Crist On Breakage

[Horseplayersbet.com]

"The time has come for racing to switch to digital payouts: If a horse should pay $2.04, or $2.39, or $102.93, he should pay off at those precise price points. Over time, the extra pennies and dollars and twenties will accumulate and be churned through the machines again and again, making up the any shortfall on breakage revenue. Racing's customers are entitled to their full payoffs instead of facing an additional tax based on an outmoded fear of pennies."
http://drf.com/news/article/107355.html

[illinoisbred]

In Illinois the breakage used to be given to a retired sailors fund. Don;t know if it still is.

[Bruddah]

In Illinois the breakage used to be given to a retired sailors fund. Don;t know if it still is.

At Oaklawn, the breakage is paid out to the Boys Club, Senior Centers in Hot Springs and several other worthy causes. This has been done since the 1960's and is an important revenue source for these worthy causes. Speaking as an Oaklawn fan only, I say leave the breakage as is. (JMHO) :ThmbUp:

[DanG]

"The time has come for racing to switch to digital payouts: If a horse should pay $2.04, or $2.39, or $102.93, he should pay off at those precise price points. Over time, the extra pennies and dollars and twenties will accumulate and be churned through the machines again and again, making up the any shortfall on breakage revenue. Racing's customers are entitled to their full payoffs instead of facing an additional tax based on an outmoded fear of pennies."
http://drf.com/news/article/107355.html
If I may paraphrase your tag line Bruddah...

Can I get an ‘amen' Brother Steve! :ThmbUp:

[Horseplayersbet.com]

At Oaklawn, the breakage is paid out to the Boys Club, Senior Centers in Hot Springs and several other worthy causes. This has been done since the 1960's and is an important revenue source for these worthy causes. Speaking as an Oaklawn fan only, I say leave the breakage as is. (JMHO) :ThmbUp:
Without getting too political here, shouldn't it be up to the individual person, the one who cashes the ticket, how he donates, and to what cause he donates, if any?

[FenceBored]

Without getting too political here, shouldn't it be up to the individual person, the one who cashes the ticket, how he donates, and to what cause he donates, if any?

Why do you hate widows and orphans, and have you stopped beating your spouse? :D

[Horseplayersbet.com]

Why do you hate widows and orphans, and have you stopped beating your spouse? :D
"I help unwed mothers get their start."

-Steve Martin

Everyone has their favorite charities.

[FenceBored]

"I help unwed mothers get their start."

-Steve Martin

Everyone has their favorite charities.

Agreed, but any attempt to modify breakage in a jurisdiction that gives part of the proceeds to charity will be met by charges that "you're stealing money from (insert local charity here) to line the pockets of (insert derogatory reference to horseplayers here)."

[rjorio]

Steve Crist is once again ahead of the curve on the seldom addressed issue of breakage. It is additional taxation and it's elimination is as important as reduction in takeout.

[castaway01]

It's a nice thought but I wouldn't hold my breath waiting for it to happen.

[Imriledup]

Breakage is the biggest scam in racing going on today.

They didn't want to pay 4.39 to a player who bet 2 dollars to win, but what about the player that bets 200? His ticket goes from 439 to 420, they take 19 bucks breakage so they can avoid him holding up the lines to cash?

How much longer does it take to pay this guy 19 extra dollars with no pennies involved?

I shudder to think at all the extra money i would have in my bank account from this stuff over the years.

[cj]

It's a nice thought but I wouldn't hold my breath waiting for it to happen.

No, but it has to start somewhere if you want things to change.

[Imriledup]

No, but it has to start somewhere if you want things to change.


Hopefully things will happen before we all 'cash in our chips' if you know what i mean. I'd hate to think that this generation of players is going to take it in the shorts.

[rrbauer]

At Oaklawn, the breakage is paid out to the Boys Club, Senior Centers in Hot Springs and several other worthy causes. This has been done since the 1960's and is an important revenue source for these worthy causes. Speaking as an Oaklawn fan only, I say leave the breakage as is. (JMHO) :ThmbUp:

The issue is not about whether the money is going to worthy causes. It's about the process which is no longer necessary except for the few small cents that will be lost in the full-cent payoff calculation. The payoff money belongs to the people who put up the bets: The horseplayers. Do the Oaklawn-sponsored "charities" give receipts to the horseplayers for their "chariiible contributions"? Why not if it's so appreciated?

Breakage in North America amounts to over $100 million per year. It's robbery and as has been pointed out if it goes to the rightful owners, most of it will get churned back into the pools and increase handle and revenue for the industry. Instead, it goes to everyone and their brother, but not to the rightful owners. I'm glad that Crist has voiced an opinion on the issue...better late than never.

[Tom]

Agreed, but any attempt to modify breakage in a jurisdiction that gives part of the proceeds to charity will be met by charges that "you're stealing money from (insert local charity here) to line the pockets of (insert derogatory reference to horseplayers here)."

The the appropriate response to that ridiculous charge is that SUPERMARKETS must go to dime breakage, too.

[Imriledup]

The the appropriate response to that ridiculous charge is that SUPERMARKETS must go to dime breakage, too.

No one seems to mind waiting in line at the market while a 90 year old person is fishing thru their beat up little change purse for the exact amount of pennies for their denture cream.

They don't 'dime break' poor old grandpa Joe, why do they break me? and you?

[Track Collector]

Takeout rate + breakage = Net takeout rate

Hope all you want, but tracks will not give an inch until they see an advantage in doing so.

[Imriledup]

Takeout rate + breakage = Net takeout rate

Hope all you want, but tracks will not give an inch until they see an advantage in doing so.

Yes, there's no advantage in treating your customers right and giving them THEIR money.

[Charli125]

Takeout rate + breakage = Net takeout rate

Hope all you want, but tracks will not give an inch until they see an advantage in doing so.

The tracks do have a clear advantage. There will be more money in the pools, thus more takeout for them.

[Bruddah]

Agreed, but any attempt to modify breakage in a jurisdiction that gives part of the proceeds to charity will be met by charges that "you're stealing money from (insert local charity here) to line the pockets of (insert derogatory reference to horseplayers here)."

You are 100% correct. Any changes from Charity revenue streams, which were created in most cases so Pari Mutual betting would be approved by the citzenry, will result in a backlash by the same voters.

At present and for the forseeable future, Horse Racing doesn't need anymore black eyes with the voting public. On second thought, maybe this is how the Industry Idiots can eliminate race tracks completely. It seems like a perfect business plan for Racing Managemnt to adopt. What a bunch of maroons with a jaundiced case of short sightedness.

Sorry Fence, I meant to give you an AMEN Bruddah!!

[thespaah]

Without getting too political here, shouldn't it be up to the individual person, the one who cashes the ticket, how he donates, and to what cause he donates, if any?
Yes!

[thespaah]

Why do you hate widows and orphans, and have you stopped beating your spouse? :D
This is the type of commentary that the go along to get along people have foisted upon the principled.
No one said anyhting about hating anyone.
But it is easy for do-gooders to shame those who on principle would like to make the decsion to do what they wish with THEIR money.
The guilt trip nonsense no longer works.
If you want to donate, feel free. Stay out of everyone else's wallet

[CBedo]

Takeout rate + breakage = Net takeout rate

Hope all you want, but tracks will not give an inch until they see an advantage in doing so.Exactly. Reducing breakage is reducing the takeout rate. I think in an earlier thread with Prairie Meadows, he talked about "if there was a reduction in breakage, it would have to be made up somewhere" or something similar, implying a takeout increase to offset any breakage reduction.

Lowering takeout is a discussion that we have had (and will continue to have) plenty of times.

[Bruddah]

This is the type of commentary that the go along to get along people have foisted upon the principled.
No one said anyhting about hating anyone.
But it is easy for do-gooders to shame those who on principle would like to make the decsion to do what they wish with THEIR money.
The guilt trip nonsense no longer works.
If you want to donate, feel free. Stay out of everyone else's wallet

Get a grip on reality Mr Spaah. If I were "going along to get along" I would not have made contrarian posts. I stated my opinions and others have stated theirs. I saw nothing in my posts which tries to shame others for having opposite views, until I read your post. The truth is the truth. If I am a "do gooder" that must make you and others the anthesis of that title. All based on your words not mine. :D

[Cratos]

"The time has come for racing to switch to digital payouts: If a horse should pay $2.04, or $2.39, or $102.93, he should pay off at those precise price points. Over time, the extra pennies and dollars and twenties will accumulate and be churned through the machines again and again, making up the any shortfall on breakage revenue. Racing's customers are entitled to their full payoffs instead of facing an additional tax based on an outmoded fear of pennies."
http://drf.com/news/article/107355.html


The breakage problem in horseracing payouts of wagers might be fixable by going to wagering cards. On the first wager the bettor would get a reusable “wagering card” which electronically records the bettor’s wager on the card and encodes the card with a unique pass code.

If the bettor wins, the bettor gets the total payout to the penny recorded on the card and can use the card to make future wagers by using the card at any betting window or free-standing betting machines.

However if the bettor loses there must be “new” out-of-pocket wagering money added to the reusable card at the betting window or at the wagering machine and this process always recycles itself for losers with an “empty” card.

[Track Collector]

The tracks do have a clear advantage. There will be more money in the pools, thus more takeout for them.

Before providing some generalized math, let it be known that I do not favor the track's position on keeping the takeout rates so high. That said, the following, while not 100% precise, should give you an idea of why I believe tracks have not seriously considered takeout rate reductions:

Example Track --> Calder Race Course
Average WPS Pool --> $89,228
Average Win Pool = $89,228 * 65% = $58,000
Average Races per Day --> 11
Win Pool Takeout Rate --> 18%
Note: This example ignores the additional amount of takeout due to breakage. This example also seeks to give the track their highest rate of return by assuming that all handle is on-track.

The means that on average, Calder makes ($58,000 x 11 x 18%) = $114,840 per day on win bets. If they were to lower their takeout by 3%, they would then make $58,000 x 11 x 15% or $95,700 which is $19,140 per day less. If the $19,140 returned to betters was re-invested, the track would gain back $19,140 x 15% = $2,871. Now they would be out $19,140 - $2,871 or $16,269 per day.

The lower takeout rate should attract more price-sensitive betters, so how much more NEW daily handle is needed to break even? It is approximately $16,269 / 15% or $108,460 or a huge 17% more than the current daily handle.

Now moving away from the example and back in to reality, only about 20% of a track's handle comes from on-site, so instead of making 18%, the track only makes about 6-12% on the balance of 80% handle from ADW's, etc. Taking the mid-point of 9% for the off-track handle means that NEW daily handle required to break even would be approximately $16,269 / ((18% x .2) + (9% x .8)) = $150,639 or a 23.6% increase over the original handle. Tracks are looking to make additional monies, not break even, so perhaps a 25-30% overall win pool handle increase would be needed.

Now YOU get to be the high-level track management person who has the ability to make decisions on track takeout rate reductions. You likely need a minimum 25-30% handle increase to justify your 3% reduction. How long do you think it will take before enough existing on-track bettors and the new ones you hope to attract wager enough to get you to this level? Will it be 3 months, 6 months, 2 years, or perhaps even never? And are you willing to take the risk of being fired after just a few months when top management get impatient with the current progress?

I recognize that there could be some errors in both the math and assumptions, but I think you will see that it is easy to criticize when one does not take a more detailed look at the financial aspects of doing this.

For the record, I do believe that rather than choice, tracks will be FORCED to reduce takeout rates and or close over the next few years in order to compete and exist along with other favorable takeout rate games like poker.

[takeout]

Breakage is the biggest scam in racing going on today.Totally agree. Breakage’s time (if it ever really was valid) has long past. It should’ve been abolished decades ago.

[BombsAway Bob]

The breakage problem in horseracing payouts of wagers might be fixable by going to wagering cards. On the first wager the bettor would get a reusable “wagering card” which electronically records the bettor’s wager on the card and encodes the card with a unique pass code.

If the bettor wins, the bettor gets the total payout to the penny recorded on the card and can use the card to make future wagers by using the card at any betting window or free-standing betting machines.

However if the bettor loses there must be “new” out-of-pocket wagering money added to the reusable card at the betting window or at the wagering machine and this process always recycles itself for losers with an “empty” card.
Like the NYRA ONE Account cards anyone can use ontrack now?

[CBedo]

I'm not arguing that lower takeout will or will not increase handle (plenty of other discussions about that), but I did want to comment on your math in the "simple example." Actually the gap is much smaller than you calculate do to the multiplicative effect of having more money (from the lower takeout) to reinvest in the next race (it's like compound interest). Iterating the reinvestment of extra monies into the upcoming race pool, continues to increase the pool size so that the track loses less than what you calculate. One thing this doesn't take into account is that through the larger pools and lower takeout, after the last race, the public has much more money in their pocket than they did in the higher takeout scenario, so in realty, the multiplier either continues to grow, or if they wanted to leave with the same amount of money, they could put more in the pools to start with.

My point, I guess, is not to credit or discredit any school of thought, it's just meant to show that 1) it's not as clear as you make it, even in the simple scenario, and 2) (for both sides), statistics don't lie, statisticians do; just because something is logical, doesn't mean it has to be true. :)