Where did all the horses go?

[whodoyoulike]

Originally Posted by lamboguy

interesting topic here. my only time that i was ever able to beat sports gambling was in the early 1970's. ...

so off to vegas i went, and i went right to this sports book called Little Caesar's. the owner of the place was a guy by the name of EUGENE MAYDAY.---------- he sat in the sports book all day booking the highest limits in the desert. he also happened to own over 2000 taxi cabs that ran around Los Angeles all day.

so i started betting the man the hockey games. for about 2 weeks i was betting his limit on the games $5,000. i thought to myself it wouldn't be to long before i went into the taxi business in Los Angeles. ...

Great line!!

I'll remember this for most of the day.

[Poindexter]

Originally Posted by dilanesp

I am saying the following :

1. There may be successful sports bettors among the small group of people who have incredibly sophisticated amounts of information about a sport. Comparable to the huge computer driven horse racing betting outfits.

Also comparable to who wins playing daily fantasy sports online, which has been widely documented. Picking players shouldn't work any different than picking teams, and yet only the big data operations consistently win. That pretty much shows the reality of sports betting.

2. Variance is incredibly large and it is basically impossible for any modest sports bettor to establish a statistically significant winrate.

3. Sports betting markets are highly efficient, like financial markets, and therefore you are going to generally need inside information or some sort of arbitrage to win as an average player.

4. Most of the claims in this thread about angles (although not your claims!) really don't work mathematically or don't work often enough to get you a decent sample size.

Sports bettors can bet any time they want and lock in the line. So while the closing line is likely pretty efficient a sports bettor can bet the opener that might be 2 points bettor than the closing line (obviously at lower limits). Last time I checked in the NBA a point was worth almost 4 %. Since at random you can hit 50% and most games swing at least a point, from opening to closing, just by being sharp, a player is almost at break even, before he even gets started(assuming he can consistentlly get a 1/2 point beter than closing line).

If you want to live under the delusion that there are not factors in sports that dictate outcomes, fine, but nothing could be further from the truth. It is not like a deck of cards where your Ace King is x% better than your opponents likely hand, it is human beings playing a very competitive game, riding a wave of emotions and reacting to winning streaks, losing streaks, big wins, embarrassing losses, pressure, fatigue and of course there are matchups, injuries, significance of those injuries.

Also, you give linesmakers way too much credit. They are good, but it is the sharps that iron out the line to make it really good, not the linesmaker.

I do not care what game you are taking on, horses, poker, sports, they are all very beatable, and they are all very tough to beat at the same time.

Also regarding variance, the higher you go up the ladder the less the variance is. If a player could truly hit 57% long term he is not going to have many losing seasons. At 55% he is in pretty good shape. It is just when they hit in the 53-54% or even worse that the things you are talking about really come into play.

We are all adults here (I think) and we all have to determine where we are in all our endeavors, including our gambling/investing ones(whatever you want to call it). If we keep good records we know exactly where we are. Doesn't mean we will be in the same place next month, next year or in 5 years. We live, learn and grow as individuals.

I just don't see the point in anyone coming on here and saying, Poker isn't beatable or sports isn't beatable or horses aren't beatable, or so and so is full of it when he says he has a 20% roi............we all know that they all can be beat, but only a small percentage will beat them. Whether poster x is in that unique class, none of us will ever know for sure. I tend to take people at their word, but it isn't costing me anything to do so.

[thaskalos]

Originally Posted by dilanesp

2. Variance is incredibly large and it is basically impossible for any modest sports bettor to establish a statistically significant winrate.

Yes...there is great "variance" in sports-betting. But, when a coin-flip guarantees 50% winners...the variance becomes easier to bear. The horseplayer and the poker player should have it as good.

[Murph]

Originally Posted by dilanesp

One other thing. Lambo's story is great, because it illustrates a couple of things:

Excellent story lambo and it helps to make my point from earlier.

Originally Posted by dilanesp

1. Limits. Even where there is a theoretical opportunity for arbitrage, you can't bet a lot. And that's a huge problem because you need to turn over a lot of action to win a decent winrate. Books may take a ton of action from their best customers, but if you are trying to exploit them, they are likely to significantly limit your action. If they don't limit your action, you should consider that maybe they understand the situation better than you do.

2. Holes close up. Books who routinely allow themselves to be exploited will go bust. Books that figure out what is happening will close the holes. Over time, successful systems will be detected by others as well, which will speed up the closing of the hole.

From a small hometown front book to a Las Vegas legal parlour, you will not be allowed to operate the book for a mark. They don't even need to figure what you do to win they may just not like it. When they 'speed up closing of the hole' they will generally try to toss you into it first. Not unlike lambo's WU friend.

[Lose The Juice]

Back to the OP, this goes back to the late 80s, when Congress gutted the tax deduction on horse-ownership losses. Within a few years, the old-line stables that used to bring in untold numbers of quality hosses a year to NY -- Tartan, Darby Dan, Bwamazon, Christiana, Greentree, Rokeby, Harbor View, etc. -- all more or less disappeared, though the Darby Dan heirs still race a few with Jim Toner. Phipps, thank God, stayed on.

For better or worse, these were old-money outfits that could absorb losses and were in for the long haul. Now their horses are out, and you get more new-money guys who have some big years, then go bust. The Ernie Paragallo story was particularly depressing.

[Parkview_Pirate]

Originally Posted by Track Phantom

I disagree wholeheartedly about lack of discretionary income. I truly believe horseplayers, and most any gamblers, will always find a way to play and are impervious to normal societal financial conditions. We are a different breed. While the rest of the society drives 15 miles out of the way to save .12c per gallon of gas, we think nothing of tossing $60 into a field of $3,500 claimers at Turf Paradise, half of which are making their first start since 2015.

There will always be some of us degenerates who spend some extra bucks on the ponies, and the "Sport of Kings" does have some tradition to support it. But against the economic headwinds we see today, contraction is a certainty, and many of the changes to improve things seem to fail to take that into account. Today, discretionary income that supports the sport is coming from a smaller and smaller pool of gamblers.

Lose the Juice makes a good point - along with the middle class squeeze, the Tax Man made ownership more costly, and with owners bearing a lot of out-of-pocket expenses to stay in the game, how long can that last? We all know how few horseplayers show a profit, and I've got to believe owners that show a profit are a shrinking pool as well.

For the sport to succeed long-term, attracting new fans is a must - to replace fans leaving the game or dying. Same issue with owners. And against the backdrop of a contracting economy, it's going to be tough. Millennials won't have the money, the Feds won't provide tax relief, most states and tracks won't be able to provide relief from high takeouts, and costs are not declining.

Horse racing today is about the same place in the declining timeline where dog racing was back in 2000....

[Saratoga_Mike]

Originally Posted by Lose The Juice

Back to the OP, this goes back to the late 80s, when Congress gutted the tax deduction on horse-ownership losses. Within a few years, the old-line stables that used to bring in untold numbers of quality hosses a year to NY -- Tartan, Darby Dan, Bwamazon, Christiana, Greentree, Rokeby, Harbor View, etc. -- all more or less disappeared, though the Darby Dan heirs still race a few with Jim Toner. Phipps, thank God, stayed on.

As long as you show a profit two out of seven years (I believe that's the test), you can deduct horse-ownership losses just like any other business. What advantages were there in the late 80s? I'm guessing maybe some sort of accelerated depreciation, but I'm curious to know. Thanks.

[alhattab]

Originally Posted by Saratoga_Mike

As long as you show a profit two out of seven years (I believe that's the test), you can deduct horse-ownership losses just like any other business. What advantages were there in the late 80s? I'm guessing maybe some sort of accelerated depreciation, but I'm curious to know. Thanks.

Was curious so did a quick search. According to linked piece- from 1990- reason was simple. Lower tax brackets post 1986 TRA meant that after tax losses were much higher than before. Of course, willingness to absorb such losses abated when the after tax cost more than doubled.


http://articles.latimes.com/1990-08-...-132_1_tax-law

[AndyC]

Originally Posted by Lose The Juice

Back to the OP, this goes back to the late 80s, when Congress gutted the tax deduction on horse-ownership losses. Within a few years, the old-line stables that used to bring in untold numbers of quality hosses a year to NY -- Tartan, Darby Dan, Bwamazon, Christiana, Greentree, Rokeby, Harbor View, etc. -- all more or less disappeared, though the Darby Dan heirs still race a few with Jim Toner. Phipps, thank God, stayed on.

For better or worse, these were old-money outfits that could absorb losses and were in for the long haul. Now their horses are out, and you get more new-money guys who have some big years, then go bust. The Ernie Paragallo story was particularly depressing.

The thing gutted in the 80's was the ability to write off passive losses without having passive income. Essentially those are losses passed through to investors who put money up and have no say in the running of the business. People who owned horses as a business were not restricted from taking losses. The problem was that many of the businesses took on money partners who were not in the business and accordingly could not take the losses passed through to them. Without the ability to get an immediate tax benefit from horse ownership losses, the money quickly dried up.

The passive loss rule was/is very effective at closing a massive loophole for tax shelters. The problem for racing is that when horse ownership had to stand on its own with regard to economic feasibility it didn't really stand up. Not exactly a great place to put your money if you are looking for sustainable profits.

[AndyC]

Originally Posted by Saratoga_Mike

As long as you show a profit two out of seven years (I believe that's the test), you can deduct horse-ownership losses just like any other business. What advantages were there in the late 80s? I'm guessing maybe some sort of accelerated depreciation, but I'm curious to know. Thanks.

The 2 years out of 7 profit test changes the burden of proof from the taxpayer to the IRS. It is still a good idea to make sure that you look like a business when the 9 factor test is applied.

For those of you really interested in knowing more I have attached the IRS audit guide for the Hobby/Business question.

[ultracapper]

Originally Posted by AndyC

The thing gutted in the 80's was the ability to write off passive losses without having passive income. Essentially those are losses passed through to investors who put money up and have no say in the running of the business. People who owned horses as a business were not restricted from taking losses. The problem was that many of the businesses took on money partners who were not in the business and accordingly could not take the losses passed through to them. Without the ability to get an immediate tax benefit from horse ownership losses, the money quickly dried up.

The passive loss rule was/is very effective at closing a massive loophole for tax shelters. The problem for racing is that when horse ownership had to stand on its own with regard to economic feasibility it didn't really stand up. Not exactly a great place to put your money if you are looking for sustainable profits.

There is a poster that belongs to that horse ownership group. So, if that horse had never made it to the track, all the money he put up would have just been lost, and he wouldn't have been able to write any of it off? Or, being that the horse has raced, let's say it wasn't nearly as successful as it has been. Our poster would only be able to write off losses no greater than what his share of the horse's winnings are?

If I'm understanding this correctly, having that tax law repealed would be much more advantageous to horse racing than the "signer" legislation we're tossing around right now. I can see how the passive write off law could be abused, it could almost be used as a "laundry", but for syndicate ownership groups to flourish, some kind of passive loss allowance seems necessary.

[AndyC]

Originally Posted by ultracapper

There is a poster that belongs to that horse ownership group. So, if that horse had never made it to the track, all the money he put up would have just been lost, and he wouldn't have been able to write any of it off? Or, being that the horse has raced, let's say it wasn't nearly as successful as it has been. Our poster would only be able to write off losses no greater than what his share of the horse's winnings are?

If I'm understanding this correctly, having that tax law repealed would be much more advantageous to horse racing than the "signer" legislation we're tossing around right now. I can see how the passive write off law could be abused, it could almost be used as a "laundry", but for syndicate ownership groups to flourish, some kind of passive loss allowance seems necessary.

All good questions.

First off, the investor must invest in a business. So 5 racetrack buddies putting up $5000 each to claim a horse just for the thrill of horse ownership would NEVER be able to write off losses, clearly a hobby. An investor in a long-time racing/breeding operation (unquestionably a business) would be able to write off losses when he/she had passive profits from other passive business investments or when the investment is sold or discontinued. So if a passive loss of $10,000 per yr for 5 years is not allowed and in the 6th year you sell your investment the entire $50,000 loss could be written off in yr 6. Also if you lost $10,000 in year 1 and made $10,000 in year 2 then you can write-off your year 1 loss in year 2.

Racing was certainly not the primary target for the tax legislation, it was the tax shelter industry of which racing used as a source of funding.

[ultracapper]

K-1 is the litmus test?

[AndyC]

Originally Posted by ultracapper

K-1 is the litmus test?

No, because people can be active participants in a business and still get a K-1. A K-1 with limited partner checked would certainly put you in the Passive category.

[ultracapper]

All 2 of them were in the 1st at SA today.

Nice overlay into the DD however. Winner of a 2 horse race to the favorite in a 7 horse field paid 9/2. I expected it to be around $5.