Parimutuel Death Spiral

[drib]

The decreasing handles on 2 major circuits (California and NY) have significant consequences for intermediate to large bettors. Here is a simple example: given a pool of $100,000 with a 20% takeout, let's say that $2000 is bet on a winning combination for a payout of $82. Now if a player bets an additional $200, he knocks the payout down to $74.80. Let's suppose that the handle on the race is reduced by 10%. When the same additional $200 winning bet is made, the payout is now reduced to $74.00, in this case costing the winning bettors an extra 1%. The larger that additional bet, the bigger the increased cut. This is just as strong as an increase in takeout.
I call this the "Yonkers effect" b/c I observed the negative consequences 25 years ago at Yonkers Raceway. A drop in handle put the squeeze on the largest players. This started a vicious spiral leading to parimutuel oblivion. Unlike Gulfstream, Oaklawn, Del Mar, and Saratoga, Santa Anita and Aqueduct have a fairly small core of players providing a significant % of handle. The current drop in pools at these two tracks spells big trouble long term.

[Zman179]

Big players had better get used to it, because with the economy as bad as it is (a little better over the past year or two, but still rough), disposable income is hard to come by nowadays. Plus, frankly, horse racing simply is not as popular a gambling attraction as casino games. The handles are going to continue to drop.

[CincyHorseplayer]

The big bettors can go where a lot of the business in the world goes=to southeast Asia.There are huge handles in Hongkong I hear.

[Stillriledup]

Natti is right, HK is where the largest players are betting, America is nickel and dime stuff for the most part.

[Stillriledup]

The decreasing handles on 2 major circuits (California and NY) have significant consequences for intermediate to large bettors. Here is a simple example: given a pool of $100,000 with a 20% takeout, let's say that $2000 is bet on a winning combination for a payout of $82. Now if a player bets an additional $200, he knocks the payout down to $74.80. Let's suppose that the handle on the race is reduced by 10%. When the same additional $200 winning bet is made, the payout is now reduced to $74.00, in this case costing the winning bettors an extra 1%. The larger that additional bet, the bigger the increased cut. This is just as strong as an increase in takeout.
I call this the "Yonkers effect" b/c I observed the negative consequences 25 years ago at Yonkers Raceway. A drop in handle put the squeeze on the largest players. This started a vicious spiral leading to parimutuel oblivion. Unlike Gulfstream, Oaklawn, Del Mar, and Saratoga, Santa Anita and Aqueduct have a fairly small core of players providing a significant % of handle. The current drop in pools at these two tracks spells big trouble long term.


100 percent true. Many large players are very pool sensitive, when the pools are smaller, they bet less. So, not only are the boycotting bettors hurting the track by not betting themselves, but they're forcing other players to bet less....even people who are NOT boycotting Santa Anita are scaling back their normal amounts.

[Zman179]

Natti is right, HK is where the largest players are betting, America is nickel and dime stuff for the most part.

Hong Kong and Japan have handles that rival the Breeders' Cup...and that's on any given Saturday or Sunday.

[DeanT]

Sharp post drib.

[lamboguy]

this game is the greatest game on earth, its the easiest thing to keep together, yet the guys that run this sport have worked overtime to blow it up!

they have to be complete imbeciles

[The Hawk]

Hong Kong and Japan have handles that rival the Breeders' Cup...and that's on any given Saturday or Sunday.

That's true, but they only run once or twice a week, I believe.

[ranchwest]

this game is the greatest game on earth, its the easiest thing to keep together, yet the guys that run this sport have worked overtime to blow it up!

they have to be complete imbeciles

Well, they don't have to be, but they are. :lol:

[drib]

News that this weekend the Santa Anita betting plummeted 25% just makes matters worse. In my mythical example, a 10% handle decline caused that additional $200 wager to drop the payoff from $74.80 to $74.00. Well, a 25% drop in pool size causes the same bet to knock the price to $72.80. The geniuses of California racing are in uncharted waters here. I do not know of any major racing circuit that has ever experienced such decline in business. No intermediate to large bettor (forget about whales) can continue his normal betting patterns in the face of the double whammy of rising takeout and declining pool size.

[Stillriledup]

News that this weekend the Santa Anita betting plummeted 25% just makes matters worse. In my mythical example, a 10% handle decline caused that additional $200 wager to drop the payoff from $74.80 to $74.00. Well, a 25% drop in pool size causes the same bet to knock the price to $72.80. The geniuses of California racing are in uncharted waters here. I do not know of any major racing circuit that has ever experienced such decline in business. No intermediate to large bettor (forget about whales) can continue his normal betting patterns in the face of the double whammy of rising takeout and declining pool size.

They'll be ok, they dont seem to care all that much, all they care about is the horsemen and if the purses are going to be higher.

I think the stupidest thing they did was to raise takeout SO much, i mean, why not raise it a quarter of a point? Raise it from 20.68 to 20.93? Would that have been so hard? No, they have to go for the jugular and try and bankrupt the players in one fell swoop.

Also, another dumb thing they did was not force trainers to enter horses. There are enough horses on the grounds but owners dont want to run in 11 horse fields, all they had to do was tell these trainers that if they dont run their horses, they'll lose their stalls. Put the screws to the trainers and make them run, this way,they dont have to raise takeout to give these people 'incentive' to run, you give them an ultimatum.

[lamboguy]

everyone seems to be an expert on this subject. if hypothetically they lowered the takeout from 20% down to 10% the handle would not double. it might go up 20%.

the game is real boring because it has changed for the worse. the game is catered to owners and trainers with big bankrolls that eliminate the competion. its really that simple. the structure of the game flat out sucks. i really wonder why hana only takes on drugs and track takeout and not the real problem, the structure to make the game more fan friendly.

[DeanT]

everyone seems to be an expert on this subject. if hypothetically they lowered the takeout from 20% down to 10% the handle would not double. it might go up 20%.

the game is real boring because it has changed for the worse. the game is catered to owners and trainers with big bankrolls that eliminate the competion. its really that simple. the structure of the game flat out sucks. i really wonder why hana only takes on drugs and track takeout and not the real problem, the structure to make the game more fan friendly.

There are a million things out there Lambo to take on. The door just has to be open a little bit. When horseplayers have a voice they can be part of change. I just read today that ESPN spends $20M a year on research for their viewership - $20M! What does racing spend? $50k? I have no idea. And it is a billion dollar business.

The stuff horseplayers are working on are all stuff you talk about. There are literally dozens of things out there to fix. High prices, tote systems, more choice, better racing, better probable reporting, better penalities for offenders, better B tracks where there is more competition and fewer superstables at 2-5 each race dropping in for a slots purse..... we could be here til next week listing them.

But the door has to be open to work on them and give feedback. Players have been ignored for 125 years. It is not going to take a month or even a year for them to be suddenly embraced, imo.

[lamboguy]

i really don't want to upset you, but you are dealing with people that are dopes. they are all paid employees that only care about their paychecks on friday. if the paycheck is 5 minutes late they would have your arrested. should takeout be alot lower, answer 100% yes, shoutd there be security on the tote systems to protect the customer, better drug tests, better security all around. yes yes yes. but you bang your head against the wall dealing with these guys that don't care about what you want and what is good for THEM TOO. they are stupid and should not be in charge of running racetracks. these guys have failed to the 10th degree and the only answer you are giving me is that you are speaking to them. get rid of the cancer already. its just upsetting to me to watch this game go to hell. the answers they give you are new wagers, grand slams, rainbow pick six, .10 superfecta's. meanwhile the percentage of winning favorites went form barely 33% to 40%. that is the bottom line, less competetive boring races.

[Stillriledup]

There are a million things out there Lambo to take on. The door just has to be open a little bit. When horseplayers have a voice they can be part of change. I just read today that ESPN spends $20M a year on research for their viewership - $20M! What does racing spend? $50k? I have no idea. And it is a billion dollar business.

The stuff horseplayers are working on are all stuff you talk about. There are literally dozens of things out there to fix. High prices, tote systems, more choice, better racing, better probable reporting, better penalities for offenders, better B tracks where there is more competition and fewer superstables at 2-5 each race dropping in for a slots purse..... we could be here til next week listing them.

But the door has to be open to work on them and give feedback. Players have been ignored for 125 years. It is not going to take a month or even a year for them to be suddenly embraced, imo.

Nail, meet hammer head. Good stuff Dean!

Racetracks are in the gambling business and they're just using horses as their vehicle. They aren't really too interested in investing in the GAME, all they care about is getting as much money as they can as soon as they can. If they were racing cockroaches, they would act the same way, they aren't into 'cultivating' any kind of fan base, they arent interested in the people in the game, they arent interested in the history or the tradition of the sport and they're not interested in working together with other people to make this game a real SPORT.

They just want to get a percentage of gambling dollars, horses just happen to be a word that's on their gambling license, to them, it may as well be ant racing, there's no difference to them.

[thaskalos]

The decreasing handles on 2 major circuits (California and NY) have significant consequences for intermediate to large bettors. Here is a simple example: given a pool of $100,000 with a 20% takeout, let's say that $2000 is bet on a winning combination for a payout of $82. Now if a player bets an additional $200, he knocks the payout down to $74.80. Let's suppose that the handle on the race is reduced by 10%. When the same additional $200 winning bet is made, the payout is now reduced to $74.00, in this case costing the winning bettors an extra 1%. The larger that additional bet, the bigger the increased cut. This is just as strong as an increase in takeout.
I call this the "Yonkers effect" b/c I observed the negative consequences 25 years ago at Yonkers Raceway. A drop in handle put the squeeze on the largest players. This started a vicious spiral leading to parimutuel oblivion. Unlike Gulfstream, Oaklawn, Del Mar, and Saratoga, Santa Anita and Aqueduct have a fairly small core of players providing a significant % of handle. The current drop in pools at these two tracks spells big trouble long term.This is one of the main reasons why informed horseplayers always harp on the advantages of the large mutuel pools; they are more able to "swallow" these large wagers, without severely affecting the payoffs.

Of course, the racetracks - true to their nature - do everything they can to insure that the mutuel pools remain as small as possible...with their short fields and escalating takeouts.

[Stillriledup]

This is one of the main reasons why informed horseplayers always harp on the advantages of the large mutuel pools; they are more able to "swallow" these large wagers, without severely affecting the payoffs.

Of course, the racetracks - true to their nature - do everything they can to insure that the mutuel pools remain as small as possible...with their short fields and escalating takeouts.

I hear you on this one!