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Originally Posted by Rutgers
"And so is the takeout. Maybe my question wasn't clear. Why is a 15% rebate on a 25% takeout bet better than a 7% rebate on a 17% bet? It seems that either way, you're more or less betting into an effective take of 10%"
Short term, if you win, it is actually much better to get a 7% rebate on a 17% bet. Long term, with wins and losses, it does not make a difference.
Assume at Utopia Downs, with have a 10 horse field with $10,000 bet on each horse. Total pool amount is $100,000. Also assume a bettor made a $100 win on the horse that won.
With a 25% takeout $75,000 goes back to the winning ticket holders. At $10,000 bet on each that means there were 5,000 winning $2 tickets. So, $75,000/5,000 = $15.00 Mutual payout for each $2.00 wager. So our bettor collects 50 * $15.00 = $750. Plus, he gets 15% of his wager or $15. So he ends up, with $765.
With a 17% takeout, $83,000 goes back to the winners. The winning mutual is now $16.60. So the bettor is now getting back $16.60 * 50 = $830.00 plus $7 rebate for a total of $837.00
But has we all know, we don't win them all. After losing the next 9 races while betting $100 a race with a 15% rebate(on a 25% takeout) the bettor would get back $135. Adding that to the $765 you end up with $900 (after wagering $1,000). With a 7% rebate(on a 17% takeout) the bettor would get back $63. Adding, that to the $837 you end up with the same $900.
I know this is a rather simple made up example, but the math is the same in the real world.
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Quote:
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Originally Posted by ryesteve
Well. maybe you should, because I could swear that his conclusion is that it IS a wash. 
I do understand that if a player is unprofitable, the lower take / lower rebate scenario is preferable, but since we're talking about whales, my assumption is that we're not talking about losing players, since someone betting 7 figures a week who's not a winning player, is going to exhaust their bankroll pretty quickly under either scenario. |
Actually, a profitable player wants the lower take/lower rebate. The profitable player wins a larger percentage of the pool (or
everybody's money) with a lower takeout. A higher rebate just gives you back a larger percentage of your
own money.
In my above example, if the player continues to lose, the bettor is better off with the 15% rebate (but 25% takeout). He will
not be winning but losing less then if the got 7% rebate(with 17% takeout) Hitting 1 out of 11 races leaves $915 for the 15/25 split and $907 for 7/17 split after wagering $1,100.
If the bettor wins more than 1 out of 9 races, he will be better off with the lower rebate/lower takeout. Hitting 1 out of 8 races races gives $870 for the 15/25 split and $886 for the 7/17 split after wagering $800. Profitable for both structures, but more profit for the 7/17 split.
If he hits at 1 out of 9, he breaks even with both rebate/takeout structures.
Keep in mind, 1 out of 10 is the "natural odds" in our example.
