European Racing Economics

[traynor]

http://www.parimutuel-europe.org/Download/EPMA_Economic_impact_of_horse_racing_03Sept09.pdf

This document explains why bettors in the UK (close to 90% return of all money wagered to bettors) do so well, and why they are so amused by the US bettors who decry the "lack of information available to bettors" for UK races (not true, but widely believed to be true by US bettors).

I am not sure the "added information" that most rely on to form betting decisions in the US is worth the difference in money extracted from wagering pools before distribution to bettors. Especially for serious bettors.

The document makes a number of interesting points--not the least of which is the relatively healthy racing industries in France and Sweden, and the reasons behind that success.

[Hoofless_Wonder]

The material is a bit dated, being from 2009. From the charts on page 18, the bettors in Sweden only get back 70% of the handle, yet they had more betting than France. That would seem to indicate a very negative headwind.

The UK model is definitely the way to go for the bettors - especially with gambling "profits" not taxed.....

[horses4courses]

Funny that UK and Australian models resemble a free market for bettors,
while the US approach is far less capitalistic.

I'm not saying that bookmakers are a boon for the sport,
but they do give bettors more freedom of choice.

[ribjig]

bettors in Sweden only get back 70% of the handle...

UK gets back 89% or ~7% more than US on win bets???
What is UK historical data: all 4/5 or heavier to win ROI?
What about all 1/2 or heavier?
(could bloody well be a small profit?)

[traynor]

The material is a bit dated, being from 2009. From the charts on page 18, the bettors in Sweden only get back 70% of the handle, yet they had more betting than France. That would seem to indicate a very negative headwind.

The UK model is definitely the way to go for the bettors - especially with gambling "profits" not taxed.....

Check Exhibit 9 on Page 17. Where did you find the figures indicating Sweden has more betting than France?

[Saratoga_Mike]

Check Exhibit 9 on Page 17. Where did you find the figures indicating Sweden has more betting than France?

Interesting takeout info.

The confusion was caused by the stats on page 18 - it shows France's handle in euros and Sweden's in krona, so you need to multiple the Swedish number by roughly 0.11.

[flatstats]

The UK is unique in that we have three betting mediums

Bookmakers
You can take the price they offer at the time or you can take the Starting Price.

The "take out" or more correct terminology overround is roughly 1.5%-2% per runner. So in a 10 runner race the standard punter is 17% down to start with.

Exchanges
The overround tends to be around 2-4% for the whole race so this is way better for punters. However, winning bets are subject to a commission charge of ~4.5% for minnows and 0-2% for whales.

Tote
This used to be government owned but was sold to a bookmaker a few years ago. This is the closest to your PMU returns.

The takeouts IIRC are as follows:

Win Pool 16.5%

Exacta Pool 25%
Trifecta Pool 25%
Placepot Pool 28% (find 6 horses to show)
Jackpot Pool 28% (find 6 horses to win)

Notes
* Two or three courses have also broken away from the Bookmakers SP and produce their SPs (ChesterBet). This tends to pay around 10% less than the industry standard SP.

* Betfair levy a premium charge for consistent winners. This is as high as 60% for some punters.

* To fund racing a percentage of stakes or winnings was previously taken as a levy. This changed to a Gross Profit Tax, which was widely welcomed by they racing industry but which has ultimately become detrimental for punters. For the past 10 years the British Horseracing Authority realised that the more profit bookmakers made the more money racing would receive. Thus the BHA changed policies to be pro-bookmaker and anti-punter.

[traynor]

The UK is unique in that we have three betting mediums

Bookmakers
You can take the price they offer at the time or you can take the Starting Price.

The "take out" or more correct terminology overround is roughly 1.5%-2% per runner. So in a 10 runner race the standard punter is 17% down to start with.

Exchanges
The overround tends to be around 2-4% for the whole race so this is way better for punters. However, winning bets are subject to a commission charge of ~4.5% for minnows and 0-2% for whales.

Tote
This used to be government owned but was sold to a bookmaker a few years ago. This is the closest to your PMU returns.

The takeouts IIRC are as follows:

Win Pool 16.5%

Exacta Pool 25%
Trifecta Pool 25%
Placepot Pool 28% (find 6 horses to show)
Jackpot Pool 28% (find 6 horses to win)

Notes
* Two or three courses have also broken away from the Bookmakers SP and produce their SPs (ChesterBet). This tends to pay around 10% less than the industry standard SP.

* Betfair levy a premium charge for consistent winners. This is as high as 60% for some punters.

* To fund racing a percentage of stakes or winnings was previously taken as a levy. This changed to a Gross Profit Tax, which was widely welcomed by they racing industry but which has ultimately become detrimental for punters. For the past 10 years the British Horseracing Authority realised that the more profit bookmakers made the more money racing would receive. Thus the BHA changed policies to be pro-bookmaker and anti-punter.

I don't mind even a little bit paying a commission on my winnings--as long as they let me keep betting (and winning more).

[traynor]

A plus for Sweden is that no whale cruising for krill is allowed. That should make up for some of the takeout.

[Seabiscuit@AR]

These figures will not paint a realistic picture

The big UK bookies will not tolerate winners. So they might be returning 95% or 90% of money to the bettors but this is on the condition that you are a proven loser. Show any smarts at all and you are gone and gone quickly

The other thing is the big UK bookies have not been paying much tax the last few years. This will be changing over the next few years so their returns to losers won't be as generous

[Hoofless_Wonder]

Check Exhibit 9 on Page 17. Where did you find the figures indicating Sweden has more betting than France?

My bad. I was looking at Exhibit 14 on page 18, and comparing the 9.5B Euros versus 12B Swedish kroners (or whatever they use there).

Guess I'm used to seeing pie charts with equal units....