Trouble understanding --Help!

[Alc]

I keep reading posts and articles about rebates and off-shore wagering and wonder if I'm the only one that dont get it. I'm missing something very basic. If I wager $1 at my local track;.08 goes to taxes,.08 goes to the track operator and .04 goes to purses. If I wager $1 at an off shore wagering site, does the $1 go into the common pool and if so how does the off shore site make money? How can they rebate 5 to 10%? If they pay 3% for the track signal it adds up to 23%. Can someone please explain or direct me to a source that explains the wager dollar distribution? Thanks Al

[alysheba88]

Most offshore rebate shops are NOT parimutuel thats how. The money never goes into the parimutuel pool.

[Zaf]

Are places like Betehorse & Pinnacle actually booking the bets ? Non - parimutuel ?

ZAFONIC

[cj]

Zafonic,

Allegedly, they do not go into the pool. I would not be the least bit surprised if the bets of consistent winners found its way in though. Do some searching on the board, this has been much talked about in the past.

[Dave_K]

Beyer explains it in his article. Rebate shops are only able to operate because of the ass-backwards deal the tracks give simo outlets.

To use Beyers example, say you're at Laurel and bet $100 to win on a live race at Laurel, where the take is 18% on straight bets. The track keeps $18 of your bet and distributes it the way you described.

Now, suppose you're at the Meadowlands and bet $100 on the same horse. Only $3 gets sent to Laurel, and the Meadowlands keeps $15. It really ought to be the other way around.

Rebate shops exploit this by returning a large percentage of what they keep to the bettor. They can do this because they have almost zero overhead -- as somebody here posted, there are no tracks or even simo outlets anywhere on St. Kitts (and I doubt Cuacao or the reservation in Oklahoma is any different).

[Dave_K]

Originally posted by alysheba88 (MW)
Most offshore rebate shops are NOT parimutuel thats how. The money never goes into the parimutuel pool.

Big money bet through rebate shops DOES go into tracks' parimutuel pools. That's my problem with them.

If the off-shores operated separate pools or ran a book or a Betfair type exchange (well, betehorse.com already does this), I wouldn't really care (racetracks understandably would, though).

[Alc]

If the off shore sites are not parimutuel then the only ones getting any money are the tracks (3%). Why arent the horsemen, the states and Uncle Sam screaming for their share?

[Dave_K]

Originally posted by Alc
If the off shore sites are not parimutuel then the only ones getting any money are the tracks (3%). Why arent the horsemen, the states and Uncle Sam screaming for their share?

I don't understand your first sentence. The tracks, in fact, are screaming for their share of money that is not being bet through their pools (e.g., through Betfair).

[lousycapperII]

Originally posted by zafonic
Are places like Betehorse & Pinnacle actually booking the bets ? Non - parimutuel ?

ZAFONIC

If the bet is large enough the book may use "comeback", id est, layoff the wager in the track pool. If they don't they'll either limit the size of the bet or go broke like that famous L.V. book did a few years ago.

-LCII

[Alc]

Dave If I understsand correctly, the off shore sites pay a 3% fee to the tracks for their signal. If thats all their paying then the states, Uncle Sam, a nd the horsemen are certainly not getting the usual cut that they get from an on site wager. I would think that this would result in a lot more discontent then I am hearing. Thanks for the replies. Al

[Dave_K]

Alc, yes you are right. Actually, the off-shore rebate shops are charged slightly more (about 5%) than US simo outlets. But still, this is a lot less than on-track takeout.

The reason this is allowed to continue, and in fact encouraged by some tracks (Magna just lowered the price of their signal to several rebate shops -- on the other hand, Tampa Bay has refused to do business with off-shore rebaters), is that the handle coming from these shops is enormous -- something like 10-15% of pari-mutuel pools has been quoted at some tracks.

The tracks recognize (and rebate shop owners are quick to point out) that this handle would not exist if not for the rebate shops -- which would not exist if they were charged 15% instead of 5% for the signals of US tracks. The handle is huge at the rebate shops because the rebated players are playing at what is effectively a 10% takeout instead of 20% takeout (on average).

The simplest solution (and, ironically, also the one that has the least chance of happening) is for the tracks to lower the takeout themselves to about 10%. They would now be able to keep all that money that is now going to operaters of rebate shops in St. Kitts, Curacao, reservations in OK, etc, etc.



Originally posted by Alc
Dave If I understsand correctly, the off shore sites pay a 3% fee to the tracks for their signal. If thats all their paying then the states, Uncle Sam, a nd the horsemen are certainly not getting the usual cut that they get from an on site wager. I would think that this would result in a lot more discontent then I am hearing. Thanks for the replies. Al

[stgeorge]

You can still read Beyer's column "There's No Discounting Inequities of Rebates" at the Washington Post website:

http://www.washingtonpost.com/ac2/wp-dyn?pagename=article&node=&contentId=A46003-2003Dec31&notFound=true

[trying2win]

--How does a bettor know which offshore racebooks send the bets into the U.S. and Canadian parimutuel pools, and which ones just book the bets? Does each offshore racebook explain which one of these procedures they follow on their websites? I'm just curious.

Thanks,

T2W

[LOU M.]

Lowering the take 7% would not be the same as a 7% rebate.You would only benefit if your ROI is zero or positive because a reduction in takeout is only paid on your winners. If I"m understanding this whole thing correctly the only reason rebate shops send the money in is to cover the wager otherwise they would just book the bet, but they would have extreme exposure to loses and could not keep a winning bettor. By putting the money into the pool they get back 95% pay the winner at the track rate of 83% leaving 12% profit which they use partially for the rebate. In MHO before this is all over one or more race tracks are going to be uncovered for actually running some of these operations to escape paying into purses, taxes and any other "creative" accounting. Lou M.

[Dave_K]

Originally posted by LOU M.
If I"m understanding this whole thing correctly the only reason rebate shops send the money in is to cover the wager otherwise they would just book the bet, but they would have extreme exposure to loses and could not keep a winning bettor.

No, the big rebaters are not books. The players are betting into tracks' pari-mutuel pools. Rebate shops, like the tracks, get their cut regardless of the outcome of the races -- they don't have to worry about "exposure" (there may be smaller outfits that do this, though).

They are essentially simulcast outlets (except without the TV's, tellers, etc.).

[Dave_K]

Originally posted by LOU M.
You would only benefit if your ROI is zero or positive because a reduction in takeout is only paid on your winners.

Well, if you get 20% winners at 3.95-1 average odds, you're a loser. But if those same winners paid 4.05-1, you'd be a winner.

[GameTheory]

Originally posted by LOU M.
Lowering the take 7% would not be the same as a 7% rebate.You would only benefit if your ROI is zero or positive because a reduction in takeout is only paid on your winners.

They should average out to be the same because in the rebate situation the price on the winners stays the same as at the track.

Let's say you bet exactly as the public does and lose exactly the take.

If the take is 20% and you bet with no rebate, you're going to get back $80 for every $100 you bet.

Now let's give you a 5% rebate. Now you get that $80 (no change in the winner's prices) plus $5 in rebates = $85 back.

Instead of a rebate, let's lower the take by 5%. You get back $85, right?

Same difference in the long-run. (But different short-term.)

[Dave_K]

I agree, that's why I say that rebated players are "playing at an effectively lower takout".

[LOU M.]

Didn't I say the same thing as your first reply? Concerning your second reply ,what of all your losers you would not get paid for as opposed to a rebate and also you are not taking into effect the higher odds would create more action on the horse reducing the payoff to 3.95 where the public was is the first place. If you had no take out at all eventually the pools would become so efficeint that the prices would mirror the present prices IMHO.LOU M.

[Alc]

Lou, Dave, anyone -----I think its starting to sink in. Assume I open an off shore shop. I take in $100 in wagers on Nfld Park on 1-28-04. I transmit the $100 to Nfld. They then pocket $5, put $95 into their mutuel pools and also return $95 to me. I pay out $80 to the bettors plus an 8% rebate($8). I just made $7. What a deal. But under this scenario everyone should be happy. ? I make 7%, the bettor makes $88 vice $80, the track gets an extra 5%, and 95% of the wager still goes into the mutuel pools with its normal distribution. Am I still missing something? Al

[Alc]

What am i thinking. They cant return $95 and also put the $95 in the pool. I guess I still dont get it.

[Dave_K]

Alc, yeah, that's essentially it. Rebate shop operators love your conclusion.

To continue, though, why should you (the rebate shop owner) keep that 7% (and we're talking about 7% of 1.5 bill = $105 mill per year)? You don't put anything into the industry, but reap huge benefits.

To which you (the rebate shop owner) would reply: Well, I'm not taking money away from the tracks,...by offering rebates, I've created new handle, that simply would not be there without my shop, and tracks are making even more money than if I didn't exist....

The problem with this argument is that if the tracks themselves either 1) offered rebates, or 2) lowered the take to about 8-10%, then they could completely cut out the rebate-shop-middle-man and keep that 105 mill per year for themselves, putting it back into the industry. Instead, it's going to people that own "simulcast outlets" (if they can be called that) in St. Kitts, Curacao, etc.

That's one argument against rebate shops. The other one (which I tried to formulate in the rebate thread in the Gen. Handicapping Disc. Forum) was that rebate shops give a competitive edge to big bettors and this hurts small-time horseplayers. Apparently, I was in the minority of one on this issue.

Essentially, my points were that:
1) everybody can't do better than average (i.e., the takeout). If some do better than the takeout, others must necessarily do worse.
2) the big players betting through the shops in fact do significantly better than the takeout (both the Beyer and Hegarty cite numbers supporting this).
3) the bigger the proportion of the pari-mutuel pools that is "smart money" (or even "somewhat smart money"), the harder it is for the little guy to win at this game.
4) handle from the rebate shops makes up a big percentage of the parimutuel pools (some 10-15%).

[Zaf]

So,

You can have a lower takeout from these Rebate Shops, they are offering a better deal to the public. This is what most horse players want.

On Roger Stein's Show Frank Stronach said these rebate shops will be closed down eventually. Funny, I also heard he was doing business with them and signed deals with 3 separate shops.
Whats up with that, Frank:confused:

ZAFONIC

[mikekk]

Originally posted by Dave_K

The problem with this argument is that if the tracks themselves either 1) offered rebates, or 2) lowered the take to about 8-10%, then they could completely cut out the rebate-shop-middle-man and keep that 105 mill per year for themselves, putting it back into the industry. Instead, it's going to people that own "simulcast outlets" (if they can be called that) in St. Kitts, Curacao, etc.

That's one argument against rebate shops.

Kind of begs the question, doesn't it?

Mikekk

[cj]

Keep this in mind...no matter how "smart" money is, if too much of it is going onto the same horse, it will be an underlay, thus creating big overlays on some others. I know I've said this before, but I really believe this a true.

[Alc]

Dave Thanks again for the replies. I have also reread Andy Beyers article and I think I have a better understanding. I can see your point on the harm to the betting public. It still appears that beside the bettors that horsemen and Uncle Sam are being short changed. Al