Beyer on Rebates

[karlskorner]

Maybe one of his last

www.washingtonpost.com/wp-dyn/sports/columns/beyerandrew/

[Que]

Another excellent column by Andrew Beyer. I hope he continues to write--he is definitely the strongest ally the horse player has today. With regards to this article, I agree 100%, i.e. "The success of the rebate shops underscores the fact that the American racing industry, with its high takeout, is its own worst enemy. By taking 20 percent of every dollar they bankrupt or discourage most of their customers. If, instead, tracks charged 10 percent, those same customers would be betting maniacally because they knew they had a fair chance to win."

I did a study this year to find the optimum bets using one of my methods--I analyzed thousands of races, looking at odds ranges that optimized my total return. The most interesting part of the study was when I included rebates. Using rebates the whole complexity of the program changed--with a rebate the strategy that evolved was to maxmize the number of bets, not the ROI. Specificially, the program accepted a very low ROI (i.e. 2-3%) in order to churn more bets, i.e. in order to earn more in rebates. In a given month, the amount made from rebates often exceeded the profits made from the bets. Thus, the goal became to churn as much money through the windows as possible. While the system's ROI for any given month was uncertain, the amount made from rebates was assured. For example, using Beyer's example, if you can churn $20,000 in bets a day with a 10% rebate; it's like giving the bettor/syndicate a starting balance of $60,000 every month to play the races. Therefore even in a bad month you might lose your starting balance; but in a good month you might make a small proift (2%-5%) on your bets--and you get to keep all your rebates! Another advantage of this method is that it allows you to play lower priced horses (odds wise). This results in a much smoother equity curve, that allows you to invest even more because your risk/reward ratio is much lower.

I think eventually the American racing industry will figure this all out. However, I expect in the near future they will just raise the price of their signal. Unfortunately, all we can expect are baby steps (often backwards), when giants leaps forward are required.

Que.

[LOU M.]

Do I have this right? The host track regards off-shore books as a bettor and because of it's volume rebates it 17% of the 20% take it makes from the wagers the off-shore book sends in.The off-shore book in turn rebates it's customer a portion and keeps the rest as profit. So it's in the best interest for an off-shore book to co-mingle funds and eliminate all risk and actually want to keep as many winning bettors as possible and not track and get rid of the winners.I'm on the wrong side of this game. I should be on some island making book.

[andicap]

I thought that off-shore sites that do not kick bets into pari-mutuel pools DO NOT give the tracks the 3%, that the tracks receive nada from these sites.

Am I wrong? :confused:

[BillW]

Also, the U.S. sites give more than the 3%. They also have to give up the states take to the host track. The simulcast facility probably keeps about 3% (just guessing ... someone know?). and not 17%.

Bill

[linrom1]

Peter Berube, general manager of Tampa Bay Downs, examined last season's wagers from rebate-shop customers and saw that these sophisticated players -- presumably the computer groups -- were winning at an astonishing rate relative to everybody else. "They're fleecing the rest of our customers," Berube said, "and this season we decided not to allow them access to our pools." Tampa Bay became one of the few tracks to cut off the rebate shops.

I wonder what he means by astonishing?

[BillW]

Originally posted by linrom1
Peter Berube, general manager of Tampa Bay Downs, examined last season's wagers from rebate-shop customers and saw that these sophisticated players -- presumably the computer groups -- were winning at an astonishing rate relative to everybody else. "They're fleecing the rest of our customers," Berube said, "and this season we decided not to allow them access to our pools." Tampa Bay became one of the few tracks to cut off the rebate shops.

I wonder what he means by astonishing?

Kind of odd he would reject a paying customer's money also, no wait a minute, Frankie is doing the same thing... I see a trend developing here. :eek:

Bill

[BillW]

I'd be interested to know how TAM was able to do this. Since the offshore outfits are strickly speaking, illegal. I would assume it would be illegal for TAM to contract one of them as a simulcast outlet in the first place. The only way they could get into TAM pools is indirectly through a properly contracted U.S. based hub, which would make their action somewhat anonymous (although I would assume traceable if you knew acct x was owned by the offshore firm). It would also make the success of the wagers difficult to determine as being "astonishing", other than maybe anecdotally.

Bill