Take-Out – Fact or Fiction - You Be the Judge

[Nitro]

I wasn’t sure where to place this thread. I noticed that most threads seem to be devoted to handicapping and the like. I’m curious about why there isn’t a forum devoted to just betting and betting strategies? Please take no offense, but I’m no longer a handicapper because I believe its all nonsense. I’m a player who believes in getting fair value when a play is made. I won’t go into the details of what I use to make selections, because I believe that the selection process always plays second fiddle to the betting process and actually making money in this game.

What concerns me is all of the rhetoric and hype about the so-called evil “Take Out” which I also believe is a lot of nonsense. I’ll take it on first from my own perspective which involves playing Supers which is my forte. First of all I play only selected races that offer some real value which usually means that there are 8 or more entries. From however many entries there are I will usually key wheel 2 entries with 3 others. The keys are used in any of the top 4 positions depending upon the overall combined odds value of all the selected entries. If both keys are just used in the Win spot there are a total of 48 combinations. In the worst case (covering all 4 positions) there are 96 combinations for each key or a total 192 combinations. At say $2 each that’s range of $96 to $384 per race. At the tracks that I play I can usually find at least (3) or (4) races that offer a potential valued return of between $700 to $2500 dollars. So the cost of my keyed combinations have to fall within a profitable range of a projected value based on the odds at hand. My records show that I’m hitting on average 1 out of every 4 races. However when both keys wind up in any of the top 4 positions I’ll hit the play twice. This happens also about once every 3 hits and is icing on the cake.

I realize that there’s generally a 25% Take-Out of the total Super pool money, and that the Win pool odds value already takes the 17% Take-Out into consideration. Why should I be concerned about it at all? If after playing (4) races for about $1600 bet (rounded off), my return with a single key hitting is say $1800. I’ve lost $1200 from 3 bets. However after subtracting the $400 returned on the amount played on the winning bet, the real Net profit is $200. Now if only $100 (25% of my bet) was the calculated Take-Out on the winning play then in reality my net profit margin was actually $300. Anyway you look at it the profit margin is either considered 12.5 % ($200/$1600) without involving the Take-Out or 20% ($300/($1600-$100)) with the Take-Out. Bottom line is that I’m $200 richer!

If the Take-Out only applies to the return on a winning play, where’s all the concern, if all plays made are based on the calculated odds value (where the Take-Out has already been removed from the pool before the odds are posted)? For those who might not get it, the justification to play any race should always be based on a comparison between your overall hit-to-loss play ratio and the odds of your selected play for any given race. In other words pass the race, not because of Take-Out, but because you should never accept odds value that are lower then your ACTUAL hit-to-loss ratio no matter what type of bet you’re making.

My real concern is Uncle Sam’s Take-Out! My feeling is that if this burden was removed from those playing the ponies, we would see a REAL resurgence in this game like never before!

[Spiderman]

The level for IRS withholding and reporting signers should be raised to at least $10k. The reporting method of signer income should be changed from Schedule A to a single line and losses claimed before adjusted gross income. As the current tax code exists, merely hitting a signer for $600 will either involve reporting on Schedule A to claim losses or having a tax increase on the $600 by not reporting loss. People who do not otherwise need to file Schedule A are adversely affected by winning.

People who participated in the Twinspires P6 pool will receive a 1099 type notice of winning, though they lost on the investment. I've seen situations where an individual P6 investment of $2,000 was made and the payoff was $1,800. Player lost money, but IRS sees it as a signer for $1,800.

Revision of the onerous taxing for winning is needed. The industry should lobby for it.

[lamboguy]

today takeout is less than it ever was with rebates. if you want to bet with an adw that is the hertz of adw business, pm me with your phone number and the best time to reach you and i will get you set up. unfortunately i cannot take canadien citizen's and some states are unavailable.

[Spiderman]

NJ is likely unavailable.

[toetoe]

Spidey,

My Spidey Sense is tingling (not really). I didn't read the entire post, but apparently by takeout you meant the tax withholding. The takeout --- or rake --- is indeed deducted from every bet.

It may or may not be clobberin' time.

[Overlay]

If the Take-Out only applies to the return on a winning play, where’s all the concern, if all plays made are based on the calculated odds value (where the Take-Out has already been removed from the pool before the odds are posted)?
I grant that the odds that plays are based on have already incorporated the take prior to the odds being posted. But if there were no take, or the level of the take were not as high, wouldn't those odds (and the corresponding payouts derived from them) be even higher than they otherwise are, creating a greater likelihood of wagers offering value, and not requiring as high a percentage of winning wagers to produce a profit?

[Rutgers]

Takeout is a fact. It does really exist, and the winning payouts are less because of the takeout. So while it is possible to get more then fair value on some wagers in spite of the takeout, it would be easier finding value and the payouts would be higher if the takeout levels were lower.

But I do agree with you that the majority of the players (or at least the majority of frequent posters on this site) do not fully understand takeout and the pari-mutual system and do over-hype the effects of the takeout. And as I said before, more players are adversely affected (or is it effected?) by the uneven “rebating system” then by takeout levels on most wagers.

(As a side, technically speaking, the winners do not pay the takeout. The winners get their full winning wager back, plus the winnings. A two dollar wager at 2/1 pays $6.00 which includes the $2 wager in addition to the $4 winnings. Of course, the winner feels the impact of the takeout because the amount of the total pool was reduced by the takeout. The losing players do not feel the impact of the takeout rate because they lose the full amount of their wager, so it makes no difference to them how much goes to the takeout and how much goes to the winners.)

I also agree with you that some changes need to be made to tax code regarding gambling winnings, because the current codes are in my opinion unfair to horseplayers, especially players playing the super-exotics such as the Pick 6.

But in the grand scheme of things, to the majority of the horseplayers takeout has a bigger impact on the game then taxes on winnings do, as every player is affected by the take, while only some players are directly impacted by the tax code.

[Spiderman]

Spidey,

My Spidey Sense is tingling (not really). I didn't read the entire post, but apparently by takeout you meant the tax withholding. The takeout --- or rake --- is indeed deducted from every bet.

It may or may not be clobberin' time.
If you re-read my post, it is all about signers and withholding.

[Robert Fischer]

takeout affects the volume of value plays that you will find.

[Robert Goren]

You can ramble on and on about US tax laws, but I have yet to hear a good argument on why gamblers should be treated differently than part time or very small businesses.

[andymays]

You can ramble on and on about US tax laws, but I have yet to hear a good argument on why gamblers should be treated differently than part time or very small businesses.


The laws pertaining to gamling are vague. Every time you get a signer it enhances the chances of getting an audit. There is no way on earth they should'nt raise the limit to 1000 to one.

[Robert Goren]

While a case can be made for raising the total value of the win being raised due to inflation, I do not see a reason for the odds requirement to be changed.

[andymays]

While a case can be made for raising the total value of the win being raised due to inflation, I do not see a reason for the odds requirement to be changed.

Paperwork.

[GameTheory]

If the tracks would realize that the instant withholding on signers is costing them TONS of money every year, maybe there would be a significant lobby. They don't seem to have a clue. Maybe HANA can put some studies in front of their faces on that issue.

But on the original topic, I never understand the "all this talk about takeout is bunk because you can just figure the odds and make sure you're getting value" argument. If takeout is lowered, ALL winning wagers pay more. If you win the same bets at lower takeout that you do at higher takeout, you make more. Making more is not bunk. And then on top of that, you get to make more wagers because more opportunities will show the required value, so the effect is compounded. A rather small change in the takeout rate (either way) can mean a big difference in your bottom-line.

It is quite easy to see. If takeout was suddenly raised to 80%, would you still say it is nonsense? If it was set to 0%, wouldn't you be betting everything in sight? Takeout matters.

[DeanT]

The difference between 466-1 and 526-1 on a few pick 5's can be the difference between a positive betting year and a negative betting year.

If you are a Twinspires customer and play the 0% take pick 5 all meet at Calder, figure out your end of year plus or minus at 27% and 0% to see the massive difference. More here:

http://blog.horseplayersassociation.org/2011/04/does-takeout-matter-you-judge.html

[andymays]

If you play once a month it matters but not so much.

If you play 3 or more times a weeks it's everything.

[lamboguy]

NJ is likely unavailable.i love jersey, and spent easter there, but we don't take residents of new jersey

[Irish Boy]

A sizeable minority of players don't like the rules because of the paperwork, because how burdensome it is to show offsetting losses, because it's takes away from their bankroll and gives the government an interest-free loan. Those are real and reasonable objections.

Let's not kid ourselves though; most people don't like the signing rules because they wouldn't report that money as income as otherwise.

[dav4463]

I agree that betting strategy is more important than good handicapping. I had a race at Calder today where my 4th choice won and paid $31.20. My second choice ran second and the exacta was over $160.

However, I keyed my top two choices over the others and played my 3rd choice (also an overlay to win). I normally don't go lower than my third choice in playing to win.

My brain (and records) show that when my 4th choice is over 9-1, I make money. My brain also told me that I just didn't think this particular 4th choice would win!

That's the mistake. I should not listen to my brain!

[GameTheory]

A sizeable minority of players don't like the rules because of the paperwork, because how burdensome it is to show offsetting losses, because it's takes away from their bankroll and gives the government an interest-free loan. Those are real and reasonable objections.

Let's not kid ourselves though; most people don't like the signing rules because they wouldn't report that money as income as otherwise.Keep the signing, but drop the withholding.

[Irish Boy]

Keep the signing, but drop the withholding.
I would have no problem with that. I think a lot of people would disagree though, like good ole Jonnielu.

[Spiderman]

You can ramble on and on about US tax laws, but I have yet to hear a good argument on why gamblers should be treated differently than part time or very small businesses.
As I recall you stated that you only play win bets. Horse players are distinct from any other form of gambler and are not treated like a small business.

If treated as a business, we could then file losses against gains before reaching the adjusted gross income line. Current tax code requires filing losses against winners on Schedule A, thus negating the use of the standard deduction. In many cases where people would not otherwise have itemized deductions, that method for filing is double taxation.

How about year-to-year carryover losses. We would all love to see that.

[Spiderman]

While a case can be made for raising the total value of the win being raised due to inflation, I do not see a reason for the odds requirement to be changed.

What is the signer level for a slots or casino player? Please let me know if I am correct - it is $1,500. I hit a P3 for $600 at a Vegas race book and asked what if it were a slots hit.

[jelly]

A friend of mine put $10 into the $100,000 Twinspires pick 6 pool for Gulfstream Park and got back .33cents.He lost $9.67 and had to sign a 1099 form. :lol: :bang:

[Robert Goren]

I have no idea what the odds for a slots hit are. I do not play slots. The odds of 299-1 have been around since 1966 at least. I know because I hit a double for 650 and change in that year(I know a double paying 650+ is unheard of these days, but it happened from time to time back then) What has happened since then to change the odds requirement? In any case, it is not going to change anytime soon. You should plan your play to maximize your after tax profits. Use the tax laws to your advantage. That is what smart business people do.
Unlike the tax laws on horse betting, the takeout rates might change for the better soon.

[Robert Goren]

A friend of mine put $10 into the $100,000 Twinspires pick 6 pool for Gulfstream Park and got back .33cents.He lost $9.67 and had to sign a 1099 form. :lol: :bang: The tax is on stupidity.:rolleyes:

[Broad Brush]

You can ramble on and on about US tax laws, but I have yet to hear a good argument on why gamblers should be treated differently than part time or very small businesses.

This may be true for Federal taxes, however; some states, such as the one I live in, have the most unfair taxes known on earth. Unless you are a fulltime pro
you cannot claim your losses. So if you cash $50,000 in signers and lose
$49,500 back you owe the IRS tax on $500. You owe the state tax on $50,000???

One area where the Federal tax is not the same as tax on business:
A business can carry back or carry forward losses from other years--no dice
for horseplayers.

[funnsss1]

i would garner a bet with you that you dont average 3 out of 20 superfectas if you actually bet them with your socalled method

[PaceAdvantage]

i would garner a bet with you that you dont average 3 out of 20 superfectas if you actually bet them with your socalled methodWhat does it matter to you? Serious question.

[Kelso]

One area where the Federal tax is not the same as tax on business:
A business can carry back or carry forward losses from other years--no dice for horseplayers.Could easily be wrong, but I don't think Schedule C business filers can carry forward losses.

[Nitro]

I grant that the odds that plays are based on have already incorporated the take prior to the odds being posted. But if there were no take, or the level of the take were not as high, wouldn't those odds (and the corresponding payouts derived from them) be even higher than they otherwise are, creating a greater likelihood of wagers offering value, and not requiring as high a percentage of winning wagers to produce a profit? If the Take-out was a lower % or “0” in the Pari-mutel Win pool, the odds would certainly change a bit. My understanding is that the odds for each entry at any given time are calculated as follows:

Total Win Pool – ($Bet Entry #1) – (17% Take-Out) = Odds of Entry #1
…………….....$Bet Entry #1 [#2, #3….etc.]…………............…….1

The Exotic pools are structured differently but again the Pay Out would increase also:

Total Exacta (Triple, Super, etc) Pool – (-25% Take-Out) = Pay Out/Combination
……………......No. of Winning Combinations


You can ramble on and on about US tax laws, but I have yet to hear a good argument on why gamblers should be treated differently than part time or very small businesses. The US Tax Laws are a joke! Especially when you consider how the tax dollars are being spent.

First of all you can’t lump the casual player, the weekend warrior, or the Pro into the same category. In spite of that, none of them should be treated as a business. If anything then maybe as an Investor who might enjoy some tax relief on Capitol Gains.

But why not just follow the Canadians or the English examples and eliminate the gambling and lottery taxes altogether?


i would garner a bet with you that you don’t average 3 out of 20 superfectas if you actually bet them with your so called method.I didn’t say that I’m averaging 3 out of 20 Supers. I said 1 out 4 (or 5 out 20), but that’s really immaterial. If that’s all got out of it then you missed the point completely. The idea is to attempt to stay profitable by realizing that you should only accept a bet when the odds value is greater then your hit/loss ratio while considering the size of your bet.

I would love to take credit for the structure of that type of Super betting, because I find it very useful and a lot less stressful then worrying about the result for a single horse in a race. If given the opportunity, I would also take you up on your proposal, but I would make it more interesting by saying that no matter how many Supers I hit over 20 races that I’m profitable after the 20th.

[Spiderman]

Completed a review of my ADW superfecta bets to date. Wagers were in .50 cent increments:

Wagers - 20
Wagers Won - 3
Total Wagered 158.50
Total Won - 463.50
Average Wager - 8.00

Superfecta wagers account for .015% of overall wagering. Superfecta wagers had a return of 290%. Overall ADW wagering is at 33% profit. Time to devote more focus and investment in Superfectas.

[therussmeister]

Whenever there a threads like this, people are acting like they don't know tax law requires you to declare all your winners, not just your signers.

[Spiderman]

Whenever there a threads like this, people are acting like they don't know tax law requires you to declare all your winners, not just your signers.
Of course, that is true. I didn't read anything, other than your post. people are acting like they don't know tax law requires you to declare all your winners, not just your signers