Breakage

[kenwoodallpromos]

With today's computers, is ANY breakage justified?

[Overlay]

Are you referring to the use of computers in calculating mutuel payoffs to the penny, or in the automated cashing of winning tickets down to the penny? If all tracks had that automated cashing capability, breakage wouldn't be justified. In the absence of that capability, the use of breakage becomes a question of human time and convenience in reducing counting errors by mutuel clerks, and reducing delays for bettors that would result from having to count out payoffs down to the penny (the same arguments that were used to justify breakage being instituted in the first place). So I guess my response to your question would be, "It depends."

[BIG RED]

Isn't that also a source of income by the host track?

[Overlay]

Isn't that also a source of income by the host track?

That's another point. If breakage were removed, what effect would that have on other sources of income for tracks, such as the setting of mutuel take levels by states, or other prices the track charges to the public?

[kenwoodallpromos]

In 2000, NYRA breakagfe was $2,333,246, of which tthenstate got bout 30%. in Ny as other states, it varies by track, OTB, type of racing how much % the state gets and if 5 or 10 cent breakage applies.
Generally breakage appears to be about 1/2 or .5% of all wagers, so about $75 million per year in the USA.

[DJofSD]

Racing has a bad habit of only changing when they have their backs up against the wall. What will cause the industry to feel the pain and cause them to change their evil ways? I'm not sure. Hell, even the stock market now trades on the penny.

For those using wagering services, there's absolutely no excuse.

Those using self-service teller machines should be getting returns to the penny.

For those that still like to have cash in their hand after every race, start a new policy where only whole dollars are paid when going to the windows that are serviced by a person and return a voucher for the balance.

[rrbauer]

Breakage is a ripoff of the horseplayer and has been ever since computers have come into play for managing and calculating the pari-mutuel pools and the payoffs.

Before computers breakage served two purposes. One, it allowed the folks in the "calc room" of the pari-mutuel dept a quick way to calculate payoffs using their Friden and other brands of manual calculators. Two, it simplified cash settlements at the payout windows since all settlements were done by cash. No pennies or nickels needed.

If you've been around long enough you remember the days when those pricks in the PM department wouldn't even take a nickel as bona fide money for either part of a bet; or, part of bringing the payout to the next dollar prior to payout.

Today ALL pari-mutuel pools are managed and payoffs are calculated by computers. No manual effort is required. Today most payoff settlements ARE NOT done by cash. They are done by electronic transactions for account wagering; and, they are done by voucher for SAM wagering. Today there is nary a whimper when a customer plops down a handful of nickels to bring the payout balance to the next dollar when a ticket or voucher is being settled. And for that matter it's not unusual to have some nickels pushed your way if the teller has any in the change bin when you're being paid.

Where some breakage may be justified is to remove any mills (fractions of a cent) from the payoff calculation. And, if you want to split hairs in the support of breakage, removing pennies from the final cash settlement makes sense (If the calculated payoff is 23.67 you get 23.65). Other than that there is no reason to remove pennies from the calculation either in the account-wagering or voucher-wagering scenarios.

When the subject of breakage is raised to officials from the racing associations, racetracks or racing commissions they have a standard answer: Oh. That's covered by state law and requires legislative action to get it changed.

Well who are the experts at getting legislative action to get things changed?
Yep. Racing associations, racetracks and racing commissions. And, as usual with no pressure from their customers to invoke change they aren't going to budge. In most cases the first two mentioned benefit financially from breakage so there is even more motivation not to act.

Racing is one of the only businesses that I know today where customer service amounts to take it or leave it. Like it or lump it. Our way or the highway.

[Trax21]

But if you could get the breakage eliminated, wouldn't they simply raise the takeout percentage to recover? It's not like there is a hard cap on it.

[kenwoodallpromos]

But if you could get the breakage eliminated, wouldn't they simply raise the takeout percentage to recover? It's not like there is a hard cap on it.
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Looks like breakage averages about 1/2% of total wagers, or $75 million nationwide.

[banacek]

Nickel breakage ok, dime breakage is criminal. But as a Canadian when I bet into the U.S. track pools that have dime breakage, I get nickel breakage!

[PriceAnProbability]

Nickel breakage ok, dime breakage is criminal. But as a Canadian when I bet into the U.S. track pools that have dime breakage, I get nickel breakage!

When OTB had the surcharge in NY, you got double breakage, where a $2.60 payoff that could have been $2.79 drops to $2.39, and paid off at $2.20!

[Trax21]

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Looks like breakage averages about 1/2% of total wagers, or $75 million nationwide.


So...with those numbers, it's like an additional half percent takeout across the board. With takeout percentages running 15 to 20 for WPS and 18 to 30 for exotics nationwide, it seems that the breakage is a small irritation in the whole scheme of things.

Of course if you're a low odds favorite type player, the breakage hits you harder by percentage than the longshot player who would hardly notice.