with their 10% to 12% rebates smash Ghostzapper and drive its ROI below 0% making it a losing long term bet for all players backing Ghostzapper without a rebate. Now the ROIs of all the other horses in the race do improve thanks to the extra money on Ghostzapper from the rebaters. But none of them improve their ROIs enough to become profitable long term plays

For the non rebate player there are no good options as all ROIs are below 0% and will send you bankrupt long term. But backing Ghostzapper is the least bad option if you are forced to play as you will lose money more slowly at -6%. Backing any of the other options will send you broke faster with ROIs between -13% and -48%. So backing the same horse as the big rebate players is your least bad option. Backing a different horse or exotic combination to the big rebaters will send you broke faster than if you back the same horse or exotic combination as them

The correct play for the non rebate player in a rebated pool is not to bet at all. Which is why rebates won'y be growing turnover for the tracks long term

The rebate players with 10% to 12% rebates will be getting an ROI on Ghostzapper of 4% to 6% but they will be able to pile a lot more money on than they could in the non rebated pool. So they will win lots more money than in the non rebated pool. But this comes directly at the expense of the non rebated players who backed Ghostzapper. It is a direct wealth transfer between the 2 parties and very unfair

[Seabiscuit@AR]

Stillriledup

the pools are less accurate with bigger takeouts. You just have to look at Betfair where the odds are not 20% better on all runners. On Betfair some runners will be 0% better (i.e. same price as the -20% tote) while other runners will be 100% better odds or more

This is another reason why rebating is a great scam for the rebate players

[AndyC]

AndyC

it is not perverted logic. It is perfectly sound logic

In a pool with no rebates the long term ROIs of the runners might play out like this when the pools close

Ghostzapper +5% ROI
Zenyatta -15% ROI
Big Brown -20% ROI
Blame -25% ROI
Curlin -25% ROI
Saint Liam -30% ROI
Tiznow -35% ROI
Volponi -40% ROI
Rachel Alexandra -50% ROI

Now if you are holding a Ghostzapper ticket well done you are holding a long term winning ticket. Of course this means all those really smart players we hear about will all be holding Ghostzapper tickets. All those world beating syndicates with their armies of form analysts and computer programmers will be backing Ghostzapper (well they would if they existed but they probably don't exist in a world without rebates but you get the point - Ghostzapper would be the horse they would be backing if they were around as it is the "correct" answer to this race)

Now if you back any other horse you will go broke long term although backing Rachel Alexandra will send you broke faster than backing Zenyatta

Now let's change this race to the world of big rebates. Now the ROIs for the race when the pools close will look like this

Ghostzapper -6% ROI
Zenyatta -13% ROI
Big Brown -18% ROI
Blame -23% ROI
Curlin -23% ROI
Saint Liam -28% ROI
Tiznow -33% ROI
Volponi -38% ROI
Rachel Alexandra -48% ROI

Now Ghostzapper is the only horse worth playing for the big rebate syndicates as even they are not getting 15% rebate in the win pool to turn any of the other horses profitable after rebate. So the big rebaters with their 10% to 12% rebates smash Ghostzapper and drive its ROI below 0% making it a losing long term bet for all players backing Ghostzapper without a rebate. Now the ROIs of all the other horses in the race do improve thanks to the extra money on Ghostzapper from the rebaters. But none of them improve their ROIs enough to become profitable long term plays

For the non rebate player there are no good options as all ROIs are below 0% and will send you bankrupt long term. But backing Ghostzapper is the least bad option if you are forced to play as you will lose money more slowly at -6%. Backing any of the other options will send you broke faster with ROIs between -13% and -48%. So backing the same horse as the big rebate players is your least bad option. Backing a different horse or exotic combination to the big rebaters will send you broke faster than if you back the same horse or exotic combination as them

The correct play for the non rebate player in a rebated pool is not to bet at all. Which is why rebates won'y be growing turnover for the tracks long term

The rebate players with 10% to 12% rebates will be getting an ROI on Ghostzapper of 4% to 6% but they will be able to pile a lot more money on than they could in the non rebated pool. So they will win lots more money than in the non rebated pool. But this comes directly at the expense of the non rebated players who backed Ghostzapper. It is a direct wealth transfer between the 2 parties and very unfair

So your entire premise rests on your theory that rebate players are so smart that they will always bet on the horse that gives them an overlay when factoring in their rebates. Of course this would require that each of the rebate players would have sophisticated modelling programs that would give them accurate probabilities. And of course, they would be able to predict exactly how much money will come in at the last second by other rebate players and smart players looking to bet the overlay.

In your example of ROIs without rebates you fail to explain why the smart players would leave money on the table by allowing Ghostzapper to go off at a positive ROI of 5%. You also don't explain why a non-rebate player would bet Ghostzapper in your rebate scenario. Presumably they are addicted to action and will bet at any cost.

I will conclude my participation in this thread with the following. There are a lot of sharp players who get rebates but there are also a lot of poor players who get rebates. I believe that betting by rebate players cause many horses to become underlays but also cause many horses to become overlays. If I thought otherwise or saw evidence to the contrary through my results I would cease betting immediately.

[Vigorish]

So your entire premise rests on your theory that rebate players are so smart that they will always bet on the horse that gives them an overlay when factoring in their rebates. Of course this would require that each of the rebate players would have sophisticated modelling programs that would give them accurate probabilities. And of course, they would be able to predict exactly how much money will come in at the last second by other rebate players and smart players looking to bet the overlay.

In your example of ROIs without rebates you fail to explain why the smart players would leave money on the table by allowing Ghostzapper to go off at a positive ROI of 5%. You also don't explain why a non-rebate player would bet Ghostzapper in your rebate scenario. Presumably they are addicted to action and will bet at any cost.

I will conclude my participation in this thread with the following. There are a lot of sharp players who get rebates but there are also a lot of poor players who get rebates. I believe that betting by rebate players cause many horses to become underlays but also cause many horses to become overlays. If I thought otherwise or saw evidence to the contrary through my results I would cease betting immediately.


The distorting impact of rebates is actually very intuitive, and simple to grasp. People who bet with large rebates do not have the same betting patterns as people who bet with no rebates, or relatively insignificant rebates (such as those found at TVG, Twinspires, Expressbet, or through a track's rewards program).

The people who bet with large rebates, in the aggregate, have a higher ROI than the general betting public. The rebate puts more money in the hands of skilled players, which makes the marketplace more efficient.

[Dave Schwartz]

So your entire premise rests on your theory that rebate players are so smart that they will always bet on the horse that gives them an overlay when factoring in their rebates. Of course this would require that each of the rebate players would have sophisticated modelling programs that would give them accurate probabilities. And of course, they would be able to predict exactly how much money will come in at the last second by other rebate players and smart players looking to bet the overlay.

That would be precisely correct.

In your example of ROIs without rebates you fail to explain why the smart players would leave money on the table by allowing Ghostzapper to go off at a positive ROI of 5%

First, how do you know he was a +5% ROI?

Second, nobody said that the lines made by the largest rebate players is ALWAYS correct. I would just said that the lines are VERY, VERY GOOD.

[AndyC]

That would be precisely correct.



First, how do you know he was a +5% ROI?

Second, nobody said that the lines made by the largest rebate players is ALWAYS correct. I would just said that the lines are VERY, VERY GOOD.

He was a plus 5% because that's what the example said. Even if your lines are very, very good you run a risk of overbetting and nullifying your edge.

Am I the only person who knows many large rebate bettors who really don't have the skills to make lines that are even average? Also I am not convinced that a large rebate player can wade too deep into the blind exotic pools without completely obliterating any possible overlay.

[RXB]

The distorting impact of rebates is actually very intuitive, and simple to grasp. People who bet with large rebates do not have the same betting patterns as people who bet with no rebates, or relatively insignificant rebates (such as those found at TVG, Twinspires, Expressbet, or through a track's rewards program).

The people who bet with large rebates, in the aggregate, have a higher ROI than the general betting public. The rebate puts more money in the hands of skilled players, which makes the marketplace more efficient.

Vigorish, great posts in this thread. You get it.

It is a fallacy that break-even is the dividing line between opposing money that a horseplayer should want or not want in his betting pools. Actually, the dividing line is 1-takeout. The vast, vast majority of rebate-incented betting is above that dividing line. Rebates incent the recipients to bet more money into the pools that carries an above-average expectation. So contrary to what a few people are saying here, large rebates do indeed make it harder for other players to win.

Sort of similar to the misconception that a horse with a 50% win probability that goes off at 4/5 is a bad favourite.

[Stillriledup]

Vigorish, great posts in this thread. You get it.

It is a fallacy that break-even is the dividing line between opposing money that a horseplayer should want or not want in his betting pools. Actually, the dividing line is 1-takeout. The vast, vast majority of rebate-incented betting is above that dividing line. Rebates incent the recipients to bet more money into the pools that carries an above-average expectation. So contrary to what a few people are saying here, large rebates do indeed make it harder for other players to win.

Sort of similar to the misconception that a horse with a 50% win probability that goes off at 4/5 is a bad favourite.

It only becomes harder to win if the takeout rises. If the takeout is 15.43 percent, its 15.43 percent with rebate bettors in the pool or out of the pool. The takeout is the same, so the difficulty to win for the non rebated player remains the same. You can also make the case that with rebate players in the pool, it becomes EASIER to win for the average horseplayer simply because the pool sizes are bigger AND there's more money spread around on more combinations and the reason the money can be spread around on "losers" is because the rebate players can be less selective in what they play. They don't have to be as smart with their wagers.

[RXB]

It only becomes harder to win if the takeout rises. If the takeout is 15.43 percent, its 15.43 percent with rebate bettors in the pool or out of the pool. The takeout is the same, so the difficulty to win for the non rebated player remains the same. You can also make the case that with rebate players in the pool, it becomes EASIER to win for the average horseplayer simply because the pool sizes are bigger AND there's more money spread around on more combinations and the reason the money can be spread around on "losers" is because the rebate players can be less selective in what they play. They don't have to be as smart with their wagers.

Again, you're wrong. Either you are incapable of understanding or just too hard-headed to really try to understand, but I've explained it more than once and you still don't get it.

[Stillriledup]

Again, you're wrong. Either you are incapable of understanding or just too hard-headed to really try to understand, but I've explained it more than once and you still don't get it.

Hypothetical example.

2 horse race at SRU Downs. The #1 horse ends up with a final total of 2 dollars to win. The #2 horse also ends up with 2 dollars to win. The final win pool size is 4 dollars. Two different people each make one 2 dollar wager. The #1 horse was played by a person on track who gets no rebate. The #2 horse was wagered on by a rebate bettor from an off track location


Now, if you were the person who wagered on the #1 horse, explain to me why its different for you if the person who bet on the #2 horse is a rebate player or a non rebate player.

If the 2 horse wins, he pays the same no matter who bets him. He pays the same if the 2 dollars is from a rebate bettor and he pays the same if he's from a non rebate bettor.

What am i missing?

[baconswitchfarm]

Hypothetical example.

2 horse race at SRU Downs. The #1 horse ends up with a final total of 2 dollars to win. The #2 horse also ends up with 2 dollars to win. The final win pool size is 4 dollars. Two different people each make one 2 dollar wager. The #1 horse was played by a person on track who gets no rebate. The #2 horse was wagered on by a rebate bettor from an off track location


Now, if you were the person who wagered on the #1 horse, explain to me why its different for you if the person who bet on the #2 horse is a rebate player or a non rebate player.

If the 2 horse wins, he pays the same no matter who bets him. He pays the same if the 2 dollars is from a rebate bettor and he pays the same if he's from a non rebate bettor.

What am i missing?


What you are missing is that someone may be winning and people who can't win must put a stop to it. If every story about rebates focused on syndicates of large losers who dropped millions every year after rebates, people would be joyous these rebates allowed these chumps more turnover of their money to juice up the pools. You can explain it till you are blue in the face. In this game , people hate winners. Track management, horsemen, losing gamblers all have that in common.

[lamboguy]

What you are missing is that someone may be winning and people who can't win must put a stop to it. If every story about rebates focused on syndicates of large losers who dropped millions every year after rebates, people would be joyous these rebates allowed these chumps more turnover of their money to juice up the pools. You can explain it till you are blue in the face. In this game , people hate winners. Track management, horsemen, losing gamblers all have that in common.i am a rebate player and totally understand where you are coming from. if they took my rebate away, it wouldn't bother me in the least bit because i am a consistent loser, i would just stop betting and take up basket weaving. by giving me the rebate it gives good handicappers like yourself a shot to get my money.

you might be mixing up rebate players with batch and rebate players. for me, i am not large enough to have the services of batch betting. the batch bettors have a giant edge and then they get the larger rebates and piss people off like yourself. instead of crying about rebates, people should learn how to take advantage of batch bettors in those pools.

[Seabiscuit@AR]

AndyC

the results of rebate players are well documented

http://www.bloodhorse.com/horse-racing/articles/66960/case-made-for-high-volume-betting-services

http://www.bloodhorse.com/horse-racing/articles/43354/jury-out-on-rebates-computer-bets

The first link is from a 2012 article. The second link is from a 2008 article

From the 2012 article (first link) we read "The high-volume service operators didn’t reveal rebate numbers, but they sought to dispel a common belief in the industry that their players win “straight up,” or without the discount. Terry of RGS, which has about 90 customers, said that in 2011 they lost about 6% when rebates aren’t factored into the equation."

So rebate players are averaging an ROI of -6% which is an incredible result over a large volume of wagers for ALL players with RGS as they beating the tote takeout by 10% or more. What it means is that if you were a non rebate player who backed the exact same horses as the RGS players you would have lost -6% and so been on the path to going broke. If you were an RGS rebate player though you probably got back 10% and so had an ROI of +4% or so on a huge turnover winning a fortune. The 2008 article reveals RGS rebates were 10% to 13% although this might have been reduced a touch by 2012 thanks to increased signal fees

The rebate players are taking the money from the non rebate players who back the same horses. The scam is very clever. The rebate player bets the horse's odds down to a -6% loss (as above) but gets a return of about +4% themselves because they do not pay the full cost of their bet but instead the cost of the bet is passed on to the non rebate player who backs the same horses as the rebate player. So the two players exhibit equal skill at selection but one wins a fortune while the other goes broke

The other point is that rebates will always be skewed towards winning players as only winning players or very rich losers can bet big enough to receive rebates. But once you obtain a big rebate it is easier to be a winning player as the non rebate players cannot win (see the Ghostzapper example)

[Seabiscuit@AR]

Stillriledup

what you are missing with your example is the cost of the rebate is paid for by the non rebate players backing the same horse as the rebate player. The players backing a different horse to the rebate player will be better off

The trick is we know from the fact that rebate players have an average ROI of -6% before rebate that the rebate players are on average way smarter than the average player. So the non rebate player wants to be betting the same horses (or exotic combinations) as the rebate player. But it is the non rebate player who does back the same horse as the rebate player who is worse off and pays for all the rebates

So if you are a non rebate player -

If you bet a different horse to the rebate player you are "better off" than you would be in a non rebated pool. But the average ROI of your selections is likely -18% if the track takeout is -16%. Not much point being "better off" backing the wrong horses with ROIs worse than the track takeout

If you bet the same horse as the rebate player you are worse off. The average ROI of your selections is -6%. But in a pool without rebates you might have had an ROI of +4%

[Seabiscuit@AR]

Stillriledup

Just using the numbers from my Ghostzapper race example earlier in this thread. The ROIs on the horses for the non rebate player shifted as follows (non rebated pool ROI first then rebated pool ROI)

Ghostzapper changed from +5% ROI to -6% ROI for the non rebate player
Zenyatta changed from -15% ROI to -13% ROI for the non rebate player
Big Brown changed from -20% ROI to -18% ROI for the non rebate player
Blame changed from -25% ROI to -23% ROI for the non rebate player
Curlin changed from -25% ROI to -23% ROI for the non rebate player
Saint Liam changed from -30% ROI to -28% ROI for the non rebate player
Tiznow changed from -35% ROI to -33% ROI for the non rebate player
Volponi changed from -40% ROI to -38% ROI for the non rebate player
Rachel Alexandra changed from -50% ROI to -48% ROI for the non rebate player

So the non rebate player was "better off" in the rebated pool if they backed any horse except Ghostzapper. But they were only better off because all these horses were bad bets that could not be made into positive ROIs even with a rebate. If you back any of these horses you go broke long term with ROIs of -13% to -48%

The only horse worth backing in the non rebated pool was Ghostzapper with an ROI of +5%. It is the only horse where the non rebate player is worse off in the rebated pool. But this time being worse off is a big deal as you have gone from backing a profitable bet at +5% ROI to backing a long term losing bet at -6% ROI

The rebates are paid for by ripping off the players who back the same horses as the rebaters

[RXB]

What you are missing is that someone may be winning and people who can't win must put a stop to it. If every story about rebates focused on syndicates of large losers who dropped millions every year after rebates, people would be joyous these rebates allowed these chumps more turnover of their money to juice up the pools. You can explain it till you are blue in the face. In this game , people hate winners. Track management, horsemen, losing gamblers all have that in common.

Baloney. What it's about is simply explaining how it actually works. Too many people don't understand the math and where the real dividing line is. If SRU thinks that incenting additional dollars into the pool with a long run ROI expectation of .90-.95 pre-rebate ROI is going to help him win, he doesn't understand how it really works. I've explained it to him before, and yet he continues to hold to his incorrect argument.

If someone can make a lot of money by taking advantage of large rebates, good for that guy. And I'm fine with ADW's offering rebates. I don't blame anyone for making the most of a legal opportunity. The racetracks and regulators have created the situation with high takeouts and the market has responded.

[AndyC]

The rebate players are taking the money from the non rebate players who back the same horses. The scam is very clever. The rebate player bets the horse's odds down to a -6% loss (as above) but gets a return of about +4% themselves because they do not pay the full cost of their bet but instead the cost of the bet is passed on to the non rebate player who backs the same horses as the rebate player. So the two players exhibit equal skill at selection but one wins a fortune while the other goes broke

Why would a rebate player know when he has bet a horse down to a -6% return and why wouldn't a non-rebate player know that he is betting a horse that yields a 6% loss? Handicapping is not about selecting horses it is about assessing probabilities. If a bettor doesn't have the skill to know when or if he is betting an overlay they will never win because of "skill".


The other point is that rebates will always be skewed towards winning players as only winning players or very rich losers can bet big enough to receive rebates. But once you obtain a big rebate it is easier to be a winning player as the non rebate players cannot win (see the Ghostzapper example)

Betting big makes it more difficult to win than betting small simply because of the effect of a big bet on a payoff. This is especially true in exotics (except for the P-6) whereby a large bet can significantly reduce a payoff because there are far fewer winning tickets percentagewise. A rebate will often not even make up for the reduction in payoff from a large bet.

[Vigorish]

Greetings,

I appreciate all of the positive feedback I have received, as well as the criticism. It is really not hard to grasp how rebates distort the parimutuel marketplace, ensuring that access to rebates plays an integral role in each players respective ROI. As other posters have noted, it is not a matter of looking at the playing field in terms of positive and negative ROI; this is a false dichotomy. What matters is the opportunity cost of making wagers.

Having been on this board for several months, and having conversations with several posters (many who are extremely brilliant and pleasant), I am struck by how many players readily admit to losing at this game. However, rebates are keeping many players afloat and giving them a glimmer of hope that they might one day beat the game (or get back to winning as they did five or six years ago). If forced to return to the track with their non-rebated cohorts, many claim they would stop playing or play very little.

I will use my own wagering as a case study to illustrate how rebating is keeping me in the game. In late October, I joined one of the best rebate shops online. If I had not done extensive research and had the right contacts, I never would have found such a deal. Most likely, I would still be getting roughly 1% or less back from a major ADW. When I joined my current ADW, I deposited $1000. Currently, I have $550 in my account. I have made just over $10,000 dollars in wagers. My ROI in this time period was -11.97%. At Twin Spires, TVG, or Expressbets, I would have have already tapped out or been forced to redeposit. My average rebate of 7.45% (it would be higher if I did not make such a high proportion of win bets) has converted my -12% ROI to a -4.5% ROI. This is effectively equivalent to me getting better odds on my winners.

All of the mental gymnastics in the world will not change the fact that rebates are giving me a much better deal than Oliver Oldtimer who bears the full brunt of the game's suffocating takeout. Irrespective of your relative skill, rebates modify your ROI. Assume Oliver Oldtimer is a colossal fish who has a ROI of -25%, if he is refunded roughly 7 or 8 cents on the dollar, his opportunity cost for playing is substantially reduced. Assuming his handle stays constant, he can avoid every 3rd trip to the ATM.

This is the inequity that many of us see as unfair and damaging to the health of the game. It is not that I hate rebates and want to see people lose money. To be honest, once my rebate is annihilated by the game's administrators, I will quickly leave the game and return to poker. Rebates are keeping me in this game. If all players were afforded the same opportunity that I currently enjoy, the game might stop bleeding customers and attract some new ones. What created the poker explosion was the very real possibility of becoming a long-term winning player. Players could identify the winners with relative ease. Vicarious learning quickly took place and the game was inundated with new players who wanted to be the next Chris Moneymaker.

In horse racing, the few winners are mostly hidden from public view. They are largely anonymous and unwilling to blog about their experiences with the game. If anything, the elite winning players and the industry that enables them engage in a conspiracy of silence. In the short run, they might extract more revenue with sweetheart deals for the chosen few, but in the long-run they make the game increasingly less attractive to the general public. Real takeout reform respects the fact that this is a parimutuel game where skill distinguishes winners from losers. With a healthy game, a talented handicapper should expect the same general results irrespective of whether that money is wagered at the track, Twinspires, or an obscure ADW located in St. Kitts. With modest reductions in takeout for everybody, the game could credibly compete for new customers, while reclaiming some that have already left. This would make the game infinitely more attractive for the vast majority of its participants.

[Hoofless_Wonder]

Hypothetical example.

2 horse race at SRU Downs. The #1 horse ends up with a final total of 2 dollars to win. The #2 horse also ends up with 2 dollars to win. The final win pool size is 4 dollars. Two different people each make one 2 dollar wager. The #1 horse was played by a person on track who gets no rebate. The #2 horse was wagered on by a rebate bettor from an off track location


Now, if you were the person who wagered on the #1 horse, explain to me why its different for you if the person who bet on the #2 horse is a rebate player or a non rebate player.

If the 2 horse wins, he pays the same no matter who bets him. He pays the same if the 2 dollars is from a rebate bettor and he pays the same if he's from a non rebate bettor.

What am i missing?

SRU, still love ya man, but some day you need to take an accounting class.

The difference is rather simple in your $4 win pool example, since SRU Downs has an average takeout of 20%, of which the ADW gets a good chunk for the "service" of raising handle.

If the # 1 horse wins, the bettor on track receives $3.60.

If the # 2 horse wins, the bettor receives $3.60 + $0.20 for a total return of $3.80.

To the track, it makes no difference - for the moment. To the bettor on track, he/she should be asking why doesn't SRU Downs pay more? If I play SRU Downs, I have to be twice as good of handicapper to break even versus the whale betting off-track.

Guess what happens over time? SRU Downs finds only rebate players in the pools, leaving them with the challenge of making a profit on the thinnest of margins. If they want to pay the ADW less (i.e., raise signal fee), the rebate offered will be reduced. This will drive the whales away, and now handle drops.

What if SRU Downs came up with the bright idea to give the ADW less for rebates, and pay out the difference to all bettors? Then with your hypothetical match race, now the payouts can be $3.70 or either horse.

Now word gets out to the little players - "hey man, those ponies at SRU Downs sure do pay juicy prices!"

The next thing you know there's $8 in the win pool, and things are looking up....that is what you are missing....

[Seabiscuit@AR]

AndyC

When would a rebate player know he has bet a horse down to a -6% loss? Well on one individual race the rebater would not know. But over a large sample of races you would know. As the RGS guy says his customers lose -6% before rebate. So if they maintain bets at current levels then the ROI will stay at -6% before rebate until something changes. But I have seen reports from the big rebate shops for over 10 years now and they consistently report their customers lose about -5% to -7% before rebate. So the rebaters have this game well under control

Likewise the non rebate players will be aware over time that they are losing -6% on every dollar bet if they play the same bets as the rebaters. They will know this simply by tracking their bets. As I have said countless times the best option for non rebate players is not to bet at all as this situation will not change. The rebaters can bet the horses down to -6% but still collect +4% so they won't change their ways while the non rebate player can only accept the -6% ROI. They cannot fight back they can only quit the game. Some will say they can raise their bets and get a rebate but if they do that the big syndicates with their massive winnings built up over years will just raise their bets more as they do with the Kentucky Derby every year

You may have forgotten but I did explain earlier in this thread this exact point you are making to me now - i.e. that betting big reduces your own odds. I have no arguments with that. This is how it should be as it is the laws of supply and demand. Big players should always accept they will get lower odds than small players. It is a basic cost of doing business for a big player. Rebates reverse this natural law of supply and demand and this is one of their worst aspects

[Dave Schwartz]

Am I the only person who knows many large rebate bettors who really don't have the skills to make lines that are even average? Also I am not convinced that a large rebate player can wade too deep into the blind exotic pools without completely obliterating any possible overlay.

That would depend upon your definition of "large."

Of course, the do exist. I know of a player who loses around $3m per year. As a posted above suggested, "I would say that he is good for the game."

However, there are far less losing players among big players and none among (what I call) whales. You just do not wager $100m per year and lose. You don't make it to the end of the year and certainly do not return for a second year.

[AndyC]

AndyC

When would a rebate player know he has bet a horse down to a -6% loss? Well on one individual race the rebater would not know. But over a large sample of races you would know. As the RGS guy says his customers lose -6% before rebate. So if they maintain bets at current levels then the ROI will stay at -6% before rebate until something changes. But I have seen reports from the big rebate shops for over 10 years now and they consistently report their customers lose about -5% to -7% before rebate. So the rebaters have this game well under control

Likewise the non rebate players will be aware over time that they are losing -6% on every dollar bet if they play the same bets as the rebaters. They will know this simply by tracking their bets. As I have said countless times the best option for non rebate players is not to bet at all as this situation will not change. The rebaters can bet the horses down to -6% but still collect +4% so they won't change their ways while the non rebate player can only accept the -6% ROI. They cannot fight back they can only quit the game. Some will say they can raise their bets and get a rebate but if they do that the big syndicates with their massive winnings built up over years will just raise their bets more as they do with the Kentucky Derby every year

You may have forgotten but I did explain earlier in this thread this exact point you are making to me now - i.e. that betting big reduces your own odds. I have no arguments with that. This is how it should be as it is the laws of supply and demand. Big players should always accept they will get lower odds than small players. It is a basic cost of doing business for a big player. Rebates reverse this natural law of supply and demand and this is one of their worst aspects


So basically a non-rebate player has no clue as to whether or not they are betting overlays or underlays. Presumably a rational bettor would try only to bet overlays if the expectation is to win. A bettor who just craves action doesn't concern himself/herself with trying to only bet overlays. They just want to feel the rush when their horse wins. A non-rebate player can win by betting overlays. I know several that do. His enemy is the high take-out rate and not the rebate.

Can you think of other bets a person might make on the outcome of an event where the odds change after you have made your bet? If I go to Las Vegas and put $11,000 down to win $10,000 on the Chargers next weekend getting 9 points, will I find out later that I will only get 8 points or that my winnings will only be $9,000? Most businesses give their large customers discounts.

[AndyC]

The trick is we know from the fact that rebate players have an average ROI of -6% before rebate that the rebate players are on average way smarter than the average player. So the non rebate player wants to be betting the same horses (or exotic combinations) as the rebate player. But it is the non rebate player who does back the same horse as the rebate player who is worse off and pays for all the rebates.

If there were 2 winning players who had 2 different styles of handicapping they could conceivably bet on all different horses yet both come out ahead. There really is no good reason for a non-rebate player to want to bet like a 6% loser. If the average player isn't as smart as the rebate player eliminating rebates won't add 20 points to their IQs.

[GMB@BP]

That would depend upon your definition of "large."

Of course, the do exist. I know of a player who loses around $3m per year. As a posted above suggested, "I would say that he is good for the game."

However, there are far less losing players among big players and none among (what I call) whales. You just do not wager $100m per year and lose. You don't make it to the end of the year and certainly do not return for a second year.


How much do you have to wager in a year, with a rebate I assume, to lose 3 million? Seems like it has to be in the 10's of millions.

[Sapio]

If there were 2 winning players who had 2 different styles of handicapping they could conceivably bet on all different horses yet both come out ahead. There really is no good reason for a non-rebate player to want to bet like a 6% loser. If the average player isn't as smart as the rebate player eliminating rebates won't add 20 points to their IQs.

In general whales and syndicates have very similar models. As such their uncertainity in their models are similar, but don't necessarily represent reality. If a player can get a better understanding of uncertainity, he has a a much better chance at being profitable, while at times betting with the large rebate bettors and other times betting against.

Thomas Sapio

[Dave Schwartz]

How much do you have to wager in a year, with a rebate I assume, to lose 3 million? Seems like it has to be in the 10's of millions.

That would make sense to me.

[mountainman]

Rebates don't come from my pocket. And they don't make those who receive them one whit smarter. So kickbacks fund chalk-eating whales, which then ensures the likeliest winner keeps going favored? Big deal. The minnows would handle that, anyway. This game wasn't designed to be easy.

Much has been made here about all the money big betting-outfits take down. Let's look at the flip-side: What about all the winning tickets funded by large interests out merely to break even and capitalize on rebates? Their losing principal goes SOMEwhere. And it's not back to them.

[Stillriledup]

Rebates don't come from my pocket. And they don't make those who receive them one whit smarter. So kickbacks fund chalk-eating whales, which then ensures the likeliest winner keeps going favored? Big deal. The minnows would handle that, anyway. This game wasn't designed to be easy.

Much has been made here about all the money big betting-outfits take down. Let's look at the flip-side: What about all the winning tickets funded by large interests out merely to break even and capitalize on rebates? Their losing principal goes SOMEwhere. And it's not back to them.

Exactly.

Paging Seabiscuit, paging Seabiscuit. :D

[RXB]

Pool at Fish Downs: $1 million, 20% takeout on all bets, zero breakage = $800,000 returned to bettors.

A whale enters Fish Downs pool one day. Bets $100,000, gets back only $95,000 pre-rebate, i.e. losing 5%. The regulars at Fish Downs do their usual thing that day. Total pool is now $1.1 million. $880,000 (.8 x $1.1mil) returned to bettors in total.

Other bettors are still betting $1 million but now only getting back $785,000 (880k - 95k) instead of $800,000.

The whale is below the break-even point (without rebates) in terms of profit or loss, but he is still subtracting from his competitors' bankrolls, not adding to them. Because his return is above 1-takeout (.95 versus .80).

Also, the whale, being relatively skilled, is going to land more often on relatively good bets. Thus, the greatest detrimental impact of his skilled wagering is upon other relatively skilled players as a group, rather than unskilled players as a group. And if the whale stays in the pool, the relatively skilled group will eventually cut their betting to keep their aggregated losses at previous levels. Which, of course, is to the further benefit of the whale (at least in the short term), for the same reason that the whale's disappearance from the Fish Downs pool would be good for the skilled group.

So, to summarize the key point yet again, it is NOT the break-even point between profit/loss that determines whether marginal dollars wagered into a pool are to the overall benefit or detriment of the competition. It is 1-takeout.

[Maximillion]

SRU's original question in this thread was if there is more expert money in smaller pools/tracks (in this case lets call them higher rebate tracks) than larger pools.

It has been pointed out to me by someone I greatly respect that its very probable that at smaller(higher rebate) tracks like say Mnr and CT, the "whales" betting handle is at a much higher % of the total pool than the larger pool tracks,so the answer to the original question would appear to more experts/smaller pools.

That said,I think each player should look at his own results at different tracks instead of fretting over whether a pool is efficient or not.

Using the 2 examples above:

At almost 400 races at Mnr, I have a positive ROI(without rebate).....I dont really care who is in the pools there,I will continue to play it.

At CT at just over 300 races Im down 20%......no rebate is gonna help me there,so for me its probably time to give it up.

[Stillriledup]

SRU's original question in this thread was if there is more expert money in smaller pools/tracks (in this case lets call them higher rebate tracks) than larger pools.

It has been pointed out to me by someone I greatly respect that its very probable that at smaller(higher rebate) tracks like say Mnr and CT, the "whales" betting handle is at a much higher % of the total pool than the larger pool tracks,so the answer to the original question would appear to more experts/smaller pools.

That said,I think each player should look at his own results at different tracks instead of fretting over whether a pool is efficient or not.

Using the 2 examples above:

At almost 400 races at Mnr, I have a positive ROI(without rebate).....I dont really care who is in the pools there,I will continue to play it.

At CT at just over 300 races Im down 20%......no rebate is gonna help me there,so for me its probably time to give it up.

At some point, the expert gambler will get his bankroll up so high, that it won't be worth it for him to nickel and dime the smaller pools. If an elite player who has a few hundred grand in his betting account (or, at least access to that type of money) is that guy going to spend his time handicapping smaller tracks so he can make 200 dollar win bets and 20 dollar exacta boxes or is he going to concentrate on NY or Calif where he can bet 2 or 3k to win, and 200 dollar exa boxes?

[Seabiscuit@AR]

mountainman

whether or not rebates come from your pocket depends on if you are backing the same horses as the rebate players. If you are backing the same horses as the rebate players then they are taking large amounts from your pocket. The odds on your winning bets are probably dropping by 10% or so given how big the rebates are

If you are backing different horses to the rebate players then the rebates are not coming from your pockets. But then the bets you are making are so bad that the rebate players won't touch them as not even a rebate of 10% to 12% will rescue the bet and make it profitable

Based on the info from the rebate shops, the rebate players are losing -6% before rebate and betting close to 20% of the pool. We also learn that players switching from no rebate to rebates increase their turnover by 6 times over

So horses bet by rebate players are losing -6% with almost 20% of the pool. This means horses not bet by rebate players must be losing about -20% if the takeout is -18% with these bets making up almost 80% of the pool

Now the rebate players are increasing their bets by 6 times vs their bets the non rebate player. Some of this will be due to the fact the rebater can now bet horses at -3% ROI in the non rebate pool. But some of it will be due to dumping big bets on horses that would have been ROI +1 or higher in the non rebate pool

The horses bet by the rebate players must drop in odds significantly due to the big bets from the rebaters (you need to bet big to get those rebates). The horses not bet by the rebaters will increase slightly in odds (you get dissipation as most combinations will not be bet by the rebate players)

So we know that horses bet by the rebaters return ROI -6% before rebate. But if there were no rebaters betting 6 times as much as before these horses would pay much better than -6% and plenty would pay a positive ROI of +1 or better. The rebaters on average will still be making positive ROI plays thanks to their rebates

We also know that horses not bet by the rebaters return ROI -20% before rebate if the takeout is -18%. But if there were no rebaters betting big on the other horses/combos these horses would pay slightly worse and would return about -22% with dissipation spreading the loss across a large number of horses

So if you back the same horses as the rebaters you now cop -6% ROI but in a pool with no rebates you would get much better than -6% and a good chance of finding positive ROI bets in the pool. These non rebate players are worse off and the money for the rebates are coming straight from their pockets

If you back different horses to the rebaters your ROI improves from -22% to -20%. So you are "better off" but not really as you are still on the road to ruin

An important point to remember is that there is a massive difference between betting at ROI +1% vs ROI -1%. You bet big turnover at +1% you can still win a fortune. You bet big turnover at -1% you can go broke. There is not such a difference between +1% and +3% or -1% and -3% as in one case you are a winner in the other case you are a loser. But going from a positive to a negative ROI changes the game drastically from being on the freeway to fortune vs the road to ruin. Rebating crucially shifts bets for the non rebate players from positive ROI to negative ROI and so affects their gambling lives massively. The benefits from the rebaters are only token though as going from backing a -22% ROI horse to a -20% ROI horse does not change the fundamental fact you will go broke long term

[Seabiscuit@AR]

AndyC

I agree there is no reason for the -6% ROI better to keep betting as a loser. But the effect of rebates is to remove almost all positive ROI bets from the pools for the non rebate player as the rebaters are backing all the right horses mostly as is revealed by their -6% ROI on big turnover. So their best option is not to bet at all which will not grow the game

As for paying discounts to big customers. If I have 5000 oranges to sell and a big customer turns up and says they will buy 4000 oranges if I give them a 10% discount I might consider that a good deal if I don't think I can sell all 5000 oranges before they go off. But if 2 customers turn up at the same time each wanting to buy 4000 oranges we now have a shortage of oranges and selling them at a discount is not such a good idea. In fact I might even raise the price of my oranges if the customers are really desperate for the oranges and there are no other oranges available

The problem with offering rebates is they increase the supply of money wanting to back the "right" horses (i.e. positive ROI horses). But they don't increase the supply of money wanting to back the "wrong" horses (i.e. horses with ROIs worse than the takeout). With gambling you need willing counterparties to take the other side of your bet. No point wanting to bet $5000 on a horse to win if you can only find people willing to bet $1000 against the horse. You can now only bet $1000. This can happen on Betfair if you are a big player, you cannot get your order filled

The point is there has never been a shortage of money wanting to back the "right" horses. So there was never any need to offer rebates

[mountainman]

mountainman

whether or not rebates come from your pocket depends on if you are backing the same horses as the rebate players. If you are backing the same horses as the rebate players then they are taking large amounts from your pocket. The odds on your winning bets are probably dropping by 10% or so given how big the rebates are

If you are backing different horses to the rebate players then the rebates are not coming from your pockets. But then the bets you are making are so bad that the rebate players won't touch them as not even a rebate of 10% to 12% will rescue the bet and make it profitable

Based on the info from the rebate shops, the rebate players are losing -6% before rebate and betting close to 20% of the pool. We also learn that players switching from no rebate to rebates increase their turnover by 6 times over

So horses bet by rebate players are losing -6% with almost 20% of the pool. This means horses not bet by rebate players must be losing about -20% if the takeout is -18% with these bets making up almost 80% of the pool

Now the rebate players are increasing their bets by 6 times vs their bets the non rebate player. Some of this will be due to the fact the rebater can now bet horses at -3% ROI in the non rebate pool. But some of it will be due to dumping big bets on horses that would have been ROI +1 or higher in the non rebate pool

The horses bet by the rebate players must drop in odds significantly due to the big bets from the rebaters (you need to bet big to get those rebates). The horses not bet by the rebaters will increase slightly in odds (you get dissipation as most combinations will not be bet by the rebate players)

So we know that horses bet by the rebaters return ROI -6% before rebate. But if there were no rebaters betting 6 times as much as before these horses would pay much better than -6% and plenty would pay a positive ROI of +1 or better. The rebaters on average will still be making positive ROI plays thanks to their rebates

We also know that horses not bet by the rebaters return ROI -20% before rebate if the takeout is -18%. But if there were no rebaters betting big on the other horses/combos these horses would pay slightly worse and would return about -22% with dissipation spreading the loss across a large number of horses

So if you back the same horses as the rebaters you now cop -6% ROI but in a pool with no rebates you would get much better than -6% and a good chance of finding positive ROI bets in the pool. These non rebate players are worse off and the money for the rebates are coming straight from their pockets

If you back different horses to the rebaters your ROI improves from -22% to -20%. So you are "better off" but not really as you are still on the road to ruin

An important point to remember is that there is a massive difference between betting at ROI +1% vs ROI -1%. You bet big turnover at +1% you can still win a fortune. You bet big turnover at -1% you can go broke. There is not such a difference between +1% and +3% or -1% and -3% as in one case you are a winner in the other case you are a loser. But going from a positive to a negative ROI changes the game drastically from being on the freeway to fortune vs the road to ruin. Rebating crucially shifts bets for the non rebate players from positive ROI to negative ROI and so affects their gambling lives massively. The benefits from the rebaters are only token though as going from backing a -22% ROI horse to a -20% ROI horse does not change the fundamental fact you will go broke long term

Creative, but fraught with spin, opinion, semantics, and misconceptions. According to your theory, whales could as well be funded by Santa Claus and the fact that they lose just 6% of their churn would somehow preclude other players from profiting. Or even surviving.

With all respect ,sir, I know numerous players that make money on the game w/o benefit of rebates,, and even several chalk-oriented bettors whose stats would outperform the number you cited for whales.

And as far as my plays being invalidated if not also backed by whales, my selections on the mnr- website over the last 3 1/2 years have netted a profit. And that's forcing the volume (as per management's request) to 4 or 5 races per night. And taking shorter odds on those spot plays than I would have to as a non-public handicapper.

Your math characterizes big chalk syndicates as an avalanche that, somehow, by virtue of curtailing its losses, eventually crushes everything in sight. Here's my math: Since rebates are forked over AFTER the skim has been set, the pools are still a zero-sum game. And the money that empowers (according to your theory) big chalk-bettors to drive odds lower and lower ( which can't continue indefinitely w/o diminishing returns) is no different than an inheritance, lottery score, or gift from the easter beagle (Charlie brown). And when the price drops on a horse they've targeted, it rises on the rest of the field, which creates contrarian opportunity.

Nor have I found bigger bettors at mnr all that formidable, much less infallible. There are blindspots in their conservative, carefully structured methods. Recurrent oversights and insensitivity to certain factors that makes them vulnerable.

A lot of this is merely my opinion, and I do respect your well-stated point of view, biscuit.

[Saratoga_Mike]

With all respect ,sir, I know numerous players that make money on the game w/o benefit of rebates,, and even several chalk-oriented bettors whose stats would outperform the number you cited for whales.

And as far as my plays being invalidated if not also backed by whales, my selections on the mnr- website over the last 3 1/2 years have netted a profit. And that's forcing the volume (as per management's request) to 4 or 5 races per night. And taking shorter odds on those spot plays than I would have to as a non-public handicapper.



First, I agree with you on the rebate issue. Curious, though, why did/does mgt care what or how many selections you post?

[baconswitchfarm]

Creative, but fraught with spin, opinion, semantics, and misconceptions.


You could have stopped with the first sentence. Sums up that whole argument to perfection.

[AndyC]

The point is there has never been a shortage of money wanting to back the "right" horses. So there was never any need to offer rebates

If your statement is true, a track would achieve their highest handle without rebates. Rebates have nothing to do with attracting money to back the "right" horse. They have everything to do with adjusting the costs to the bettors.

[traynor]

At some point, the expert gambler will get his bankroll up so high, that it won't be worth it for him to nickel and dime the smaller pools. If an elite player who has a few hundred grand in his betting account (or, at least access to that type of money) is that guy going to spend his time handicapping smaller tracks so he can make 200 dollar win bets and 20 dollar exacta boxes or is he going to concentrate on NY or Calif where he can bet 2 or 3k to win, and 200 dollar exa boxes?

Yes. Emphatically. For those bettors, "handicapping" is not some agonizing process of endless confusion and anxiety, pretending one is "outthinking" or "outsmarting" other bettors to stroke one's own ego. It is a process of clicking the GO button, and having a set of very sophisticated computer algorithms analyze the races at many tracks--every day--to isolate the most profitable earning opportunities.

[mountainman]

First, I agree with you on the rebate issue. Curious, though, why did/does mgt care what or how many selections you post?

For horizontal gimmicks, by request from viewers. But it's not a tout show, I respect our viewers more than that. It's about the commentary, so, as a compromise, I post as many spot-plays to the web site as is possibly feasible.

Incidentally, I think the "fade" feature on our website has proven more useful to players. Good handicappers rarely want touted, but, to my experience, coming out strongly AGAINST a fave or contender (that goes on to tank) gets their atn and respect.

[Seabiscuit@AR]

mountainman

the fact you show a profit does not prove one way or another re the impact of rebates. My concerns are more made from the point of view of the average player not superstar tipsters like yourself. The fact you hold an enormous ROI edge over the competition does not prove one way or the other the effect of rebates. I have seen great horses win against biases worth 5 lengths. The fact the horse won does not disprove the concept of bias or the fact there was a bias. It simply means the horse was a freak. Likewise the fact you are a tipping genius is not a good guide to the effect of rebates on the average player

[Seabiscuit@AR]

AndyC

In the long term the pools will be at their highest with no rebates. You can see this from the inflation adjusted pools now vs the late 1990s when rebate shops like RGS started up. The pools these days are smaller when you adjust for inflation

With rebates there is an oversupply of money wanting to back the right horses with positive ROIs. But an undersupply of money wanting to back the horses that lose -25% to -30% on turnover. These bad bets are needed so that the winning players can bet big and win (this is true whether the pools are rebated or not but with rebates the imbalance gets greater and greater over time)

[AndyC]

AndyC

In the long term the pools will be at their highest with no rebates. You can see this from the inflation adjusted pools now vs the late 1990s when rebate shops like RGS started up. The pools these days are smaller when you adjust for inflation

With rebates there is an oversupply of money wanting to back the right horses with positive ROIs. But an undersupply of money wanting to back the horses that lose -25% to -30% on turnover. These bad bets are needed so that the winning players can bet big and win (this is true whether the pools are rebated or not but with rebates the imbalance gets greater and greater over time)

You are starting to sound like Yogi Berra. Horses that lose -25% to -30% do so because they are OVERBET. So by definition there is an oversupply of bets for these horses. When there is a lot of money chasing the so-called right horses the overbet horses become less overbet resulting in a better situation for the bettors who make such bets.

[mountainman]

mountainman

the fact you show a profit does not prove one way or another re the impact of rebates. My concerns are more made from the point of view of the average player not superstar tipsters like yourself. The fact you hold an enormous ROI edge over the competition does not prove one way or the other the effect of rebates. I have seen great horses win against biases worth 5 lengths. The fact the horse won does not disprove the concept of bias or the fact there was a bias. It simply means the horse was a freak. Likewise the fact you are a tipping genius is not a good guide to the effect of rebates on the average player

Please, let me clarify. Just a profit from spot-plays, and it's a modest one confined to a track I'm intimately familiar with. NO long-term profit picking every race on the show. Whoever can manage THAT is a genius. I've never met a handicapper who was 17% smarter than the public while picking every race, year after year. But I'm sure there are public analysts with better records than mine.

[lansdale]

I'll post again when I have time, but I think this piece which as only gained in relevance as rebates have become a much bigger part of the game.

Lansdale,



washingtonpost.com

There's No Discounting Inequities of Rebates


By Andrew Beyer

Thursday, January 1, 2004; Page D03


Horse race betting in America is undergoing a revolutionary change, one that affects every player and every racetrack. But the industry still doesn't know quite what to think or do about the impact of rebates on its business.

In recent years, certain betting operations -- mostly located off-shore -- have enticed high-rolling customers by refunding to them a certain percentage of their wagers. If an off-track betting shop offers a rebate of 10 percent, a gambler who wagers $20,000 in a day will get $2,000 credited to his account, regardless of the outcome of his bets. The total wagered on U.S. races through so-called rebate shops may be in the vicinity of $1.5 billion a year -- 10 percent of the parimutuel action at U.S. tracks.

Rebates were spawned by the peculiar economics of parimutuel betting in the simulcast era. Racetracks typically take 20 percent of every dollar wagered by their customers -- revenue that goes into purse money, upkeep of the facilities and profits. When they started to send their television signals to each other and take each other's bets, tracks set a very cheap price on the simulcast product -- normally about 3 percent. Thus, if Laurel Park offers its races to Churchill Downs or New York Off-Track Betting, those outlets keep 17 percent of the money bet on Laurel races and send 3 percent to Maryland. Tracks such as Laurel initially viewed this 3 percent as a bonanza, but they belatedly learned that simulcasting is a double-edged sword.

The age of simulcasting spawned the development of telephone-betting and off-track betting operations that weren't burdened by the expenses of running a racetrack. After paying 3 percent for the signal, the OTB operators were receiving 17 percent of the bets they took in. If they offered a 10 percent rebate to a gambler who would bet millions of dollars a year, they were going to pocket 7 percent of those millions.

In many cases, such deals cannibalized the racetracks' business. If a horseplayer stops putting his money through the windows and instead places his bets by phoning a rebate shop, the track may receive only 3 percent instead of 20 percent of his action. Thus have racetrack executives described the rebaters as "pirates" and worse.

But the economics of rebates is not so simple. If it were, racetracks could simply refuse to do business with the rebate shops. But their existence has changed the dynamics of horse betting in a way that benefits the industry, too.

Many skilled horseplayers are unable to make a profit at the track; they lose not because they can't beat the races but because they can't beat the takeout. If a horseplayer loses 8 percent of all the dollars he pushes through the windows during the course of a year, he has proved that he is much more adept than the average player (who loses 20 percent), but he is nevertheless likely to go broke in the long run. With a rebate, however, he can become a winner.

Maury Wolff and David Cuscuna studied rebates for the National Thoroughbred Racing Association Players' Panel, a board of gamblers examining the important issues in the sport. It was they who produced the $1.5-billion-a-year betting figure. In the course of their research, Wolff related, "One rebate shop provide these numbers: Their customers lose 7 to 8 percent overall, and basically play for a 2 percent profit after the rebate. And so they bet gigantic dollars to chase that 2 percent."

Instead of betting less as his bankroll is eroded by losses, a gambler with a rebate has a huge incentive to bet more money. If his profit margin is 2 percent, he has to wager heavily to make that edge worthwhile. Wolff says he knows players whose annual wagering has increased tenfold -- say, from $3 million a year to $30 million a year. This is not money being pirated from racetracks; it is money that otherwise wouldn't be bet.

Rebates encouraged for the highest of high rollers to get involved in American racing. Syndicates have operated successfully for years in Hong Kong by using sophisticated computer programs to analyze races and calculate optimal betting strategies. Their methods might not have been able to succeed on American races with a 20 percent takeout. But the availability of rebates has given offshoots of the Hong Kong syndicates (supposedly, there are two such groups) the opportunity to use their methods in this country. When horseplayers observe dramatic late changes in horses' odds, it is usually the rebate-driven computer groups that are betting. Wolff believes they account for $500 million a year in handle on U.S. races, and most tracks are understandably disinclined to turn away business of this magnitude.

Nevertheless, the tracks realize this is hardly an ideal system. "In a perfect business environment, the only rebates would be offered by the host track," said Bill Nader, vice president of the New York Racing Association. NYRA would love to be able to target prime customers and develop their loyalty to NYRA instead of, say, an off-track operation in St. Kitts. But racetracks in New York and elsewhere are so heavily regulated that they don't have the flexibility to run their business as they would like. They may raise the rates that they charge the rebate shops (to 5 percent or so), but they have to do business with them. "The rebate sites have some of the best customers in the sport -- a customer base we can't ignore," Nader said.

The system is hardly a fair one for the majority of a track's customers. The gamblers getting rebates have a huge competitive advantage over the long-suffering souls in the grandstand betting at a 20 percent takeout rate. Peter Berube, general manager of Tampa Bay Downs, examined last season's wagers from rebate-shop customers and saw that these sophisticated players -- presumably the computer groups -- were winning at an astonishing rate relative to everybody else. "They're fleecing the rest of our customers," Berube said, "and this season we decided not to allow them access to our pools." Tampa Bay became one of the few tracks to cut off the rebate shops.

Gamblers who look at Tampa Bay's takeout rates -- 22.5 percent on exactas, 25.9 percent on trifectas -- might reasonably say that the track is equally guilty of fleecing its customers. Few horseplayers have a chance to make a profit betting against the sky-high rates that prevail at most American tracks.

Even though rebate-shop customers are being treated much better than the majority of on-track players, Wolff maintained that the current system makes sense. "Racing is like a lot of businesses in which they best customers get the best deals," he said. "Rebates are targeted to the people who need them most. In an ideal world, though, takeouts would be a lot lower and that would be the end of it."

Indeed, the success of the rebate shops underscores the fact that the American racing industry, with its high takeout, is its own worst enemy. By taking 20 percent of every dollar they bankrupt or discourage most of their customers. If, instead, tracks charged 10 percent, those same customers would be betting maniacally because they knew they had a fair chance to win.

[lamboguy]

if you asked me, i would give batch bettors double rebates in maiden races and lets see how they do!

[Seabiscuit@AR]

mountainman

most public handicappers cannot make a dent in the takeout even with specific spot plays. So no need to be modest. Your results at Mountaineer are exceptional so well done. But because they are exceptional they are less of a guide for the other 99% of the betting population

The other point is the one you raise about having intimate knowledge about Mountaineer Park. This is important too. You see the big betting syndicates betting hundreds of millions a year will only seek handicapping perfection at places like Japan and Hong Kong where the massive pool sizes per race justify spending a large amount of time on each race. In other countries with much smaller pool sizes per race they don't aim for handicapping perfection but instead they aim for time efficient handicapping and the rebates help with this as the rebates allow a less accurate handicapping strategy to return a healthy profit. As long as they can make some profit at a small track like Mountaineer which is bigger than their costs it all adds up across America as they repeat the process at every track across America. So they might make -6% loss before rebates, +4% after rebates. Do this on big turnover at every track in America and you make big money. You might beat their results at Mountaineer and Turf Paradise Man might beat them at Turf Paradise. But the time you spend on each race is likely to be longer and your methods are less likely to be transferable to other tracks. So while you can beat them at your home track your total profits are much smaller as you are limited by time and the pools at your home track

Given the small pools at American tracks a player has to spread their action over a number of tracks using more generic handicapping methods if they want to win a decent amount of money. Once they do this their methods start to clash with the more generic methods of the big syndicates. And then the big bets of the big syndicates do start to hurt those players betting on the same selections

[Seabiscuit@AR]

Thanks for that posting lansdale

Good piece by Beyer covering most of the issues

Rebaters fleecing the other customers is a great quote from the Tampa Bay Downs guy. This is exactly what happens and the fairness issue is the central issue

The lack of total turnover growth in the 10 years since the Beyer article means the unfairness of rebates are not offset by any other benefits. The rebates have to go for the good of the game

The whole track signal fee idea of tracks selling their signals for 3% was and is insanity. Lowering takeout for all was the only path that ever made sense

[Stillriledup]

Thanks for that posting lansdale

Good piece by Beyer covering most of the issues

Rebaters fleecing the other customers is a great quote from the Tampa Bay Downs guy. This is exactly what happens and the fairness issue is the central issue

The lack of total turnover growth in the 10 years since the Beyer article means the unfairness of rebates are not offset by any other benefits. The rebates have to go for the good of the game

The whole track signal fee idea of tracks selling their signals for 3% was and is insanity. Lowering takeout for all was the only path that ever made sense

You sound bitter. And jealous. You're better than that, especially since you've been told that rebates are available to everyone, you're not being held back on race, color, religion or sexual orientation. You not having one is on you.

[Seabiscuit@AR]

Stillriledup

Rebates are unfair like trainers using Cobalt is unfair (an issue posted by you in another thread)

Rebates are not open to everyone. Back in the late 1990s they even had secret websites. By the time they became public knowledge several of the rebaters had won millions and then reinvested some of the profits to build super systems that made them almost unbeatable

Even today if I ring up RGS and ask for 12% rebate on $100 turnover a year ($2 a week) they will not give it to me. They will ask that I turnover a million or so to get the rebate. The more you win the more you bet, the more you lose the less you bet. For winning players it is easy to bet big as they make more money every time they bet. But for the average player losing -15% to -25% it is impossible to become a big player as if you bet $1000 you lose $150 to $250. Bet another $1000 and fall further behind. New players to the game will mostly start off as big negative ROI players and find it hard to ever establish themselves in the game

Rebates favour older players well established in the game and are not available on an equal basis

With tote betting the concept has always been all bets are paid at the same odds no matter at what time they are placed before the race and I see no reason why that basic concept should no longer apply

Rebaters should stop fleecing their fellow horseplayers

[Fox]

You sound bitter. And jealous. You're better than that, especially since you've been told that rebates are available to everyone, you're not being held back on race, color, religion or sexual orientation. You not having one is on you.

He probably complains too when he is at the store and the guy in front of him has a coupon for 10% off and he doesn't.

[Seabiscuit@AR]

Fox

the person at the store with the 10% discount coupon is not fleecing me. If the coupon were for a chocolate bar and we were both buying the same chocolate bar according to the rules of rebating they would break 10% off my chocolate bar and give it to the guy with the coupon

I'm sorry if I want my full chocolate bar

[lamboguy]

Fox

the person at the store with the 10% discount coupon is not fleecing me. If the coupon were for a chocolate bar and we were both buying the same chocolate bar according to the rules of rebating they would break 10% off my chocolate bar and give it to the guy with the coupon

I'm sorry if I want my full chocolate bari am a basic dope, i would love to give these big guys double rebates on maiden races just to get their money into the pools. the way i look at it is that the more money that goes in the more i am going to take out. i would even go one step further. i would create a running total and give these guys half the money they lose back at the end of the year.

[Stillriledup]

Stillriledup

Rebates are unfair like trainers using Cobalt is unfair (an issue posted by you in another thread)

Rebates are not open to everyone. Back in the late 1990s they even had secret websites. By the time they became public knowledge several of the rebaters had won millions and then reinvested some of the profits to build super systems that made them almost unbeatable

Even today if I ring up RGS and ask for 12% rebate on $100 turnover a year ($2 a week) they will not give it to me. They will ask that I turnover a million or so to get the rebate. The more you win the more you bet, the more you lose the less you bet. For winning players it is easy to bet big as they make more money every time they bet. But for the average player losing -15% to -25% it is impossible to become a big player as if you bet $1000 you lose $150 to $250. Bet another $1000 and fall further behind. New players to the game will mostly start off as big negative ROI players and find it hard to ever establish themselves in the game

Rebates favour older players well established in the game and are not available on an equal basis

With tote betting the concept has always been all bets are paid at the same odds no matter at what time they are placed before the race and I see no reason why that basic concept should no longer apply

Rebaters should stop fleecing their fellow horseplayers

But, no matter how you spin it, you not betting a million is on you. Also, there are plenty of places that give rebates to everyone, you just sign up and get a rebate, even if you are a small player. Its open to you. If you want a bigger rebate, you have to bet more, the system is fair. All the largest players all started off as 2 dollar bettors and got to become big bettors thru skill. Horseplayers don't start off on their first ever day to the track betting thousands per race, no matter how rich they are. Everyone starts off as a very small bettor and works their way up thru years of practice, hard work, guts, talent, observation and passion...everyone who is getting a large rebate earned it with blood, sweat and tears. Everyone has the same shot to be a big bettor....they don't close you off because they don't like the way you look or dress.

Life isnt equal, very little in life is equal, most every business rewards its better customers. Big bettors who bet tens of thousands and millions do more for the industry than the 2 dollar player...its not equal, a person who bets 10 million a year is contributing tens of thousands to purses and to pay the salaries of the industry employees, the smaller bettor, not so much.

There needs to be some incentive to get great, if everyone gets the same exact rebate, how is that fair to the people who worked their rear ends off to become huge bettors? How is that fair to them that a 20 dollar weekly bettor is getting the same exact rebate?



Saying that rebaters should "stop fleecing" fellow horseplayers is really kind of ridiculous.... if that money was all "given back" it would go into the pockets of the ADW owners and that money would not be returned to the industry, it would go into the ADW owners bank accounts and taken out of circulation.

Lastly, here's another way to look at this....and a question for you if you don't mind answering it. If all rebate shops essentially made all their customers part owners of the ADW and didnt view them as customers, would you feel better about things? You're viewing these rebate bettors as mere customers, but if they just became "part owners" than the monies they receive are essentially company profits and its not a case of the company sharing money with large bettors. Just view big bettors as part owners...because what would happen is this. if all these rebates were taken away (like you want) the money that the big bettors stop receiving would just go to a smaller group of ADW owners and essentially be taken out of circulation. (if, hypothetically, big bettors continued to wager at the same levels with no rebate).

[RXB]

Rebaters should stop fleecing their fellow horseplayers

The whales are simply advancing their own self-interest, like most of the rest of us. Although I think that in the long run the game would be better off with lower takeout for everyone, which would result in lesser rebates, nonetheless the guys getting the massive rebates aren't doing anything wrong.

[baconswitchfarm]

But, no matter how you spin it, you not betting a million is on you. Also, there are plenty of places that give rebates to everyone, you just sign up and get a rebate, even if you are a small player. Its open to you. If you want a bigger rebate, you have to bet more, the system is fair. All the largest players all started off as 2 dollar bettors and got to become big bettors thru skill. Horseplayers don't start off on their first ever day to the track betting thousands per race, no matter how rich they are. Everyone starts off as a very small bettor and works their way up thru years of practice, hard work, guts, talent, observation and passion...everyone who is getting a large rebate earned it with blood, sweat and tears. Everyone has the same shot to be a big bettor....they don't close you off because they don't like the way you look or dress.

Life isnt equal, very little in life is equal, most every business rewards its better customers. Big bettors who bet tens of thousands and millions do more for the industry than the 2 dollar player...its not equal, a person who bets 10 million a year is contributing tens of thousands to purses and to pay the salaries of the industry employees, the smaller bettor, not so much.

There needs to be some incentive to get great, if everyone gets the same exact rebate, how is that fair to the people who worked their rear ends off to become huge bettors? How is that fair to them that a 20 dollar weekly bettor is getting the same exact rebate?



Saying that rebaters should "stop fleecing" fellow horseplayers is really kind of ridiculous.... if that money was all "given back" it would go into the pockets of the ADW owners and that money would not be returned to the industry, it would go into the ADW owners bank accounts and taken out of circulation.

Lastly, here's another way to look at this....and a question for you if you don't mind answering it. If all rebate shops essentially made all their customers part owners of the ADW and didnt view them as customers, would you feel better about things? You're viewing these rebate bettors as mere customers, but if they just became "part owners" than the monies they receive are essentially company profits and its not a case of the company sharing money with large bettors. Just view big bettors as part owners...because what would happen is this. if all these rebates were taken away (like you want) the money that the big bettors stop receiving would just go to a smaller group of ADW owners and essentially be taken out of circulation. (if, hypothetically, big bettors continued to wager at the same levels with no rebate).



If all rebates were somehow made illegal(not possible) , fifty new adws would open up in the next six months. All owned by pro players. The smartest guys will still be the smartest.

[lamboguy]

If all rebates were somehow made illegal(not possible) , fifty new adws would open up in the next six months. All owned by pro players. The smartest guys will still be the smartest.that's already happened, buts its not that lucrative unless they have real huge action. there are a whole bunch of steady costs that adw have to play, like fees to equibase and their hubs. their platforms need a 24 hour a day technical team. that is why bigger adw's have the edge over the smaller guys around. the expenses to the big ones represent peanuts vs. the total handle. also if online gambling becomes legal they are already set up for it (poker, sports, or casino games).

[GMB@BP]

You sound bitter. And jealous. You're better than that, especially since you've been told that rebates are available to everyone, you're not being held back on race, color, religion or sexual orientation. You not having one is on you.

Rebates are not available to everyone, how can you make such a definitive and incorrect statement, they are available to people who live in the right locations but if you don't, you must survive without it, racing cannot survive with half the country in this situation.

[baconswitchfarm]

Rebates are not available to everyone, how can you make such a definitive and incorrect statement, they are available to people who live in the right locations but if you don't, you must survive without it, racing cannot survive with half the country in this situation.


But rebates are available to everyone. The only thing that limits a player today is themselves. A dishwasher and a rocket scientist are equals when they walk through the turnstiles. If you live in a shortsighted state that is trying to kill wagering you should move. I have . The idea that no one can get ahead now is nonsense. None of the guys I know who play for a living started out rich, myself included. The people who do the most business get the best price , same as every business in the country. Warren Buffett pays less per share to trade stock than me. I don't pee my pants and cry about where is the fairness. I work harder and hope to achieve that type of success as well someday. But mostly I try to concentrate on making the most of myself with the hand I have been dealt.

[Dave Schwartz]

Bacon,

There are limitations based upon state laws. This is, of course, driven (or not prevented) by horsemen in the locale.

But your point is well-taken: just about everyone can get a rebate, even for small play.

[bisket]

I'm only at post 79 in this thread, and I'm enjoying the conversation. I would like to make one point. The highly skilled bettor is probably the easiest to exploit. The opportunities to exploit them are smaller than an unskilled player because the skilled are able to beat the percentages.

Usually the unskilled bettor doesn't have discipline, hence they are unpredictable. The skilled are very predictable, when this happens they do this..... the easiest of all situations to exploit. It's just you have to be happy with the smaller amount of opportunities to finish in the black.

I would like to make one more observation... on big race days the skilled become the dumb money :p

[Stillriledup]

Rebates are not available to everyone, how can you make such a definitive and incorrect statement, they are available to people who live in the right locations but if you don't, you must survive without it, racing cannot survive with half the country in this situation.

So if NASA called you and said you can have a high paid government job with full benefits, but you have to move, would you go on a message board and say "NASA is being unfair, jobs are not available to everyone"?

[Hoofless_Wonder]

....There needs to be some incentive to get great, if everyone gets the same exact rebate, how is that fair to the people who worked their rear ends off to become huge bettors? How is that fair to them that a 20 dollar weekly bettor is getting the same exact rebate?

What makes you assume that huge bettors worked their butts off to get where they are today? How do you not know that the whale betting $50M a year isn't a 24 year-old analyst at Goldman Sach's in charge of a system that returns a negative ROI without rebates, but is consistent enough to return a positive ROI with rebates? Goldman looks at racing as just another skim-a-matic to turn profits.

"Expert Money", by all accounts, is a small percentage of the players - including the whales, the syndicates, the pros, and recreational bettors. For those of us who are not experts, the rebates simply seem to be a way to discourage betting, not supporting it.

Your posts support the idea that rebates can help the recreational bettor climb to one of the other positions, yet the data indicates that with the inherent difficulty of the game, there are fewer new fans to start off as recreational players.

Horse racing for the casual, regular attending fan is going the way of the dodo bird.

[Seabiscuit@AR]

Stillriledup

You have not been paying attention. Keep your eyes on the bouncing ball

I agree with your idea that most big bettors started off small and worked their way up after years of persistence. But the opportunity to work your way up from scratch is no longer available to today's young players and this is one of the biggest problems with rebates

Rebates push the odds of all horses towards efficiency and when you are playing off -20% takeout this is very bad news. For the small non rebate or even token rebate player these days there are hardly any good bets in the pool. The market in positive ROI bets has been cornered by the rebaters and the young players of today will be simply facing a wall of bets with ROIs of -6% or worse. They will not be spending years in the game because after a few months they will work out the smart option is not to play the game at all. For the non rebate player the game is basically one of video horse racing where it is predetermined that you will lose. So you have these zombie race tracks wasting all these expenses on purses and track management when they could be running video horse racing on the cheap and the non rebate players would not notice the difference

Check out the threads on this board that ask how old people are and you can see the game is full of players aged 50+ but not so many young ones

ADWs have been owned by big players for years. The fact is there should not be any ADWs at all as they bring nothing to the game. They are just middlemen skimming off money that should be kept in the game. You need tracks, horses, jockeys, trainers, owners, breeders and then you have your customers (bettors) who put plenty of money into the game. You don't need ADWs as the tracks can run the ADW or you can have one big ADW to handle all bets

If you want competition between betting operators then it should be more in the form of fixed odds operators vs tote not a million ADWs all pooling their bets into the same tote

I would not object to an ADW that made itself useful by speeding up the delivery of tote odds to all players. But none of them do this or anything like this to make the game better. They've got nothing, they are an extra mouth to feed and should get the boot from the game

[Stillriledup]

Stillriledup

You have not been paying attention. Keep your eyes on the bouncing ball

I agree with your idea that most big bettors started off small and worked their way up after years of persistence. But the opportunity to work your way up from scratch is no longer available to today's young players and this is one of the biggest problems with rebates

Rebates push the odds of all horses towards efficiency and when you are playing off -20% takeout this is very bad news. For the small non rebate or even token rebate player these days there are hardly any good bets in the pool. The market in positive ROI bets has been cornered by the rebaters and the young players of today will be simply facing a wall of bets with ROIs of -6% or worse. They will not be spending years in the game because after a few months they will work out the smart option is not to play the game at all. For the non rebate player the game is basically one of video horse racing where it is predetermined that you will lose. So you have these zombie race tracks wasting all these expenses on purses and track management when they could be running video horse racing on the cheap and the non rebate players would not notice the difference

Check out the threads on this board that ask how old people are and you can see the game is full of players aged 50+ but not so many young ones

ADWs have been owned by big players for years. The fact is there should not be any ADWs at all as they bring nothing to the game. They are just middlemen skimming off money that should be kept in the game. You need tracks, horses, jockeys, trainers, owners, breeders and then you have your customers (bettors) who put plenty of money into the game. You don't need ADWs as the tracks can run the ADW or you can have one big ADW to handle all bets

If you want competition between betting operators then it should be more in the form of fixed odds operators vs tote not a million ADWs all pooling their bets into the same tote

I would not object to an ADW that made itself useful by speeding up the delivery of tote odds to all players. But none of them do this or anything like this to make the game better. They've got nothing, they are an extra mouth to feed and should get the boot from the game

I agree with you that its much more difficult to work your way up the ladder, but its not due to some players receiving rebates, it has to do with the fact that the players are much better and there's much more information these days.

Rebates don't push anything towards efficiency, its the skill of the players that are making the odds more efficient.

As far as ADWs not bringing anything to the game, why would you say that the ability to place wagers while NOT having to drive to the track is a bad thing? Are you suggesting that horse racing not use current technology and permit bettors to make bets from the comfort of their own homes?

[Seabiscuit@AR]

Stillriledup

Rebates do push odds towards efficiency. If the true price of a horse is 3.00. You get 10% rebate. You maximise your profit on the race by betting it down to 2.80 for thousands rather than betting hundreds and leaving the odds at 3.20 or 3.30

If there was no rebate then the most skilled players out there have no incentive to bet a true 3.00 horse below 3.10 as 3.10 is the lowest price they can bet and still make a profit if the tote pays to the nearest 10 cents

So the rebate allows the odds to be bet towards efficiency and skill has nothing to do with it. If a player bets a true 3.00 horse down to 2.80 with no rebate then they are not showing much skill

Players should be able to bet from home or via internet. But there is no reason why you can't have one big ADW that takes the tote bets for everyone and it offers full phone and internet betting. All bets are being pooled into only one pool so you only need one central ADW for tote betting. This central ADW can be owned by the tracks collectively so you are not losing money to middlemen

[Seabiscuit@AR]

Also, if they are going to have lots of different ADWs they should make each ADW have their own separate tote pool. So if an ADW wants to offer 12% rebates it can but it will mean if you want the 12% rebates you will be playing against other players with 12% rebates (i.e. a fair game)

[GMB@BP]

So if NASA called you and said you can have a high paid government job with full benefits, but you have to move, would you go on a message board and say "NASA is being unfair, jobs are not available to everyone"?

So let me get this straight, the best way to play this sport is to take advantage of the wonderful rebate, but to do so you may have to relocate to another state, leaver your family, ties, etc.

This will surely grow the sport! It wont be long till its back to the glory days.

[thaskalos]

So if NASA called you and said you can have a high paid government job with full benefits, but you have to move, would you go on a message board and say "NASA is being unfair, jobs are not available to everyone"?

SRU...we live during a time when this "sport" is going through a period of crisis. Horseplayers are abandoning the game in droves...and the only reason why the wagering pools are as big as they currently are is because of the proliferation of this "whale" betting that is causing chaos on the oddsboard in the last seconds of the wagering period. Have you seen how pathetic the wagering pools are even as the horses are nearing the starting gates?

I don't know if you've noticed, but even the hardened bettors of this board have indicated in various polls which have been posted here that the vast majority of them are currently wagering only a FRACTION of what they wagered in years past. And your suggestion during a depressing time such as this...is to have the average player uproot his family and relocate to a different state, in search of rebates?

[Stillriledup]

SRU...we live during a time when this "sport" is going through a period of crisis. Horseplayers are abandoning the game in droves...and the only reason why the wagering pools are as big as they currently are is because of the proliferation of this "whale" betting that is causing chaos on the oddsboard in the last seconds of the wagering period. Have you seen how pathetic the wagering pools are even as the horses are nearing the starting gates?

I don't know if you've noticed, but even the hardened bettors of this board have indicated in various polls which have been posted here that the vast majority of them are currently wagering only a FRACTION of what they wagered in years past. And your suggestion during a depressing time such as this...is to have the average player uproot his family and relocate to a different state, in search of rebates?

No. I never suggested that anyone move and relocate. The argument was whether or not rebates are actually available to everyone. Some people are confusing being available with being easily available.

[Vigorish]

What has been mostly lost in the discussion is the effect of rebates on the perception of the new player who enters the game. Irrespective of their actual impact, the existence of rebate operations makes the game even more unattractive to new players. Why is this the case?

1) Rebates, especially the meaningful type, are often covert. Many of the best rebate operations use word-of-mouth advertising and will not or cannot post their rates. Being in the right social circle can mean the difference between playing Woodbine with a 11% or 22% blended takeout.

2) The rates given to players are often contingent on handle. Thus, the most elite players are further advantaged against their newer, inexperienced, and less savvy cohorts.

3) Your ability to gain a rebate is often contingent on where you live. There are certain maneuvers that players can implement to keep their rebates, but most are not realistic for 99% of players.

4) Rebates increase market efficiency. It is not that pools are so efficient that overlays are totally extinct. However, the opportunity cost of finding that elusive overlay has increased. To make matters even worse, rebate whales have a different definition of value. Due to the rebate, they can afford to push money onto horses who have a slightly negative expectation. For the average player, this means the game is not only harder to beat, it's harder to lose at a modestly slow rate.

What happens when a player realizes he's been paying 22% takeout while fellow competitors are paying 12 or 13%? They feel like they have been swindled by seasoned grifters. The game loses its luster when the competition plays with different rules. Imagine you live Illinois for example, not only do you not have access to meaningful rebates, you could be forced to pay a surcharge on your wagers. Alternatively, you might live in Texas and not even have access to an ADW. In California, you might get some some relief, that is, if you wager over 60K per month.

The average player can be forgiven for thinking that the tote board offers the same value for every player. The parimutuel system was supposed to usher in fairness and transparency. Instead, the current system creates an uneven playing field where one player is paid $3.00 and another receives $3.20. The bottom line is that the current system undermines the credibility of the game, and makes it less attractive to ordinary fans. Average fans do not have access to batch betting or batch streaming, nor do they get back between 5 and 20% on most exotics. The perception of an uneven playing field, depressed and unequal mutual payoffs, and late odds changes all combine to further erode the game's fan base.

[AndyC]

What has been mostly lost in the discussion is the effect of rebates on the perception of the new player who enters the game. Irrespective of their actual impact, the existence of rebate operations makes the game even more unattractive to new players. Why is this the case?

1) Rebates, especially the meaningful type, are often covert. Many of the best rebate operations use word-of-mouth advertising and will not or cannot post their rates. Being in the right social circle can mean the difference between playing Woodbine with a 11% or 22% blended takeout.

2) The rates given to players are often contingent on handle. Thus, the most elite players are further advantaged against their newer, inexperienced, and less savvy cohorts.

3) Your ability to gain a rebate is often contingent on where you live. There are certain maneuvers that players can implement to keep their rebates, but most are not realistic for 99% of players.

4) Rebates increase market efficiency. It is not that pools are so efficient that overlays are totally extinct. However, the opportunity cost of finding that elusive overlay has increased. To make matters even worse, rebate whales have a different definition of value. Due to the rebate, they can afford to push money onto horses who have a slightly negative expectation. For the average player, this means the game is not only harder to beat, it's harder to lose at a modestly slow rate.

What happens when a player realizes he's been paying 22% takeout while fellow competitors are paying 12 or 13%? They feel like they have been swindled by seasoned grifters. The game loses its luster when the competition plays with different rules. Imagine you live Illinois for example, not only do you not have access to meaningful rebates, you could be forced to pay a surcharge on your wagers. Alternatively, you might live in Texas and not even have access to an ADW. In California, you might get some some relief, that is, if you wager over 60K per month.

The average player can be forgiven for thinking that the tote board offers the same value for every player. The parimutuel system was supposed to usher in fairness and transparency. Instead, the current system creates an uneven playing field where one player is paid $3.00 and another receives $3.20. The bottom line is that the current system undermines the credibility of the game, and makes it less attractive to ordinary fans. Average fans do not have access to batch betting or batch streaming, nor do they get back between 5 and 20% on most exotics. The perception of an uneven playing field, depressed and unequal mutual payoffs, and late odds changes all combine to further erode the game's fan base.


The only new player who would even be aware of rebates would be a sophisticated gambler who would surely seek out rebates for him/herself.

If, in fact, rebates make the market more efficient there will be many players who will benefit because they won't be betting as many huge underlays.

When a player realizes that other players are paying only 12 or 13% versus 22% presumably they would try to find out how they could lower their own costs.

[cj]

The only new player who would even be aware of rebates would be a sophisticated gambler who would surely seek out rebates for him/herself.

Depends how you define "new". Pretty much any player that plays for more than a week or two is going to hear about rebates.

When a player realizes that other players are paying only 12 or 13% versus 22% presumably they would try to find out how they could lower their own costs.

Most people will just move on to something else.

[GMB@BP]

No. I never suggested that anyone move and relocate. The argument was whether or not rebates are actually available to everyone. Some people are confusing being available with being easily available.

You certainly did by equating it to getting a job offer in another state.

I agree its easy, heck lets take this a step further. Betting on football game is easily available to everyone, ALL they have to do is relocate to Vegas or Atlantic City, thats it.

Heck they could move to England, its not that hard really.

[AndyC]

Stillriledup

Rebates do push odds towards efficiency. If the true price of a horse is 3.00. You get 10% rebate. You maximise your profit on the race by betting it down to 2.80 for thousands rather than betting hundreds and leaving the odds at 3.20 or 3.30

If a horse should pay $4.00 and ends up being a price that would pay $3.00 because rebaters overbet the horse that moves the pool towards inefficiency. The only thing that moves a market towards efficiency is smart bettors.

[Stillriledup]

You certainly did by equating it to getting a job offer in another state.

I agree its easy, heck lets take this a step further. Betting on football game is easily available to everyone, ALL they have to do is relocate to Vegas or Atlantic City, thats it.

Heck they could move to England, its not that hard really.

I wouldnt suggest to anyone to move to another state, i could care less whether you do or you don't, so i would never suggest that. Now, if i gave a crap, i might, but i don't, so i didnt go there and never even hinted that was the case.

Sometimes in life, things arent handed to you and if you want them, you have to go out and get them...which means, they ARE available if you do the leg work. If you don't want to do the leg work, that's perfectly fine, but you can't then complain that they're not available to you when they are. They might not be easily available, but we can't expect everything in life to be handed to us on a silver platter, right?

[riskman]

Depends how you define "new". Pretty much any player that plays for more than a week or two is going to hear about rebates.



Most people will just move on to something else.

And they have, and they will.

[GMB@BP]

I wouldnt suggest to anyone to move to another state, i could care less whether you do or you don't, so i would never suggest that. Now, if i gave a crap, i might, but i don't, so i didnt go there and never even hinted that was the case.

Sometimes in life, things arent handed to you and if you want them, you have to go out and get them...which means, they ARE available if you do the leg work. If you don't want to do the leg work, that's perfectly fine, but you can't then complain that they're not available to you when they are. They might not be easily available, but we can't expect everything in life to be handed to us on a silver platter, right?

I am glad you came around with my original statement that they are not easily available.

I still contest that they are bad for the game, do nothing to grow the game, and we would all be MUCH better off with takeout reductions and not gimmick rebates for those fortunate enough to obtain them.

[Seabiscuit@AR]

Andy C

If a horse should be 4.00 (3-1) and gets bet down to 3.00 (2-1) then the ROI will be -25%. So I agree it will be overbet towards inefficiency

But this is ignoring the plentiful evidence out there that rebate players on average are only losing between -5% to -8% ROI before rebate after they have piled on huge bets. Without their huge bets the ROIs on these bets would be positive or small losers. The facts are that the rebate players don't overbet their plays in the long run which is all that counts

I agree that smart players bet horses towards efficiency. But give the same smart player a rebate they will now bet the horse further towards efficiency than they would without a rebate

[AndyC]

Andy C

If a horse should be 4.00 (3-1) and gets bet down to 3.00 (2-1) then the ROI will be -25%. So I agree it will be overbet towards inefficiency

But this is ignoring the plentiful evidence out there that rebate players on average are only losing between -5% to -8% ROI before rebate after they have piled on huge bets. Without their huge bets the ROIs on these bets would be positive or small losers. The facts are that the rebate players don't overbet their plays in the long run which is all that counts

I agree that smart players bet horses towards efficiency. But give the same smart player a rebate they will now bet the horse further towards efficiency than they would without a rebate

What we do agree on is that the current take out rates are too high for everybody.

What would a smart rebate player be doing without rebates? Probably not betting the races.

What is so bad about an efficient pool for the average player? Given that about 1% of players are winners, doesn't an efficient pool keep bettors from betting on horses that are way overbet?

[DeltaLover]

Andy C

If a horse should be 4.00 (3-1) and gets bet down to 3.00 (2-1) then the ROI will be -25%.

Or the crowd knows more than you!

Horses who seem to be obvious underlays based in their running lines usually are not.

[traynor]

Or the crowd knows more than you!

Horses who seem to be obvious underlays based in their running lines usually are not.

Which may be why so many bettors have such problems turning a profit. It is not that making a profit wagering on thoroughbred races is difficult. It is that making a profit wagering on thoroughbred races using the same data, criteria, and "logic" in handicapping that everyone else is using that is difficult.

People tend to fall in love with "consistency"--meaning they would prefer to endlessly repeat old, broken, obsolete, inefficient, unworkable processes and procedures because--at one time or another--they seemed to work. At least for awhile. Anyone who thinks otherwise should do a bit of study on history, especially miltary history. The exact same cognitive deficiencies affect "serious handicappers and bettors" as affect military strategists. To the detriment of both.

[Sapio]

Or the crowd knows more than you!

Horses who seem to be obvious underlays based in their running lines usually are not.

It's safe to assume the crowd generally knows more than you. So, isn't it safe to assume that the crowds anointed odds for a specific horse in their previous race is quite accurate based on the available information in that race. So, following that logic aren't the horses' previous odds the best we have to quantify that horse. And when the horse is entered in a new (current) race, the only new information we have is the result of the previous race and the level of competition and a new level of competition of the race to be run.

The question is shouldn't past race odds and todays odds be of primary importance?

Thomas Sapio

[Stillriledup]

Which may be why so many bettors have such problems turning a profit. It is not that making a profit wagering on thoroughbred races is difficult. It is that making a profit wagering on thoroughbred races using the same data, criteria, and "logic" in handicapping that everyone else is using that is difficult.

People tend to fall in love with "consistency"--meaning they would prefer to endlessly repeat old, broken, obsolete, inefficient, unworkable processes and procedures because--at one time or another--they seemed to work. At least for awhile. Anyone who thinks otherwise should do a bit of study on history, especially miltary history. The exact same cognitive deficiencies affect "serious handicappers and bettors" as affect military strategists. To the detriment of both.

It was much easier to turn a profit in 1980 than it was in 2013. Some people blame rebates for the difficulty of winning these days, but the difficulty comes from the efficiency of the pools, the sharper players, the information age where info is easily available and of course, tracks not doing enough to card "hard" races.

[traynor]

It's safe to assume the crowd generally knows more than you. So, isn't it safe to assume that the crowds anointed odds for a specific horse in their previous race is quite accurate based on the available information in that race. So, following that logic aren't the horses' previous odds the best we have to quantify that horse. And when the horse is entered in a new (current) race, the only new information we have is the result of the previous race and the level of competition and a new level of competition of the race to be run.

The question is shouldn't past race odds and todays odds be of primary importance?

Thomas Sapio
When did it become safe to assume the crowd generally knows more than I do? If I believed that, I would spend more time hunting and less time betting.

[traynor]

It was much easier to turn a profit in 1980 than it was in 2013. Some people blame rebates for the difficulty of winning these days, but the difficulty comes from the efficiency of the pools, the sharper players, the information age where info is easily available and of course, tracks not doing enough to card "hard" races.

I am not really sure that is true, because I thought it was really tough to win in 1980. Most of the easy money seemed to have been made by others, and I only heard about it at seminars or in marketing attempts to separate me from what little profit I could make in order to buy someone else's surefire, can't-lose, absoiutely brilliant system, method, or software. I read a lot about the "good old days when the pickings were easy" but it must have been at tracks other than those I frequented.

I didn't really start doing well until I dismissed what others were doing (and offering to me at a price) as little more than wishful thinking and distraction, and concentrated on developing my own strategies. That, and a strong focus on trip handicapping and the "body language of horses."

There are a number of "sharp players" using very sophisticated analytical software and betting large sums of money, but their strategies are "knowable." That is, it is as possible to predict which wagers they will make as it is to predict that a fast horse with a top jockey and top trainer that looks like it is coming into peak form will probably be overbet.

The whales are not any more omniscient than the average bettor. Once one undersands what they do and how they do it, deficiencies in their strategies can be leveraged as easily as deficiencies in the strategies (and preferences) of average bettors.

[Vigorish]

It was much easier to turn a profit in 1980 than it was in 2013. Some people blame rebates for the difficulty of winning these days, but the difficulty comes from the efficiency of the pools, the sharper players, the information age where info is easily available and of course, tracks not doing enough to card "hard" races.

It's not a black or white, all or nothing, "either/or" proposition. The problem arises from both a disparity in knowledge and unequal effective takeout rates. The rebate whales have two main advantages over their non-rebated or poorly rebated cohorts. On average, they are much better performers. For example, RGS (which permits Computerized Robotic Wagering or "CRW") admitted that their players lose only 6% before the rebate. Given that average takeout exceeds 20%, these players demonstrate incredible skill.

Without the existence of unequal rebates, these players would not have the same powerful incentive to enter the pools and churn incredible sums of money. Rebates have the capacity to convert slight losers into winners and slight winners into even bigger winners. The players have a vested interest in maximizing their profits by betting as much as possible provided they can turn a profit. In some cases, players are further lured by the promise of higher rebates in exchange for higher handle.

Irrespective of the situation with unequal rebates, today's player is hit with an absurd blended takeout of 22%. They are being asked to dutifully show up at the track and pay full freight. If lucky, they might get 1% (sometimes less) from the track or one of the major ADW's. Imagine playing a game of poker and finding out that the regular players get 10% of their bets back and you get nothing. Alternatively, imagine going to a sportsbook and noticing that the moneyline is -120 on the Raiders if you bet $10, but -110 if you bet $1,000 dollars. Eventually, the dumb money will dry up and the whales will fight it out until they too become discouraged and leave the game.

The best solution is lower takeout for everybody. Personally, I would gladly forfeit my 10% rebate if it meant that everybody received a 5% reduction in takeout. The industry created this problem and it is not as though rebate players are immoral grifters. When people see an opportunity, they will exploit it. In fact, rebates do have a positive side that is often overlooked. Today's gamblers are much more savvy and price-conscious, given the wide array of attractively priced alternatives. Rebates allow many players to participate while paying something resembling realistic takeout. Unfortunately, access to rebates is unfair and uneven. Ultimately, differences in skill should separate winners and losers, not one's ability to obtain the best rebates.

[Stillriledup]

It's not a black or white, all or nothing, "either/or" proposition. The problem arises from both a disparity in knowledge and unequal effective takeout rates. The rebate whales have two main advantages over their non-rebated or poorly rebated cohorts. On average, they are much better performers. For example, RGS (which permits Computerized Robotic Wagering or "CRW") admitted that their players lose only 6% before the rebate. Given that average takeout exceeds 20%, these players demonstrate incredible skill.

Without the existence of unequal rebates, these players would not have the same powerful incentive to enter the pools and churn incredible sums of money. Rebates have the capacity to convert slight losers into winners and slight winners into even bigger winners. The players have a vested interest in maximizing their profits by betting as much as possible provided they can turn a profit. In some cases, players are further lured by the promise of higher rebates in exchange for higher handle.

Irrespective of the situation with unequal rebates, today's player is hit with an absurd blended takeout of 22%. They are being asked to dutifully show up at the track and pay full freight. If lucky, they might get 1% (sometimes less) from the track or one of the major ADW's. Imagine playing a game of poker and finding out that the regular players get 10% of their bets back and you get nothing. Alternatively, imagine going to a sportsbook and noticing that the moneyline is -120 on the Raiders if you bet $10, but -110 if you bet $1,000 dollars. Eventually, the dumb money will dry up and the whales will fight it out until they too become discouraged and leave the game.

The best solution is lower takeout for everybody. Personally, I would gladly forfeit my 10% rebate if it meant that everybody received a 5% reduction in takeout. The industry created this problem and it is not as though rebate players are immoral grifters. When people see an opportunity, they will exploit it. In fact, rebates do have a positive side that is often overlooked. Today's gamblers are much more savvy and price-conscious, given the wide array of attractively priced alternatives. Rebates allow many players to participate while paying something resembling realistic takeout. Unfortunately, access to rebates is unfair and uneven. Ultimately, differences in skill should separate winners and losers, not one's ability to obtain the best rebates.

So if rebate players lose 6%, do you think these same brilliant players would A) bet as much without a rebate or B) make smarter decisions because they're not getting a rebate.

I believe that they wouldnt be as much, and that would hurt everyone thru smaller pool sizes and they also wouldnt be as "reckless". They lose 6% because they CAN. Without the rebate, they wouldnt be able to lose 6%.

[Seabiscuit@AR]

DeltaLover

Don't confuse the issues

I was addressing the issue where a horse was a "true" 4.00 chance that had been bet down to 3.00

You are talking about the situation where a horse should be 4.00 based on form but is now trading at 3.00 in the market. Such a horse would not be a "true" 4.00 chance I agree with you there. But that is a totally different topic for another thread

[Seabiscuit@AR]

Stillriledup

if the rebaters lose their rebate

1. Their turnover will drop by about 80% to 85%
2. Their total profit will also drop by about 80% to 85% thanks to the fall in turnover of positive ROI plays after rebate
3. The biggest syndicates will be betting dumber not smarter as they will no longer be able to spend millions a year on staff to analyse their form

The players without a rebate will benefit as they will get to share in betting some positive ROI horses and exotic combinations unlike now where the rebates create a sheltered workshop for the big players who corner the market in positive ROI bets

[Maximillion]

It's not a black or white, all or nothing, "either/or" proposition. The problem arises from both a disparity in knowledge and unequal effective takeout rates. The rebate whales have two main advantages over their non-rebated or poorly rebated cohorts. On average, they are much better performers. For example, RGS (which permits Computerized Robotic Wagering or "CRW") admitted that their players lose only 6% before the rebate. Given that average takeout exceeds 20%, these players demonstrate incredible skill.

Without the existence of unequal rebates, these players would not have the same powerful incentive to enter the pools and churn incredible sums of money. Rebates have the capacity to convert slight losers into winners and slight winners into even bigger winners. The players have a vested interest in maximizing their profits by betting as much as possible provided they can turn a profit. In some cases, players are further lured by the promise of higher rebates in exchange for higher handle.

Irrespective of the situation with unequal rebates, today's player is hit with an absurd blended takeout of 22%. They are being asked to dutifully show up at the track and pay full freight. If lucky, they might get 1% (sometimes less) from the track or one of the major ADW's. Imagine playing a game of poker and finding out that the regular players get 10% of their bets back and you get nothing. Alternatively, imagine going to a sportsbook and noticing that the moneyline is -120 on the Raiders if you bet $10, but -110 if you bet $1,000 dollars. Eventually, the dumb money will dry up and the whales will fight it out until they too become discouraged and leave the game.

The best solution is lower takeout for everybody. Personally, I would gladly forfeit my 10% rebate if it meant that everybody received a 5% reduction in takeout. The industry created this problem and it is not as though rebate players are immoral grifters. When people see an opportunity, they will exploit it. In fact, rebates do have a positive side that is often overlooked. Today's gamblers are much more savvy and price-conscious, given the wide array of attractively priced alternatives. Rebates allow many players to participate while paying something resembling realistic takeout. Unfortunately, access to rebates is unfair and uneven. Ultimately, differences in skill should separate winners and losers, not one's ability to obtain the best rebates.

Its not my intention to start an argument with you....I like your posts.

You have described your rebates as "very good" and "substantial".....and in this post you say( "I would gladly forfeit my 10% rebate")

I admit Im kinda confused.......if this is true,how much are you really "disadvantaged" by other rebate players?

I think at some point the focus should be on just flat out improving your own handicapping.

[riskman]

Stillriledup

if the rebaters lose their rebate

1. Their turnover will drop by about 80% to 85%
2. Their total profit will also drop by about 80% to 85% thanks to the fall in turnover of positive ROI plays after rebate
3. The biggest syndicates will be betting dumber not smarter as they will no longer be able to spend millions a year on staff to analyse their form

The players without a rebate will benefit as they will get to share in betting some positive ROI horses and exotic combinations unlike now where the rebates create a sheltered workshop for the big players who corner the market in positive ROI bets

$10,881,239,410 was wagered on horseracing in 2013.The figures include worldwide commingled wagering on U.S. races.How much of this figure on a percentage basis do you think is wagered by the large syndicates or whales?

It is unlikely that legislatures in the various states would pass legislation similar to the recent NY law concerning fees on out of state ADW' accepting wagers from their in state residents. Who knows what could happen with the state of racing in the U.S.

In your scenario above, with take out at current levels,elimination of rebates, syndicates (WHALES) operating at -6 ROI the future of racing looks dim.
By the way, are you a U.S.resident? Your writing style leads me to believe you are not.Of course I could be wrong, but that does not negate your opinion which is welcomed.

[Seabiscuit@AR]

riskman

I am not a US resident

I would not know the exact figure wagered by whales but remember they are not betting full takeout but at a discounted takeout so a dollar lost from their wagering is not as bad as a dollar lost from players betting full takeout

Elimination of rebates won't make racing worse. The truth is that the tracks leaving their signal fees low and allowing ADWs to step in and offer rebates on a grand scale has done massive damage to racing. But it has taken time for the effects to show up

Over the last 15 years the tracks have been paying large operating expenses to support a system where a few big syndicates had a licence to print money. At the same time the game has been unfair for those not getting rebates and they have effectively been playing a video horse racing game where they could not win. The problem for the tracks is that their expenses to run this game are massively bigger than for a video horse racing game. And the takeouts are not competitive with slot machines and casino games

The tracks business model has been insane

I am not against big players winning large amounts with their betting. Far from it. But they should not be getting a subsidy via rebates to do so. They should be playing fair. Of course playing fair will mean a big player can only win a million a year not 10 million a year but there is nothing wrong with that if the pools only allow you to take out a million at equal takeout levels to the other players

[Vigorish]

Its not my intention to start an argument with you....I like your posts.

You have described your rebates as "very good" and "substantial".....and in this post you say( "I would gladly forfeit my 10% rebate")

I admit Im kinda confused.......if this is true,how much are you really "disadvantaged" by other rebate players?

I think at some point the focus should be on just flat out improving your own handicapping.

Maximillion,

My argument is not that I am disadvantaged by other handicappers. In one sense, I am extremely satisfied with my personal situation. It would be in my personal interest to perpetuate it for eternity. When I started playing with rebates back in October, I made a few deposits totaling about $1,000. I am still playing on the same money. My ROI is currently hovering around even after the rebate (actually I'm winning at 2.1% since I just hit a decent pick 4). Furthermore, I have at least doubled the size of my average bet. Things could hardly be better.

However, with the racing industry, all good things seem to come to an end. When they succeed in obliterating my rebate, either by doing what they did in Texas, Illinois, and Arizona (cutting off access to ADW's) or Pennsylvania and California (implementing punitive source market fees), I will quickly terminate my involvement with the game.

Thus, my concern is about what I perceive as the long-term health of the game. Through a combination of source market fees, signal fees, and access restrictions, rebates are going the way of the dodo bird. Within a few years, meaningful rebates may only be available to a handful of elite players - and even they might wake up to find that rebates have been seriously degraded or eliminated.

What I am trying to argue is a personal philosophical position. I believe direct takeout decreases are more desirable than rebates. The industry, in my opinion, is trying to have its cake and eat it too. They want to soak the masses with suffocating takeout, but they don't want to lose price-conscious players who might leave for greener pastures. Thus, we have a fractured, two-tiered system. In a healthy parimutuel market, skill would be the determining factor in one's success, not access to the best rebates. This game will continue to wither on the vine as long as it clings to its current pricing scheme. To retain existing fans and attract a new generation of horseplayers, ordinary players need to feel they are getting a fair shake.

[Stillriledup]

Maximillion,

My argument is not that I am disadvantaged by other handicappers. In one sense, I am extremely satisfied with my personal situation. It would be in my personal interest to perpetuate it for eternity. When I started playing with rebates back in October, I made a few deposits totaling about $1,000. I am still playing on the same money. My ROI is currently hovering around even after the rebate (actually I'm winning at 2.1% since I just hit a decent pick 4). Furthermore, I have at least doubled the size of my average bet. Things could hardly be better.

However, with the racing industry, all good things seem to come to an end. When they succeed in obliterating my rebate, either by doing what they did in Texas, Illinois, and Arizona (cutting off access to ADW's) or Pennsylvania and California (implementing punitive source market fees), I will quickly terminate my involvement with the game.

Thus, my concern is about what I perceive as the long-term health of the game. Through a combination of source market fees, signal fees, and access restrictions, rebates are going the way of the dodo bird. Within a few years, meaningful rebates may only be available to a handful of elite players - and even they might wake up to find that rebates have been seriously degraded or eliminated.

What I am trying to argue is a personal philosophical position. I believe direct takeout decreases are more desirable than rebates. The industry, in my opinion, is trying to have its cake and eat it too. They want to soak the masses with suffocating takeout, but they don't want to lose price-conscious players who might leave for greener pastures. Thus, we have a fractured, two-tiered system. In a healthy parimutuel market, skill would be the determining factor in one's success, not access to the best rebates. This game will continue to wither on the vine as long as it clings to its current pricing scheme. To retain existing fans and attract a new generation of horseplayers, ordinary players need to feel they are getting a fair shake.

Is there any area of life where everyone gets a fair skake?

[Vigorish]

Is there any area of life where everyone gets a fair skake?

No. What constitutes a 'fair shake' is highly subjective. However, a substantial number of horseplayers have decided the game is so unfair that they are leaving or reducing their handle. Furthermore, a new generation of skill-based gamblers will not give racing a serious look given its perception as a corrupt and unbeatable game.

Unlike some people who argue against rebates, I actually think it would be a mistake to eliminate rebates without a concurrent reduction in direct takeouts. Furthermore, I think the impact of CRW's (and other high volume, high rebate customers) is somewhat overblown. In fact, I doubt the negative impact is more than a couple percentage points. Oaklawn, for example, claimed that the negative impact of these players was about a percentage point.

You are correct that anybody who is motivated or skilled enough can access the best rebates. Unfortunately, the opportunity cost is so high that for many it becomes prohibitive. Even serious professional players might find it difficult to uproot their families and move to a different state. In lieu of direct takeout decreases, rebates are the next best thing. The lack of a free market is largely responsible for most of the problems with the current rebate model.

[Stillriledup]

No. What constitutes a 'fair shake' is highly subjective. However, a substantial number of horseplayers have decided the game is so unfair that they are leaving or reducing their handle. Furthermore, a new generation of skill-based gamblers will not give racing a serious look given its perception as a corrupt and unbeatable game.

Unlike some people who argue against rebates, I actually think it would be a mistake to eliminate rebates without a concurrent reduction in direct takeouts. Furthermore, I think the impact of CRW's (and other high volume, high rebate customers) is somewhat overblown. In fact, I doubt the negative impact is more than a couple percentage points. Oaklawn, for example, claimed that the negative impact of these players was about a percentage point.

You are correct that anybody who is motivated or skilled enough can access the best rebates. Unfortunately, the opportunity cost is so high that for many it becomes prohibitive. Even serious professional players might find it difficult to uproot their families and move to a different state. In lieu of direct takeout decreases, rebates are the next best thing. The lack of a free market is largely responsible for most of the problems with the current rebate model.

Good points Vig. You're right, this is a tough game...it IS beatable with great discipline, great money management, tremendous patience and elite information. (not talking inside info, talking info that a player generates himself thru careful video study, careful pp study, etc and the occasional tip doesnt hurt either)

Even with a big rebate, those players are still paying at least 10% takeout on most bets, its not like they're getting a sport bet vig of 5%, so even the biggest rebate guys have to be amazingly great to win.....its equivalent of a sports bettor being able to make a living betting sports at -120 both sides as opposed to -110....hard to be a pro sports bettor at -110 on both sides, doubly difficult to do it with -120 on both sides...and the big rebate guy is essentially betting -120 on both sides while the non rebate player is trying to win with the take much higher, sort of like -140 or -150 on both sides.

The one problem i see with "Racing" lowering takeouts across the board to 10% or under is that if people are willing to bet MILLIONS of dollars into 23% takeouts, why stop them? If bettors refused to bet into anything that was more than a 15% takeout, tracks would have to lower them. As long as people keep betting into these massive rakes, the tracks will keep the rates as they are.

[riskman]

riskman

I am not a US resident

I would not know the exact figure wagered by whales but remember they are not betting full takeout but at a discounted takeout so a dollar lost from their wagering is not as bad as a dollar lost from players betting full takeout

Elimination of rebates won't make racing worse. The truth is that the tracks leaving their signal fees low and allowing ADWs to step in and offer rebates on a grand scale has done massive damage to racing. But it has taken time for the effects to show up

Over the last 15 years the tracks have been paying large operating expenses to support a system where a few big syndicates had a licence to print money. At the same time the game has been unfair for those not getting rebates and they have effectively been playing a video horse racing game where they could not win. The problem for the tracks is that their expenses to run this game are massively bigger than for a video horse racing game. And the takeouts are not competitive with slot machines and casino games

The tracks business model has been insane

I am not against big players winning large amounts with their betting. Far from it. But they should not be getting a subsidy via rebates to do so. They should be playing fair. Of course playing fair will mean a big player can only win a million a year not 10 million a year but there is nothing wrong with that if the pools only allow you to take out a million at equal takeout levels to the other players

Thank you for your reply. Since you are not a U.S. resident, I assume you do not have a betting account with a U.S.based
ADW ,track or off track OTB.(you do not have to answer this question)If you are here in U.S for any reason you would wager physically at the track if you so desire. In any event, you would not be eligible for rebates in the U.S.

Other then your own personal opinion, then why would you care about the state of U.S. horse racing and the unfairness associated with rebating? Am I missing something here?

Whether I agree with your postings or not, I enjoy reading what you write as it does give me food for thought.

I do agree that the rebate bettor gets an advantage of better odds.Win or lose the better gets a % returned on his original wager which in effect lowers the odds after rebate on the actual bet.Is it fair that the casual player does not get the same deal? Volume discounts can be found everywhere in all types of industries. But as I always say, we are all free to make our own business decisions on the basis of what works best for us. Horses for courses, and all that.

[riskman]

[QUOTE=riskman]Thank you for your reply. Since you are not a U.S. resident, I assume you do not have a betting account with a U.S.based
ADW ,track or off track OTB.(you do not have to answer this question)If you are here in U.S for any reason you would wager physically at the track if you so desire. In any event, you would not be eligible for rebates in the U.S.

Other then your own personal opinion, then why would you care about the state of U.S. horse racing and the unfairness associated with rebating? Am I missing something here?

Whether I agree with your postings or not, I enjoy reading what you write as it does give me food for thought.

I do agree that the rebate bettor gets an advantage of better odds.Win or lose the better gets a % returned on his original wager which in effect lowers the odds after rebate on the actual bet.Is it fair that the casual player does not get the same deal? Volume discounts can be found everywhere in all types of industries. But as I always say, we are all free to make our own business decisions on the basis of what works best for us. Horses for courses, and all that.[/QUOTE/

Where I wrote lowers should read increases.