Breakage

[dancingbrave]

Does anyone have details of how much as a percentage breakage actually costs the bettor on average? Obviously it depends on what sorts of prices you go for predominately but was just wondering if there had been some analysis on a broad spectrum.

[Overlay]

For each separate type of wager (win, place, show, exotics, etc.), wouldn't the impact of dime breakage in percentage terms be ten cents divided by the overall average mutuel in each of those categories? Just as a wild guess, I would put it at around 3.3% for show bets, 2.5% for place bets, 1.25% for win bets, and something far less than those for exotics. (Again, just a guess.)

[midnight]

The higher the payout, the less of a percentage impact breakage has, and vice versa. It would be at its highest with show wagering and at its lowest with a multi-bet such as the pick six. The highest it could be, in a dime breakage state would be if the payout on a bet were to be $2.3999... and were truncated to $2.20. In that case, the breakage would amount to roughly 6.5% to 7.2% more. For example, with 100,000 in the win pool, and a takeout of 16% (leaving $84,000) there is $70,000 to win on a horse, making it 1/5. It pays exactly $2.40. If one dollar is diverted from another horse and bet on this horse, it now pays 2.3999965. That's truncated to $2.20, so a total of $77,001.10 is paid back to the bettors. The effective takeout is 22.9989%, or 6.9989 more than it was.

The breakage percentage goes up with a lower takeout and down with a higher takeout. For example, if the takeout was only 14% (leaving $86,000), and $71,667 were bet on the winner, that would pay $2.3999888, truncated to $2.20, which would pay a total of 78,883.70, which subtracted from $86,000 would leave $7,116.30, or about 7.1%. Without going into the calculations, a takeout of 10% in the same circumstances would yield breakage of about 7.5%, a takeout of 21% would yield 6.58%, etc. This is logical, as the lower the actual takeout the more money there is to be affected by breakage. As extreme examples, with no takeout, the breakage from the $2.3999/$2.20 payout would be about 8.33%, while if the takeout was 100%, the breakage would be zero.


A few more examples (I have way too much time on my hands on Tuesdays), for the approximate breakage affecting in the max ".999" way (these with a 17% takeout, expressed as a percentage of the total win pool):

$ 4.00 4.15%
$ 6.00 2.77%
$ 10.00 1.66%
$ 20.00 0.83%
$ 80.00 0.21%

Breakage is another obstacle to playing low-priced horses, and another reason why show bettors have a hard time making a profit.

[RXB]

In Canada, it's nickel breakage, including the commingled pools for American tracks. So when a horse pays $2.80 at Hawthorne or Turfway, you might get $2.90 up here.

[AngelEyes]

Midnight,

Could you give me examples of "dime breakage states". Am I correct in assuming that you won't see payoffs of 2.30/2.50/2.70 ..... etc. in those states ? If so , what robbery. How can bookies/offshore sites lose then ?

AngelEyes

[midnight]

The only nickel breakage state that I'm aware of is New York. I believe that all of Canada has nickel breakage.

If anybody knows of a state besides New York with nickel breakage, feel free to chime in.

There's no good reason from the player's standpoint that payouts can't be to the dime on the TOTAL mutuel. In other words, if a horse pays 2.3999, and a player has $200 on it, it's not hard to pay $239.90 instead of $220. The reason it won't happen is because the government gets all or some of the breakage in most states.

[gillenr]

It is time to eliminate breakage now that dime supers pay down to the penny. Other than raping the bettors, the only reason for breakage was for simpler pays.

[midnight]

Unfortunately, our idea of what a "good" reason is varies greatly from what the lawmakers' idea of "good" is, and they're not about to give up that extra revenue, even though it would probably be beneficial to the industry in the long run. Politicians aren't known for seeing too far into the future.

[so.cal.fan]

Gillenr is right!
Time to ELIMINATE breakage.
I recall years ago, I believe it was Tom Ainslie who wrote that it is actually not even legal and could be questioned in court.
I doubt that....or it would have been....but nonetheless.....it's time to go.
That's the least they can do for the bettors.

[Figman]

Midnight, You have to recalculate for NY. The NY legislators have tricked the public into thinking they have "nickle" breakage. This is true only for two dollar payoffs of $11.90 or less. There is breakage as much as 50 cents for some higher New York payoffs.

from a previous post- New York Breakage

NY has the reputation for nickle breakage while most every other racing state breaks to the dime. However, NY breaks to the nickle only on smaller payouts. Here is the breakage rule from Section 229 of the NY Racing Law:

The breaks are hereby defined as the odd cents over any multiple of five for payoffs greater than one dollar five cents but less than five dollars, over any multiple of ten for payoffs greater than five dollars but less than twenty-five dollars, over any multiple of twenty-five for payoffs greater than twenty-five
dollars but less than two hundred fifty dollars, or over any multiple of fifty for payoffs over two hundred fifty dollars.

[kenwoodallpromos]

Best to figure breakage after deducting your initial bet.
If you show pay off is $2.60, figure the breakage based on total pool split but whatever amout up to the dime it turns out to be is a % of your profit above the original $2.00.
$2.66 minus $.06 is 10% loss; @2.16 minus $.06 is 60% loss of profit.

[traveler]

Midnight,
Very good example, I think your numbers are right, "If one dollar is diverted from another horse and bet on this horse, it now pays 2.3999965. That's truncated to $2.20, so a total of $77,001.10 is paid back to the bettors. The effective takeout is 22.9989%, or 6.9989 more than it was." but the effect in percentage terms is what is criminal. You really lose 33% of the $.30 and get only $.20.
Ainslie addresses this pretty good in his "Complete Guide to Thoroughbred Racing" in a chapter on the arithmetic of racing. Not trying to be picky but the percentage loss of your profits is more dramatic at the lower odds. I too thought NY was complete nickle breakage and was consideriing playing there more because of it. Good info. everyone.

[Macdiarmadillo]

It's clearly a significant total amount since the tracks and states don't seem to want to give it up AFAIK.

With somebody snarking about "Hollywood Park: Home of the $5 exacta payoff", I was just thinking the other day also how reported dollar payouts advantage the tracks/states and screw the players. In California and other places, the exactas, for one, are reported as a dollar bet -- not calculated from the $2 bet. That means if the dollar exacta bet payout is $5, it could have actually paid 10.39 for a $2 bet. That's nearly ten percent taken away from your profit. No wonder the tracks don't mind short fields with chalk.

[rastajenk]

Regarding dime-sized wagers: A couple weeks ago I began a part-time gig punching tickets, and the ten-cent supers were the source of several interesting observations, but the one relevant to this thread is that, even though ten percent of a posted dollar payout may go to the penny, i.e., $26.14.... we aren't given pennies to pay it out! You'll get $26.10 and you'll like it, to paraphrase Judge Smails. Breakage right before your very eyes. :eek: So the concept of breakage isn't going to go away too soon.

[RXB]

It's clearly a significant total amount since the tracks and states don't seem to want to give it up AFAIK.

With somebody snarking about "Hollywood Park: Home of the $5 exacta payoff", I was just thinking the other day also how reported dollar payouts advantage the tracks/states and screw the players. In California and other places, the exactas, for one, are reported as a dollar bet -- not calculated from the $2 bet. That means if the dollar exacta bet payout is $5, it could have actually paid 10.39 for a $2 bet. That's nearly ten percent taken away from your profit. No wonder the tracks don't mind short fields with chalk.

It would pay $5.10 for a buck, since the $2 bet would pay $10.20 under that scenario. Dime breakage refers to the idea that they round down to the nearest 10-cent figure per dollar.