Why takeout rates matter more than ever in 2010.

[Stillriledup]

I get REALLY excited to wager on racing cards where i know that there's going to be plenty of 'unsophisticated' money in the pools. This happens very infrequently. You have a few 'big days' per year around the country where you really get the once a year or once every 6 month player.

We call this 'meat on the bone'.

Going back 30 and 40 years ago, you could actually beat the racetrack if you had just a decent opinion. There wasn't speed figures in the racing form, there wasn't handicappers selling trip notes, in fact, very few knew what a 'trip note' even was.

But, as time has gone on, people have gotten better, the information has gotten so 'tight' that the odds on the horses these days are so close to what they should be, that the takeout means everything. With meat on the bone, players could actually win money, now, most of your competition is from people who have amazing information.

Back in the day, there was no internet, now, people can watch video tape, discuss selections and analysis on message boards and sort of come up with a 'consensus' as to who the right horses are. Back in the day, you had none of this. If you were sort of sharp, you were collecting money just by showing up and paying attention.

Its funny and kind of ironic that the racetracks themselves and the racing industry has made information SO accessable, that just people who are sort of intelligent human beings (even if they don't know the first thing about racing) have the ability to just find the right horse more often these days than they did a few decades ago.

Take a high paid professional human from 1980, lets say our recreational handicapper is a doctor and he likes to go to the tracks on the weekends. He's a smart guy and likes to blow off a little steam on Saturday at his local track. Back in the day, he would have no chance, because he wasn't going to be handed selections for free. He wasn't going to be handed a decent speed figure (beyer) for the price of 5 dollars in the DRF. He wasn't going to be handed for free detailed trip analysis from Brad Free, he would either have to watch the video himself, or perish. Now, he just has to read Brad Free's trip/bias analysis and he'll be able to land on the 'right horse' more times in 2010 than he would have in 1980.

Believe it or not, the reason profitable race betting is so hard, is because the racetracks are making the races too easy and there are so many companies who are helping you find the right horses (Ragozin, Beyer figs, Clocker reports, etc) for a small fee.

Another problem is profit margin. The betting pools these days are SO small, that if you bet 2k to win on a 10-1 shot, you're winning too much of your own money and you kill your price. But, you really have to bet a million dollars or more per year to make any kind of money at the windows. If your profit or ROI is 1% and you wager a million bucks for the year, you only make a 10k profit, that's not enough to make a living betting the races. You would have to have at least a 5% profit margin AND bet at least a million in order to profit 50k. That's hard to do, stressful and probably not worth it.

So, where does racing go from here? In this new age of information, the races aren't going to get tougher and if anything, they're going to get easier to handicap. I think the racetracks need to somehow card more competitive races and somehow attract more people with disposable income who are willing to bet and bet large.

I've heard plenty of arguments on lowering takeout from people who have done studies on this kind of thing, i'm not sure if one of the reasons for lower takeout was because the horseplayers have just gotten better. A 20/25% takeout is really massive in 2010 because of the intelligence of the players. You could get away with this takeout in 1980 because there was plenty of 'meat on the bone'. Now, the meat is gone and players are going away quickly and not returning. Lower the price of the bet, and you might get some of these people to return because you'll have more 'winners'.

[Horseplayersbet.com]

Good post. A couple of things I'd like to add. There was more dummy money in the pools back 30 years ago. People who didn't even buy a form. I think that only one third of the bettors bought or looked at a form back then.
There were always "expert" selections available for free or a low price. But the smart money would do their best to exclude themselves from betting these picks because they were mostly underlays. The dummy money was all over the expert picks, chalk, and tips.
You are 100% correct that almost every horseplayer today is at least as knowledgeable as the top horseplayer back 30 years ago. There is hardly any player out there that isn't going by either speed figures, pace figures, done by themselves or a computer generated selection process.
Now all this happened, and collective takeout rate has gone up with the addition of exotics in every race that have high takeout rates even though WPS has remained almost constant (might have gone up a point in 30 years), at least one half the money bet today is bet into high takeout exotics which means that horseplayers are betting into a 19-20% takeout rate on average these days as opposed to a 16 or 17% takeout rate 30 years ago.

[Johnny V]

Excellent points. The learning curve is also much different. What took years of labor and trial and error can now be accomplished in a much shorter time by newer players. There is still "dumb money" in the pools but the newer students of the games money is not in the dumb money pool as long as it used to be.

[CincyHorseplayer]

I came into racing during the information boom of the 80's-90's so I wouldn't know what it's like if the competition wasn't stiff.

I see a reverse phenomenon going on though.I think there is so much information out there that the overload often lets simple truths slip by.I think overall form and class are read poorly.A change in bias is not detected very quickly.Probable pace and how a race will be run is very generically interpreted.And more is bet on concepts than one's personal oddslines.

The potential to win in this game is out there,but it's almost as if you have to be perfect or something will slip by.

I do agree that exorbitant take makes that much more difficult.Personally,in marginal payoff situations,it makes me pass more races.Competition as far as horses on the grounds is already watered down.That combined with high take and underlays galore and I'm passing more races than ever.

[levinmpa]

I've heard plenty of arguments on lowering takeout from people who have done studies on this kind of thing, i'm not sure if one of the reasons for lower takeout was because the horseplayers have just gotten better. A 20/25% takeout is really massive in 2010 because of the intelligence of the players. You could get away with this takeout in 1980 because there was plenty of 'meat on the bone'. Now, the meat is gone and players are going away quickly and not returning. Lower the price of the bet, and you might get some of these people to return because you'll have more 'winners'.

I agree with just about all of your points. I think somewhere along the way, the tracks have to figure out a way for players to bet into 2 horse matchups. This is one way to lower the takeout. It has to be setup like a sports wager. If each horse in the matchup started out at 10/11 or -$1.10 like a football game, the takeout is only 4.5%. That's pretty low for a horse race. Even if they made it 20/23 or -$1.15 we're only talking about 6.5% takeout. Of course the odds would be adjusted by incoming wagers, but the takeout wouldn't change. You might have the favorite go off at -$1.50 or 2/3 and the underdog would be +$1.20 or 6/5. This kind of wager would bring in a whole slew of new players. There are plenty of gamblers out there that love the horses, but stay away due to the steep takeout.

My other pet-peeve is racetracks that have slots do nothing with the slots revenue to give the horseplayer some takeout relief. Why not a set aside a portion of the slots revenue to lower the takeout. This in turn should increase the handle. I would think more players would want to put their gambling dollars into pools with low takeouts, and since more dollars are returned to the player, they are churned over and over, creating a growing handle. I just can't believe that not one racetrack with slots revenue has even attempted this. A growing horse handle along with the slots revenue seems to be a win/win for everyone.

[DeanT]

Nice post SRU!

I think we have a couple differences from 1980 which really throw a wrench in the plan - As you mention, dumb money. Also, late odds drops are different. And takeout was a little bit lower. Several tracks had a 13% WPS take in 1980.

So today, we like a horse at 2-1 fair. He is 5-2 with two minutes to go. We bet. He goes down to 8-5 at the half.

1980 we like that horse. He is 3-1 because of slightly lower take, and goes down to 5-2 last flash because the money is updating more honestly.

I dont think racing sees scenario number two as a big thing - but they dont tend to play races and we as horseplayers know how important it is.

[rrbauer]

My other pet-peeve is racetracks that have slots do nothing with the slots revenue to give the horseplayer some takeout relief. Why not a set aside a portion of the slots revenue to lower the takeout. This in turn should increase the handle. I would think more players would want to put their gambling dollars into pools with low takeouts, and since more dollars are returned to the player, they are churned over and over, creating a growing handle. I just can't believe that not one racetrack with slots revenue has even attempted this. A growing horse handle along with the slots revenue seems to be a win/win for everyone.

I can believe it. It's reality. Racino operators are realists. They can see daily evidence of which part of their business has growth potential and which part is on the wane. And, with more, often neighboring, states getting on the bandwagon with casino games, all promotional ideas are directed at the part of their business that has kept them from goiing under; and, that is most at risk from competition.

On the racing side they're just treading water hoping to break even. They're not interested in ideas that improve horseplayers' bottom line...it's their own bottom line that they're worried about. Horseplayers that continue to support high-takeout venues are either stupid or sick; or, both. The tracks are NOT GOING TO CHANGE THEIR BEHAVIOR until we make it painful for them to continue as they are. It's such a simple proposition.

[Seabiscuit@AR]

From what I can tell the people running betting operations don't like the idea of winning players. Their dream setup is where all bettors have exactly equal ability. Each week or month these equally matched bettors deposit money into their accounts and bet it until it is all gone into the hands of the betting operator and whoever else gets a cut from the takeout (horsemen, state governments etc). Winning players present the "problem" of capturing some of the money from the losing players before it falls into the hands of the betting operator and friends. So the betting operators don't like winning players and are happy for all to be losers

I don't agree with the above ideas but that is how some of those running betting shops think. The problem with their approach is if everyone just automatically loses all their deposited money I am not sure you can expect people to keep depositing money into their account forever. Instead they will turn to the stockmarket or the casino or sports betting etc etc

[Indulto]

… Believe it or not, the reason profitable race betting is so hard, is because the racetracks are making the races too easy and there are so many companies who are helping you find the right horses (Ragozin, Beyer figs, Clocker reports, etc) for a small fee.

Another problem is profit margin. The betting pools these days are SO small, that if you bet 2k to win on a 10-1 shot, you're winning too much of your own money and you kill your price. But, you really have to bet a million dollars or more per year to make any kind of money at the windows. If your profit or ROI is 1% and you wager a million bucks for the year, you only make a 10k profit, that's not enough to make a living betting the races. You would have to have at least a 5% profit margin AND bet at least a million in order to profit 50k. That's hard to do, stressful and probably not worth it.

So, where does racing go from here? In this new age of information, the races aren't going to get tougher and if anything, they're going to get easier to handicap. I think the racetracks need to somehow card more competitive races and somehow attract more people with disposable income who are willing to bet and bet large.

I've heard plenty of arguments on lowering takeout from people who have done studies on this kind of thing, i'm not sure if one of the reasons for lower takeout was because the horseplayers have just gotten better. A 20/25% takeout is really massive in 2010 because of the intelligence of the players. You could get away with this takeout in 1980 because there was plenty of 'meat on the bone'. Now, the meat is gone and players are going away quickly and not returning. Lower the price of the bet, and you might get some of these people to return because you'll have more 'winners'.I have to choose the "or not" option.:jump:

“Where’s the beef,” SRU?

The only thing new in your “meat on the bone” post is your diminished enthusiasm for players bulking up their wager volume to “earn” the kind of rebates that could make them extremely competitive; a practice you once staunchly advocated (theoretically, of course ;)).

How did you conclude the tracks are making the races “too easy?” Didn’t the number of P6 carryovers in SoCal increase this year, despite the decrease in average field size? Has the % of winning favorites or 2nd, 3rd, and 4th choices increased?

Did you really mean “lower the price of the bet” or “lower the cost of wagering? I’ve always associated the former term with the minimum amount required to purchase a ticket on a wager type, and the latter to be the level or rate of takeout.

IMO significantly more winners requires a level playing field where ALL players bet into the same direct or effective takeout that is initially set lower than today's direct averages with the promise of further decreases tied to defined handle increases. Venues enjoying handle increases that boost purses should get more competitive fields at all race condition levels; especially if some venues close -- at least on weekdays – and tracks engage in cooperative scheduling of stakes races.

Now that the price of a Magna 5 wager has been reduced from $2 to $1, it will be interesting to see what happens to that pool; assuming they can keep all the tracks open. Since MEC is already planning to unload Laurel, the bet should start at GP.

[Stillriledup]

I agree with just about all of your points. I think somewhere along the way, the tracks have to figure out a way for players to bet into 2 horse matchups. This is one way to lower the takeout. It has to be setup like a sports wager. If each horse in the matchup started out at 10/11 or -$1.10 like a football game, the takeout is only 4.5%. That's pretty low for a horse race. Even if they made it 20/23 or -$1.15 we're only talking about 6.5% takeout. Of course the odds would be adjusted by incoming wagers, but the takeout wouldn't change. You might have the favorite go off at -$1.50 or 2/3 and the underdog would be +$1.20 or 6/5. This kind of wager would bring in a whole slew of new players. There are plenty of gamblers out there that love the horses, but stay away due to the steep takeout.

My other pet-peeve is racetracks that have slots do nothing with the slots revenue to give the horseplayer some takeout relief. Why not a set aside a portion of the slots revenue to lower the takeout. This in turn should increase the handle. I would think more players would want to put their gambling dollars into pools with low takeouts, and since more dollars are returned to the player, they are churned over and over, creating a growing handle. I just can't believe that not one racetrack with slots revenue has even attempted this. A growing horse handle along with the slots revenue seems to be a win/win for everyone.

I totally agree with you, i know i started a post here at PA asking why all slots money is handed to horse owners. Why not take some slots money and start the day with a 20k 'carryover' into that day's 3rd race exacta pool?

Your matchup idea can be enacted, all they have to do is let US residents sign up with Betfair.

[Horseplayersbet.com]

I totally agree with you, i know i started a post here at PA asking why all slots money is handed to horse owners. Why not take some slots money and start the day with a 20k 'carryover' into that day's 3rd race exacta pool?

Your matchup idea can be enacted, all they have to do is let US residents sign up with Betfair.
The matchup bet can easily be done with the parimutuel system. Unlike Betfair, you don't get locked in odds, but final odds. Didn't Kentucky have a low takeout Odd Even bet recently?

[fmhealth]

Enjoyed your insightful post Riledup. Only one question. If players are so much more enlightened now, why is it that favorites still continue to win at about 30%. Wouldn't you think that greater insights & tools would lead to more favorites scoring?

I'm probably missing the obvious but TIA for any & all responses.

[Horseplayersbet.com]

Enjoyed your insightful post Riledup. Only one question. If players are so much more enlightened now, why is it that favorites still continue to win at about 30%. Wouldn't you think that greater insights & tools would lead to more favorites scoring?

I'm probably missing the obvious but TIA for any & all responses.
Players that do well betting don't generally play favorites as a rule. The same favorites we see today, many would not be favorites 30 years ago, many would.
The 30% rate is coincidental if accurate.
Drugs have come into play more now, horses run less, and throw plastic tracks into the equation, the variable are much higher today than yesterday as well.

One thing that I believe to be true is that a high Beyer horse (or speed fig horse adjusted by real track variant) today paid more when Beyer figures weren't in the form.

[Rutgers]

I agree with just about all of your points. I think somewhere along the way, the tracks have to figure out a way for players to bet into 2 horse matchups. This is one way to lower the takeout. It has to be setup like a sports wager. If each horse in the matchup started out at 10/11 or -$1.10 like a football game, the takeout is only 4.5%. That's pretty low for a horse race. Even if they made it 20/23 or -$1.15 we're only talking about 6.5% takeout. Of course the odds would be adjusted by incoming wagers, but the takeout wouldn't change. You might have the favorite go off at -$1.50 or 2/3 and the underdog would be +$1.20 or 6/5. This kind of wager would bring in a whole slew of new players. There are plenty of gamblers out there that love the horses, but stay away due to the steep takeout.

If you favor lowering the takeout so the majority of players will lose less, then 4.5% (or even 6.5%) is a low takeout rate. If you favor low takeout to help make yourself a winning player, 4.5% takeout on a wager with two possible outcomes, is actually a pretty high takeout rate. A takeout rate of 6.5% on a wager with two possible outcomes would basically be impossible to overcome long term. So I doubt gamblers who stay away from horse racing due to the takeout rates and fully understand takeout would be interested in two-horse match-ups. However, they may be interested in exchange betting with a commission rate of 5%. I do believe tracks have to figure out a way to bring in exchange betting. Although I will say I do not think exchange betting is for everyone and most players will be better off in the mutual pools.



My other pet-peeve is racetracks that have slots do nothing with the slots revenue to give the horseplayer some takeout relief. Why not a set aside a portion of the slots revenue to lower the takeout. This in turn should increase the handle. I would think more players would want to put their gambling dollars into pools with low takeouts, and since more dollars are returned to the player, they are churned over and over, creating a growing handle. I just can't believe that not one racetrack with slots revenue has even attempted this. A growing horse handle along with the slots revenue seems to be a win/win for everyone.

I agree with you, but most of the racinos were set-up to help the state and the horsemen, not the horseplayers. Take Yonkers for example, the VLT’s have a hold of about 8% . A little over half of that goes to the horsemen and the state. The racino gets about 3% of the total amount wagered, and most of that goes to the running of the casino. But I do think you are right, they should be able to use some of the money to lower the takeout.

Maybe that should be on the HANA agenda, to get states with racinos to require some of the money to go towards lowering the takeouts.

[Rutgers]

One thing that I believe to be true is that a high Beyer horse (or speed fig horse adjusted by real track variant) today paid more when Beyer figures weren't in the form.

It is most likely due to smaller field size and higher takeout.

[HuggingTheRail]

The matchup bet can easily be done with the parimutuel system. Unlike Betfair, you don't get locked in odds, but final odds. Didn't Kentucky have a low takeout Odd Even bet recently?

Emerald Downs had this for a bit....feature race each day, and they usually had horses about 6 or 8-1 morning line against each other. Cant recall the takeout rate, but it was "normal" if I recall correctly. They were lucky to get $1000 in the pool.....

[DeanT]

Nice posts Rutgers.

FYI - HANA has written six or seven articles on asking for a slice of slots money to go to lower takeouts. They have also been emailed to several folks who run these things. The last one (http://blog.horseplayersassociation.org/2010/01/finding-out-hard-way-about-slots.html)was a few weeks ago.

[Rutgers]

Enjoyed your insightful post Riledup. Only one question. If players are so much more enlightened now, why is it that favorites still continue to win at about 30%. Wouldn't you think that greater insights & tools would lead to more favorites scoring?

I'm probably missing the obvious but TIA for any & all responses.

I agree with you, if players are smarter the percentage of winning favorites should go up, but it has been about 33% for decades. The percentage of winning favorites may be a little higher now, but that is probably due to shrinking field size.

But on the other hand, the other indicator that should be looked at is the profit/loss from betting all favorites. If people are smarter, it could be more people are betting the favorite. If I remember correctly, for years the loss was about 10%, but recently that figure is probably closer to 15%. But here again that could be a result of shrinking field sizes. (I think Barry Meadow wrote about this at one time)

While there is more information available to horseplayers, there are more ways to interpret that information, which will lead to more different conclusions. Plus, some of the information out there can be rather useless.

[Stillriledup]

Enjoyed your insightful post Riledup. Only one question. If players are so much more enlightened now, why is it that favorites still continue to win at about 30%. Wouldn't you think that greater insights & tools would lead to more favorites scoring?

I'm probably missing the obvious but TIA for any & all responses.


While i have zero proof that bettors have gotten smarter over the years, i think that the difference is that every horse's odds has just gotten closer to market value for that particular horses chances. The horse with the most money on him is winning at a 30-35 percent clip pretty much universally, but i think that the odds have gotten tighter and that overalays are really much harder to find. This doesn't mean that 20-1 shots can't win, but the difference between some 20-1 shots in 1980 and some 20-1 shots today is that today, these horses more deserve to be 20-1. So, you are winning on a horse who has a 5% chance to win his race and you're getting 20-1, which makes him an approximately long run break even bet. In the day, there was some 'meat' on the bone and thus, you were able to get horses who were not as close to market value as they are today.

This is also going on in sports betting. There are some good articles out there now about how sports betting lines have gotten so good, that all the value is sucked out of them. I think horse racing is somewhat similar in this regard.

[Jackal]

The mass information of today bunches wagers just like tip sheets did in the past. People bet the horse that has the best recent beyer, pace rating, ect.

A friend that wins a high percentage of his wagers seldom uses a form to handicap races. It's not that he isn't capable of handicapping with the DRF. He works at the track and bets horses that impress him in the AM.