Stop blaming the rebates

[Geekyguy]

Another myth destroyed: rebates are actually GOOD for racetracks!! Here's why:

With rebates, the players are not stealing money from the pools, but from the OTBs. OTBs take that 14 percent and spend it on overhead. That means that 14 percent of every dollar bet never gets churned. The track holds a race, my OTB handles $100, the track gets $3, I get $14, and the players get the other $83.

With a rebate shop, the track gets $3, the OTB gets $4, and the rebate player gets $93. That extra $10 is available for him to churn, whereas if he had bet in an OTB, it wouldn't have been.

The only thing offsetting this is the player who wins with rebates who would not have won without them. He uses the track's money to beat it and doesn't churn what he wins (even then the track still gets the rebate savings), but he is also the exception, more than offset by the rule.

Rebates...are good!!!! The OTBs are the ones who have to fear them, because all a rebate shop is, is a discount OTB that costs less to play through because it can pass the savings from not having to turn the lights on, onto the player. Pinnacle doesn't need tellers, managers, waitstaff, cooks, or bartenders; turf clubs do.

The only people who suffer from rebates are those who have to pay a 17 percent takeout when they bet, when they could reduce that to 17 percent or 7 percent.

[midnight]

One of the things you're missing is that the big rebate players do better than the take and thus actually increase the takeout on the rest of the betting population.

For example, consider a win pool of $100,000, with a 17% takeout. The return to everybody is $100,000-17,000, or $83,000, or 83%. If the rebate players are betting 10% of that money and breaking-even before rebate, then they're putting in $10,000 and taking out $10,000. But the takeout is still 17% of the original $100,000. That means that everybody else is putting in $90,000 and getting back $73,000. That makes their return 73,000/90,000, or 81.1%. That means the takeout on the non-rebate players is effectively 18.9% instead of 17%.

Put simply: the rebate players are adding to the takeout for everybody else. Without a rebate, they might not play, or they might not play as much or as often, which would reduce the net loss of the rest of the betting population.

[westbridge]

I don't buy this, because any consistent NET winner, rebated or not, adds extra takeout to others.

Following your arguement, no one should be allowed to win consistently.

The industry use this arguement because it wants to keep racing as a recreational game (where you are expected to spend money for fun), instead of becoming a financial market (where you try to make profit.)



One of the things you're missing is that the big rebate players do better than the take and thus actually increase the takeout on the rest of the betting population.

For example, consider a win pool of $100,000, with a 17% takeout. The return to everybody is $100,000-17,000, or $83,000, or 83%. If the rebate players are betting 10% of that money and breaking-even before rebate, then they're putting in $10,000 and taking out $10,000. But the takeout is still 17% of the original $100,000. That means that everybody else is putting in $90,000 and getting back $73,000. That makes their return 73,000/90,000, or 81.1%. That means the takeout on the non-rebate players is effectively 18.9% instead of 17%.

Put simply: the rebate players are adding to the takeout for everybody else. Without a rebate, they might not play, or they might not play as much or as often, which would reduce the net loss of the rest of the betting population.

[ryesteve]

For example, consider a win pool of $100,000, with a 17% takeout. The return to everybody is $100,000-17,000, or $83,000, or 83%. If the rebate players are betting 10% of that money and breaking-even before rebate, then they're putting in $10,000 and taking out $10,000. But the takeout is still 17% of the original $100,000. That means that everybody else is putting in $90,000 and getting back $73,000. That makes their return 73,000/90,000, or 81.1%. That means the takeout on the non-rebate players is effectively 18.9% instead of 17%.
That math doesn't work because the rebates aren't coming from the money in the pool.

[Geekyguy]

That math doesn't work because the rebates aren't coming from the money in the pool.

Two things happen with rebates:

1. Winning players use them to suck even more money out of the pools; and

2. Losing players churn them instead of the OTB using them to stay in business.

In the first case, the track suffers, but in the second case, it clearly profits, and since most players lose, even with rebates, their net impact on the track is likely very positive.

All the rebate players are doing is becoming their own OTB. There's no way the track suffers just because my OTB gives me a kickback.

[midnight]

That math doesn't work because the rebates aren't coming from the money in the pool.

The math I presented has nothing to do with where the rebates are coming from. I did forget to allow the money put in by the rebate players, as it affects the percentages, but the principle is still valid.

Assume that rebate players will bet if they get a rebate and won't bet if they don't. It doesn't matter how much of a rebate they get. Assume they're break-even without the rebate. If there's a pool with $100,000 in it at a track that takes 17%, and the rebate players aren't getting any rebate, they won't bet into it. The pool will pay back $83,000 to the winners, or 83%, so the public is paying a 17% takeout, which makes sense. If the rebate players are getting a rebate, they'll culumulatively bet $10,000 into it. There's now $110,000 in the pool. The track is taking 17% of that, or $18,700. That leaves $91,300. The rebate players, being break-even, will cash out the same $10,000 that they put in. That leaves $81,300 left of the $100,000 that the rebate players didn't put in. So everybody else who isn't a break-even rebate player is getting 81.3% instead of 83%, and their takeout is 18.7%.

A simpler way to look at it is this: The extra $10,000 put in is also hit with the 17% takeout, but the rebate players aren't taking out $8,300. They're taking out the same $10,000 they put in. That $1,700 difference has to be made up by the general public.

[ryesteve]

If the rebate players are getting a rebate, they'll culumulatively bet $10,000 into it. There's now $110,000 in the pool. The track is taking 17% of that, or $18,700. That leaves $91,300. The rebate players, being break-even, will cash out the same $10,000 that they put in. That leaves $81,300 left of the $100,000
No it doesn't, because again, the rebates by which the rebate players are "breaking even" is NOT coming from the money in the pool. If they put in 10,000 they're only taking 8,300 out of the money that's actually in the pool... unless you're arguing that the public is being hurt by the presence of smarter money hitting their pool, but that's a completely different argument... just because someone is getting rebates doesn't necessarily make them a better handicapper.

[twindouble]

I don't know what the mystery is, if someone is getting anywhere from 8 to 15 percent back on every dollar they bet and we don't, it's evident to me we are getting screwed to the hilt. That's my math and we fools except it.


Good luck,

T.D.

[ryesteve]

I don't know what the mystery is, if someone is getting anywhere from 8 to 15 percent back on every dollar they bet and we don't, it's evident to me we are getting screwed to the hilt. That's my math and we fools except it.
I wouldn't argue with that... I'm just arguing against the idea that rebates make the takeout higher for everyone else than it already is to begin with.

[twindouble]

I wouldn't argue with that... I'm just arguing against the idea that rebates make the takeout higher for everyone else than it already is to begin with.

I understand but call me old fashion, when I was going full tilt in the contracting business, I baught from my local suppliers, sure I could have saved some money buying from the chain outfits but I would have to supply someone to unload and stock the material and if anything wasn't up to snuff I'd be forever holding my butt to fix it according to others that went that way. Where as, locally I'd get it resolved on the spot plus they would help stock. In other words support your local track and screw the off shore outfits, they shouldn't be legal to begin with.

Every dollar the track can bring in without theses people skimming it puts them in a better position to offer us and the horsemen more, plus these rebate shops are subverting our tax laws that we have to abide by, that's my understanding correct me if I'm wrong. The racing industry here in this country should take controll of every dollar wagered and divide it fairly and include us in the equation and they better do it quickly, if we end up in a recession, some tracks will be sucking wind. ( Magna to the rescue). I personally think that recession is just around the corner.

When the lobbyists and politicians succumb to the idea that foreign countries won't have to pay the same tax we do on winnings and alow them to offer rebates, here again we get the short end of the stick and not because our butt isn't full already.

Anyway, I don't get into this crap that seriously so, I'm open minded only to the point where it starts to effect my my handicapping. :cool:


Good luck,

T.D.

[Geekyguy]

I don't know what the mystery is, if someone is getting anywhere from 8 to 15 percent back on every dollar they bet and we don't, it's evident to me we are getting screwed to the hilt. That's my math and we fools except it. Good luck, T.D.

When you don't get money back on your bets, you are "giving" it to your OTB for the privilege of being able to play there.

If everyone chased rebates, the OTBs would be out of business tomorrow, and the tracks would be getting the same money, without the OTB cut, which would also get churned.

All rebates do is show that OTBs are a waste of money due to high overhead relative to the rebate shops with their lower overhead.

[twindouble]

When you don't get money back on your bets, you are "giving" it to your OTB for the privilege of being able to play there.

If everyone chased rebates, the OTBs would be out of business tomorrow, and the tracks would be getting the same money, without the OTB cut, which would also get churned.

All rebates do is show that OTBs are a waste of money due to high overhead relative to the rebate shops with their lower overhead.

Check this out. http://drf.com/news/article/69962.html

[Geekyguy]

[/b]

Check this out. http://drf.com/news/article/69962.html

So you have the OTBs making 9.4 percent on every wager, sucking it out of the pool just as with the rebate players, but they aren't "ruining the game."

What they really need to do is lower the takeout to a flat 7.5 percent and do away with OTB altogether. Pay 3.5 percent to the online processors who take that now after rebates, and leave the rest of the money in the system to be churned or won so that everyone can profit and the cost of doing business for all goes way down.

OTB is the cancer.

[AngelEyes]

.....
When the lobbyists and politicians succumb to the idea that foreign countries won't have to pay the same tax we do on winnings and alow them to offer rebates, here again we get the short end of the stick and not because our butt isn't full already.
T.D.

This may be off topic. I am from Canada where you don't pay taxes on winnings. Why do you have to pay additional taxes on winnings ? Doesn't takeout include taxes already ? Even so , can you not deduct your losses from your winnings ?
That means takeout is now 17->25%(takeout) + 30% (max. tax rate I think) which could = more than 50%. That's suicide. You got to be crazy to bet under those conditions.

[twindouble]

This may be off topic. I am from Canada where you don't pay taxes on winnings. Why do you have to pay additional taxes on winnings ? Doesn't takeout include taxes already ? Even so , can you not deduct your losses from your winnings ?
That means takeout is now 17->25%(takeout) + 30% (max. tax rate I think) which could = more than 50%. That's suicide. You got to be crazy to bet under those conditions.

angelEyes; Anything over five grand they withhold Fed taxes prior to payoff and yes you can deduct loses up to what you won on the federal but here in MA we get taxed at 5.5 % on all gambling winnings and can't take any loses. That can add up big time when your churning money or making big scores, we get tax forms on any winnings that are 300-1 or over, tris, supers and picks add up quick. The other problem we run into is, if your real lucky (big scores over 5 grand),claim all those loses with the Fed and your refund is high, the flag goes up so you can be assured an audit will follow. You better have a good record of those loses you claimed otherwise. :eek: We can apply for a professional gamblers status and run it like a business but who wants to bother with that. The whole thing sucks to no end.

Good luck,

T.D.

[sjk]

I would think that the biggest issue with rebates is the long-term impact on the race-going population rather than the immediate impact. I'm sure that many of us who have betting races for a long time can remember horses that won for us long ago making us winners on some of our early trips to the track.
I would think that a beginner or casual race-goer has a much slimmer chance of winning for the day than in years past.

I haven't done any calculations but it seems pretty clear that the population of players who are sharp enough to be modest losers without rebates and who are winners with the rebates are going to bet considerably more than in the past both because success leads to more betting and because the rebate structures encourage it.

As pointed out above this is going to increase the net take-out for the casual player. It would not suprise me if the casual player is fighting a 25%-30% take.

The tracks offer concerts and bobbleheads to bring out new people and probably only 5 or 10 out of 100 go home winners. If people get the feeling that winning is a hopeless proposition they are unlikely to keep coming back.

If there are relatively fewer new players the whole industry becomes increasing reliant on a small group of regulars some of whom over time will die, tap out or lose interest.

If new players are discouraged from getting seriously involved all that leaves is the sharks and things get tougher for all of us.

[Geekyguy]

angelEyes; Anything over five grand they withhold Fed taxes prior to payoff and yes you can deduct loses up to what you won on the federal but here in MA we get taxed at 5.5 % on all gambling winnings and can't take any loses. That can add up big time when your churning money or making big scores, we get tax forms on any winnings that are 300-1 or over, tris, supers and picks add up quick. The other problem we run into is, if your real lucky (big scores over 5 grand),claim all those loses with the Fed and your refund is high, the flag goes up so you can be assured an audit will follow. You better have a good record of those loses you claimed otherwise. :eek: We can apply for a professional gamblers status and run it like a business but who wants to bother with that. The whole thing sucks to no end.

Good luck,

T.D.

Anyone sharp enough to hit IRS stuff that often is either a compulsive gambler playing too many combinations, or someone so sharp that the last thing they have to worry about is paying the government occasionally. Thanks to the offshores, they don't even have to do that anymore.

[linrom1]

This has already been proven beyond doubt at tracks like Tampa and Oakland that rebaters and whales kill the game. Avg payoffs and pool sizes actually increased without the parasites.