What happens if the Whales leave California because of the high take out?

[Igeteven]

What happens if the Whales leave California because of the high take out.

IMO opinion, the average bettor goes to the track with 100-300 dollars, there was a poll on this and I believe what the results was, However, the tracks out here rely on the whales for the big bets.

There are heavy and I mean very heavy bettors out here that bet a minimum of a grand and up on a single bet. The highest I ever saw was 50 grand on a bet.

I want to know from people who keep stats or have knowledge of this, If the big bettors leave, would it bankrupt horse racing in California.

This will be interesting reading for all of us on your opinion.

[Stillriledup]

The whale's rebate house will just raise their rebate, the takeout raise won't affect them at all.

[Igeteven]

The whale's rebate house will just raise their rebate, the takeout raise won't affect them at all.

I hope you are right on this, it could BK horse racing here.

[InsideThePylons-MW]

I hope you are right on this

He's not.

[Igeteven]

The whale's rebate house will just raise their rebate, the takeout raise won't affect them at all.

one member says yes, do you have any figures on this,

[Dave Schwartz]

Whenever the takeout goes up it benefits the rebate player since his rebate is tied indirectly to the takeout. The higher the rebate, the higher the takeout usually.

However, CA has some of the lowest rebates in the country to begin with.

[Jeff P]

Whenever the takeout goes up it benefits the rebate player since his rebate is tied indirectly to the takeout. The higher the rebate, the higher the takeout usually.Not if the signal fee goes up too.

Hint: They are not planning on leaving the signal fee untouched.

-jp
.

[Stillriledup]

Not if the signal fee goes up too.

Hint: They are not planning on leaving the signal fee untouched.

-jp
.

i discussed that in another thread.



You're right, if they raise the price for the rebate shop, than the rebate shop cant pass on the saving to the customer. If that happens, and the rebate remains unchanged, they will take a hit in handle from whales. I don't think whales became whales by just handing 2 pct to Santa Anita just for the heck of it. There's gotta be something in this for the whales or they won't bet nearly as much.

[InsideThePylons-MW]

Whenever the takeout goes up it benefits the rebate player since his rebate is tied indirectly to the takeout. The higher the rebate, the higher the takeout usually.

Are you serious? Get a clue.

When takeout goes up.....

Handle goes down

The racetrack raises host fees therefore raising price to play

The people you are betting against are being taxed more so you have less money to win and have to bet more to get it (if takeout was 50% and you got a rebate of 49%, do you really think a takeout increase would be good for rebated players? They wouldn't be able to bet anything or win anything.).

If a pool is 100K and a rebate player wins 10% of the pool after takeout...if the takeout is 20% he wins $8000....if the takeout is 23% he wins $7700.

How the hell can it benefit the rebate player. :bang:

Just a joke you could say that. Do you understand anything about betting?

[Stillriledup]

Are you serious? Get a clue.

When takeout goes up.....

Handle goes down

The racetrack raises host fees therefore raising price to play

The people you are betting against are being taxed more so you have less money to win and have to bet more to get it (if takeout was 50% and you got a rebate of 49%, do you really think a takeout increase would be good for rebated players? They wouldn't be able to bet anything or win anything.).

If a pool is 100K and a rebate player wins 10% of the pool after takeout...if the takeout is 20% he wins $8000....if the takeout is 23% he wins $7700.

How the hell can it benefit the rebate player. :bang:

Just a joke you could say that. Do you understand anything about betting?


:bang:

[markgoldie]

Are you serious? Get a clue.

When takeout goes up.....

Handle goes down

The racetrack raises host fees therefore raising price to play

The people you are betting against are being taxed more so you have less money to win and have to bet more to get it (if takeout was 50% and you got a rebate of 49%, do you really think a takeout increase would be good for rebated players? They wouldn't be able to bet anything or win anything.).

If a pool is 100K and a rebate player wins 10% of the pool after takeout...if the takeout is 20% he wins $8000....if the takeout is 23% he wins $7700.

How the hell can it benefit the rebate player. :bang:

Just a joke you could say that. Do you understand anything about betting?
Just think Dave mis-spoke is all. If the state raises the takeout rate, those of us who are on a sliding scale simply get a larger rebate. However, if the signal cost goes up, we do not.

However, even when the state raises the takeout rate, the affect on the overall pools is negative, so this hurts to some degree as well. So Dave was wrong in this case. There is never a net benefit to a raise in takeout rates, even if the rebate goes up accordingly, which is what he made it sound like, even if it wasn't what he meant.

[Jeff P]

However, even when the state raises the takeout rate, the affect on the overall pools is negative, so this hurts to some degree as well. So Dave was wrong in this case. There is never a net benefit to a raise in takeout rates, even if the rebate goes up accordingly, which is what he made it sound like, even if it wasn't what he meant.

Attn: Track operators, horse owners, trainers, breeders, grooms, mutuel clerks, parking lot attendants, turf writers, racing tv personalities, data providers, chart callers, racing commissioners, politicians, governments, PLAYERS, fans... essentially everyone involved in racing:

Focus your attention on the bolded part of what Mark posted above.

The racing product is no different than any other business. Success or failure is governed by economics.

Like any other product, racing takeout has an optimal pricing point - the point at which max revenue is generated for those putting on the show.

Racing takeout is currently HIGHER than the optimal pricing point.

Meaning that when you raise it, you are moving it even farther away from the optimal pricing point than it previously was.

The only thing that can result from doing that is a drop in total revenue.

When that happens:

Track operators, horse owners, trainers, breeders, grooms, mutuel clerks, parking lot attendants, turf writers, racing tv personalities, data providers, chart callers, racing commissioners, politicians, governments, PLAYERS, fans... essentially everyone involved in racing... SUFFERS the exact opposite of the intended effect.


HANA Blog: Thoroughbred Takeout Increase in California?
http://blog.horseplayersassociation.org/2010/07/thoroughbred-takeout-increase-in.html




-jp

.

[andymays]

California has always chosen short term solutions that create long term misery. The people in charge have a knack for that. The thing is they keep getting promoted. :eek: :rolleyes:

[highnote]

I think Dave and Pylons are both right -- in general.

As Dave said, ADWs usually give bigger rebates to players who bet at tracks with high takeouts. However, those tracks tend to have lower handles.

ADWs offer low rebates on tracks with low takeouts and those tracks tend to have the largest handles -- Churchill, SoCal, NYRA ( I haven't done a fact check on these tracks, but I think it is correct ) -- although, it's tough to find an ADW that has NYRA and also gives rebates. But it is possible.

There are limits to how high takeouts can go before handle is affected. If takeout is too high fewer people will bet fewer dollars. If the pools are too small it won't be worth anyone's time to bet.

Look at the show pools at greyhound tracks, for example. A bettor may get a great rebate, but so what. If a $20 show bet on a longshot causes the show payoff to go from $5 to $3 then no one is going to want to bet it.

The bottom line is that everyone in the chain is going to suffer from higher takeout.

Churchill might be the biggest benefactor -- they still have low takeouts relative to the industry average and they sell their signal to many places. However, their takeout is still way too high, in my opinion.

[thespaah]

The whale's rebate house will just raise their rebate, the takeout raise won't affect them at all.The rebate house won't give back 15 to 25%, or whatever it is, of their wagers.
Look, the wehales need a place to play. The ADW's have been trying to keep their business by offering rebates. Good for them. But the takeout issue is going to reach a tipping point where the whales say "no more". That time may be here soon.
I would like to see the big bettors make an example of California.

[Dave Schwartz]

How the hell can it benefit the rebate player.

Just a joke you could say that. Do you understand anything about betting?

Pylons,

Yes, I understand a little. Perhaps you could explain it to me so that I could understand more.


LOL

[InsideThePylons-MW]

Pylons,

Yes, I understand a little. Perhaps you could explain it to me so that I could understand more.


Let me explain this in the most simple way possible so maybe you will understand.

Even if the rebate bettor is rebated the entire takeout increase, it still hurts him horribly......

Let's say it's a match race and only 2 people bet $100 on each horse at 20% takeout. One bettor is rebated 10% and one isn't. There is $200 in the pool so $160 is returned to the winner.

$170 ($160 + $10 rebate) is returned to rebated bettor if he wins
$160 is returned to non rebated bettor if he wins

If takeout is raised 3% to 23% and rebate is raised 3% to 13%.....pool is $200 and $154 is returned to the winner.....let's be kind and assume there is no breakage

$167 ($154 + $13 rebate) is returned to the rebated bettor if he wins
$154 is returned to the non rebated bettor if he wins


I hope from this 2nd grade textbook example that you can maybe see the following......

The rebated bettor gets hurt by a takeout increase

The non-rebated bettor gets hurt by a takeout increase

Handle will obviously drop with a takeout increase


The above should be obvious....here are a couple others that might not be so obvious to you....

A rebate player's handle will decrease due to pool size shrinkage and less wagering opportunities

A bettor will have to bet more after a takeout increase to win the same amount he would have won before the takeout increase


This is my best attempt to be the author of "Takeout for Dummies"

[ronsmac]

The Whales aren't going to leave, just as the guy said earlier they all bet with rebate shops . It'll be ok.

[Dave Schwartz]

This is my best attempt to be the author of "Takeout for Dummies"

Good title.

Obviously, you are not closely acquainted with the rebate game as it is played by the whaling community.

However, I will defer to your obvious learned expertise.


Have a nice day.

[Horseplayersbet.com]

The Whales aren't going to leave, just as the guy said earlier they all bet with rebate shops . It'll be ok.
It is pretty evident that whales are shifting at least some of their action more to tracks with lower distribution fees.
Indiana Downs and Colonial Downs just reported handle increases, while Hollywood, Lone Star, Fair Grounds and more reported decreases.
Net takeout is becoming more and more important to whales in a quest for value. Of course, since value is their game, field size and pool size are also important. Field size creates some value bets, and the bigger the pool, the more that can be wagered on a value play without turning it into a non value play.

[InsideThePylons-MW]

Obviously, you are not closely acquainted with the rebate game as it is played by the whaling community.

We know that already.

Go ahead and tell us all again that winning whales who are getting a 10% rebate on a 20% takeout wager would quit betting if they lower the takeout to 10% with no rebate.

[Dave Schwartz]

Go ahead and tell us all again that winning whales who are getting a 10% rebate on a 20% takeout wager would quit betting if they lower the takeout to 10% with no rebate.

That would be correct.

[markgoldie]

Let me explain this in the most simple way possible so maybe you will understand.

Even if the rebate bettor is rebated the entire takeout increase, it still hurts him horribly......

Let's say it's a match race and only 2 people bet $100 on each horse at 20% takeout. One bettor is rebated 10% and one isn't. There is $200 in the pool so $160 is returned to the winner.

$170 ($160 + $10 rebate) is returned to rebated bettor if he wins
$160 is returned to non rebated bettor if he wins

If takeout is raised 3% to 23% and rebate is raised 3% to 13%.....pool is $200 and $154 is returned to the winner.....let's be kind and assume there is no breakage

$167 ($154 + $13 rebate) is returned to the rebated bettor if he wins
$154 is returned to the non rebated bettor if he wins


I hope from this 2nd grade textbook example that you can maybe see the following......

The rebated bettor gets hurt by a takeout increase

The non-rebated bettor gets hurt by a takeout increase

Handle will obviously drop with a takeout increase


The above should be obvious....here are a couple others that might not be so obvious to you....

A rebate player's handle will decrease due to pool size shrinkage and less wagering opportunities

A bettor will have to bet more after a takeout increase to win the same amount he would have won before the takeout increase


This is my best attempt to be the author of "Takeout for Dummies"
Here's what "Takeout For Dummies" is unfortunately missing. Maybe we have time to call the printer so we don't embarrass ourselves?

In your example, the bettor with the new, 3% larger rebate, gets back $167 instead of $170 under the new arrangement. So he gets 1.76% less than he would have. BUT this loss of revenue, painful as it is, is mitigated by the fact that he now gets 3% more on every losing ticket that he puts through the windows as well. So had he lost the two-horse event, it would have cost him $90 the old way and $87 this way. This represents a 3.33% savings.

This throws the question of relative advantage into the realm of whether or not you are grinding out results on a positive ROI or negative ROI basis- And if positive, just how high your positive results are. Now hopefully, your balance of action is positive enough, so the new higher 3% rebate hurts a little. However, if you are showing negative straight-up ROI action and are depending on rebate income to make your play profitable (why is everyone staring at me?), the new arrangement is marginally better.

Of course, as you said before (and I did as well), there will be pool shrinkage which helps no one in particular.

[speed]

Let me explain this in the most simple way possible so maybe you will understand.

Even if the rebate bettor is rebated the entire takeout increase, it still hurts him horribly......

Let's say it's a match race and only 2 people bet $100 on each horse at 20% takeout. One bettor is rebated 10% and one isn't. There is $200 in the pool so $160 is returned to the winner.

$170 ($160 + $10 rebate) is returned to rebated bettor if he wins
$160 is returned to non rebated bettor if he wins

If takeout is raised 3% to 23% and rebate is raised 3% to 13%.....pool is $200 and $154 is returned to the winner.....let's be kind and assume there is no breakage

$167 ($154 + $13 rebate) is returned to the rebated bettor if he wins
$154 is returned to the non rebated bettor if he wins


I hope from this 2nd grade textbook example that you can maybe see the following......

The rebated bettor gets hurt by a takeout increase

The non-rebated bettor gets hurt by a takeout increase

Handle will obviously drop with a takeout increase


The above should be obvious....here are a couple others that might not be so obvious to you....

A rebate player's handle will decrease due to pool size shrinkage and less wagering opportunities

A bettor will have to bet more after a takeout increase to win the same amount he would have won before the takeout increase


This is my best attempt to be the author of "Takeout for Dummies"

It might help if ur rebate numbers were correct.

10% of $160 is 16 not 10

13% of 154 is not 13

Back to rebate for dummies

[markgoldie]

It might help if ur rebate numbers were correct.

10% of $160 is 16 not 10

13% of 154 is not 13

Back to rebate for dummies
The rebate is calculated on the amount wagered, not the amount returned.

[InsideThePylons-MW]

Here's what "Takeout For Dummies" is unfortunately missing. Maybe we have time to call the printer so we don't embarrass ourselves?

Revised edition

90% takeout with 80% rebate is a almost optimum situation for a rebate bettor

[InsideThePylons-MW]

It might help if ur rebate numbers were correct.

10% of $160 is 16 not 10

13% of 154 is not 13

Back to rebate for dummies

Sorry

I'll fix those in my next book

[chickenhead]

what mg says is correct, it's some tiny benefit on just a straight ROI basis, but even at say .90 ROI it's less than a percent to the good (I think).

ITPs point, which seems obvious, is being able to bet 300 or 400% more per bet at the same ROI is a lot more tasty than increasing your ROI by 0.3% while shrinking the pools.

Logic seems to dictate you are going to get more bang for your buck by increasing the pool and keeping ROI constant, than by adding some tiny fraction to your ROI while shrinking the pool -- you can't increase your bet size enough to make as much money in the latter case as you can in the former.

[DeanT]

Whales like Dana Parham and his $300M operation would not quit betting if takeout was 10% with no rebate. In fact, he has said that - he would prefer the latter.

The way large groups are betting now, bet to the rebate. But they are not stupid. If you move the goal posts they will adjust, like any good bettor does.

Alan Woods did not technically get a rebate at Hong Kong , but bet billions. With the new 10% rebate on large wagers there, if Mr. Woods was still with us, would have him betting differently with a new approach, I am sure.

To me, a 10% overall take would grow pools over time, and be much more preferable than the slow death of today. 31% super takeouts at PEN are a death spiral, even if we can scoop a 15%+ rebate on that action. Large bettors can feed off a carcass with that, however over time there is no carcass left to pick, and they will leave as fast as they came.

[markgoldie]

what mg says is correct, it's some tiny benefit on just a straight ROI basis, but even at say .90 ROI it's less than a percent to the good (I think).

ITPs point, which seems obvious, is being able to bet 300 or 400% more per bet at the same ROI is a lot more tasty than increasing your ROI by 0.3% while shrinking the pools.

Logic seems to dictate you are going to get more bang for your buck by increasing the pool and keeping ROI constant, than by adding some tiny fraction to your ROI while shrinking the pool -- you can't increase your bet size enough to make as much money in the latter case as you can in the former.
Depends on the poolsize and the relationship of your normal bet to the size of the pool. Also, it depends on the negative size of your ROI. One thing's for sure, though. The original version of "Takeout For Dummies" was missing a big part of the picture of rebates.

[Dave Schwartz]

I really don't know why we are spending time on this. The takeouts seem to be going up, rather than down.

My guess is that if (and it is a pipe dream, IMHO) the takeout dropped to 10% the ADWs would go away and the whale game would be dead anyway.

Just look at the model of how much the racebooks make - yes, I know they are not ADWs but the model is similar. With a 10% takeout the economy of the game is such that only the tracks can afford to take bets.

It is just like the ADWs that cannot afford to take telephone calls for $2/$5 bettors. The overhead is just too high.

[Stillriledup]

Whales like Dana Parham and his $300M operation would not quit betting if takeout was 10% with no rebate. In fact, he has said that - he would prefer the latter.

The way large groups are betting now, bet to the rebate. But they are not stupid. If you move the goal posts they will adjust, like any good bettor does.

Alan Woods did not technically get a rebate at Hong Kong , but bet billions. With the new 10% rebate on large wagers there, if Mr. Woods was still with us, would have him betting differently with a new approach, I am sure.

To me, a 10% overall take would grow pools over time, and be much more preferable than the slow death of today. 31% super takeouts at PEN are a death spiral, even if we can scoop a 15%+ rebate on that action. Large bettors can feed off a carcass with that, however over time there is no carcass left to pick, and they will leave as fast as they came.


If Parham said that, he's wrong. a 20 percent take with a 10 percent rebate is far superior to a 10 percent takeout with no rebate.

[DeanT]

If Parham said that, he's wrong. a 20 percent take with a 10 percent rebate is far superior to a 10 percent takeout with no rebate.

Far be it from me to tell a guy who bets $300M a year how to run his business and what is best for him, but that is what he has said. He is a big supporter of lower takeout for everyone.

[Horseplayersbet.com]

Lets not make the same mistake the California board is making. If takeout goes up they assume the same amount will be bet. They are dead wrong.
However if takeout drops, there will be more players and the pool size will increase.
Whales would love that scenario much more than fighting it out in today's environment.

[toddbowker]

Far be it from me to tell a guy who bets $300M a year how to run his business and what is best for him, but that is what he has said. He is a big supporter of lower takeout for everyone.Actually, he's not alone. I have spoken to many of the successful 'whales' and they are nearly universal in wanting lower takeout first, rebate second. The reason for this is that they believe they will make more in additional profits on winning wagers than they will lose in lower rebates.

[Stillriledup]

Actually, he's not alone. I have spoken to many of the successful 'whales' and they are nearly universal in wanting lower takeout first, rebate second. The reason for this is that they believe they will make more in additional profits on winning wagers than they will lose in lower rebates.

But you get a rebate if you lose also. Most bettors lose more bets than they win, but they get a rebate on 100% of their bets. Give me the higher takeout and the higher rebate. I plan on losing more bets than i win because i'm not playing 3-5 shots and i want that extra cash on the races i lose.

[chickenhead]

I really don't know why we are spending time on this. The takeouts seem to be going up, rather than down.

My guess is that if (and it is a pipe dream, IMHO) the takeout dropped to 10% the ADWs would go away and the whale game would be dead anyway.

Just look at the model of how much the racebooks make - yes, I know they are not ADWs but the model is similar. With a 10% takeout the economy of the game is such that only the tracks can afford to take bets.

It is just like the ADWs that cannot afford to take telephone calls for $2/$5 bettors. The overhead is just too high.

Seems to me (someone correct me if I'm wrong...)

There is certainly a recurring (per transaction) cost to operating an ADW, but scale dramatically changes the cost/transaction. If it doesn't, then there is an artificial roadblock somewhere that needs to be removed so it can work like every other web service in the universe.

There are billions of dollars in fixed costs required to run Google, and 20,000 very highly paid engineers, and computationally extravagent expenditure on each search -- yet they "charge" a penny per transaction and make around $16 billion in profit each year. Taking money from an account and placing it in a pool is an orders of magnitude less "expensive" (in any measurable way) transaction. It isn't scaled well due to lack of volume, but it's just a web service.

No, I'm not saying horseracing transaction volume is going to approach Google (or that it needs to)...just that everything gets better with volume. At 10% takeout there wouldn't be "No ADWs", there would be one or two monstrous ADWs, imo (the most efficient of the lot). There should be a runaway winner in that kind of market, volume begets volume.

There is a reason Betfair considers themselves a technology company first and foremost, seems to me.

[Horseplayersbet.com]

Seems to me (someone correct me if I'm wrong...)

There is certainly a recurring (per transaction) cost to operating an ADW, but scale dramatically changes the cost/transaction. If it doesn't, then there is an artificial roadblock somewhere that needs to be removed so it can work like every other web service in the universe.

There are billions of dollars in fixed costs required to run Google, and 20,000 very highly paid engineers, and computationally extravagent expenditure on each search -- yet they "charge" a penny per transaction and make around $16 billion in profit each year. Taking money from an account and placing it in a pool is an orders of magnitude less "expensive" (in any measurable way) transaction. It isn't scaled well due to lack of volume, but it's just a web service.

No, I'm not saying horseracing transaction volume is going to approach Google (or that it needs to)...just that everything gets better with volume. At 10% takeout there wouldn't be "No ADWs", there would be one or two monstrous ADWs, imo (the most efficient of the lot). There should be a runaway winner in that kind of market, volume begets volume.

There is a reason Betfair considers themselves a technology company first and foremost, seems to me.
If takeout did drop to 10-12%, there would be tremendous growth, and ADW's would be competing more on the platform of customer service. There could still be a lot more than 2 super ADWs competing for business.