Bigger Takeout for Exotics...

[DanG]

“Net” is being left out of the equations I’m reading. In evaluating your own play it all comes down to would you rather have 75% of $500.00 or 83% of $450.00?

It’s like the 21% exacta rake at Trk-A vs. the 20% rake at Trk-B. If you have a personal 5% advantage at A over B; you would be mistaken to favor the lower rake. (Trust me; I’m not justifying the obscene takeouts.)

I also think the exotic inefficiencies; while being mentioned are not stressed enough. The relatively sloppy serial / tri-super betting far outweigh the easily adjusted win tote. It’s not easy to find the win pool where an individual put in 64 wagers with the expectation of losing 63 individual bets.

[so.cal.fan]

This is a fascinating thread!
Very interesting and informative posts.

[badcompany]

Originally Posted by JPinMaryland

It would be great to get take outs smaller but unless television and newspaper coverage follows, I dont see that as getting many more people out to the track.

The getting people to the track train has already left the station. Horse racing has transitioned to a primarily off-track betting game. That said, the game needs to stop hemmoraging serious players and to start getting new ones.

Most people lose money at poker and the stock market, too. However, there are example of winning players who provide encouragement and hope to aspiring pros and semi-pros. A while back, someone posted an interview with a mob guy who ran a horse book in Brooklyin in the 80s. He said you had a better chance finding a unicorn than a winning horseplayer. Are horseplayers really this bad at the game, or is it that the deck is stacked against them? Even those who still play regularly realize what they're up against but they're either too addicted or too afraid, of having to get a life, to quit.

[classhandicapper]

Originally Posted by DanG

“Net” is being left out of the equations I’m reading. In evaluating your own play it all comes down to would you rather have 75% of $500.00 or 83% of $450.00?

It’s like the 21% exacta rake at Trk-A vs. the 20% rake at Trk-B. If you have a personal 5% advantage at A over B; you would be mistaken to favor the lower rake. (Trust me; I’m not justifying the obscene takeouts.)

I also think the exotic inefficiencies; while being mentioned are not stressed enough. The relatively sloppy serial / tri-super betting far outweigh the easily adjusted win tote. It’s not easy to find the win pool where an individual put in 64 wagers with the expectation of losing 63 individual bets.

Dan,

I agree with the first part 100%, but the second part only partially.

In theory (and probably in reality) the exotic pools are bet less efficiently, but this crazy idea that the take is divided by 2, 3, 4 or 6 because a bet is multi-race causes most people to include dozens of the poorest value horses on their tickets in an effort to hit the bet.

I see it all the time with people that may be better handicappers than I am. They simply don't quite grasp some of the horrible value individual tickets they include in their exotics trying to cash the bet. Between the higher take and the inclusion of many poor value combinations, any edge they gain because of the ability to take advantage of "multiple mistakes" or "inefficient pools" gets badly diluted.

Some day I may get brazen enough and focus on exotics. I think I would crush them if I played them properly. But unfortunately I don't have the temperment for long losing streaks and wild swings etc.. My emotional makeup is a severe limitation to my success at the races and elsewhere.

[DSB]

Ok, I'm gonna take a stab at this. Let me know if my math is wrong.

My feeling is that a multiple race wager is better than a corresponding parlay. For the record, I've never been a parlay bettor, but I have bet pick 3's and pick 4's. What I've especially enjoyed betting is a multiple race wager with a carryover. In my opinion, it's the only sure way to beat the take.

Anyway, I believe that given the choice, tracks would much rather have someone attempt, say, a three horse parlay than to play a pick 3. Regardless of takeout rates, I think tracks make more money when someone parlays, which, conversely, makes it cheaper to play the pick 3.

Let's take a typical pick 3 pool with a 22% take. In a $1,000 pool the track would rake $220 right off the bat. End of story.

But what happens when, say, a group of people attempt a parlay on the same three races? This is what I've come up with.

If 500 people set out to make a win (17% take) parlay and bet two bucks each, you have the same $1,000 bet on the first leg of the parlay.

After the first leg, some people would be eliminated and those still remaining would divide $830.

That $830 would be bet on the second leg, with the track returning $689 to the bettors who survived round two.

The final $689 would return a total of $572 to those who had all three winners in the parlay.

That means over the same three races, the track rake would have totaled $428 instead of the $220 they took from the corresponding pick 3 pool.

Sure looks like a better wager to get into the closed pool that took 22% all at once rather than a parlay which takes three seperate chunks along the way.

Now I realize that a parlay involves three pools which will include other win wagers than just the original parlay money. But because that additional money is cut at the same rate, I don't see how it would affect the numbers, on average.

Btw, I'm sticking with my original claim that single race exotic wagers are always more expensive than a w,p,s bet in the same race, regardless of how many horses are involved in the exotic.

[DanG]

Originally Posted by DSB

Btw, I'm sticking with my original claim that single race exotic wagers are always more expensive than a w,p,s bet in the same race, regardless of how many horses are involved in the exotic.

I think I know where you’re going with this ‘DSB and I agree in this sense. Let’s say the track is made up of 5 levels of players.

A. Serious as a heart-attack
B. Serious as a mild stroke
C. Serious as a common cold
D. Serious as a hang nail
E. Serious as Rip Taylor during happy hour.

• If you give player A & B a menu of every conceivable exotic wager in each race they will act accordingly to their edge.

• Player C will dip in occasionally and possible more then should because there is such a thing as knowing just enough to get in trouble in pari-mutual wagering.

• Player D may very well benefit from the 1950’s betting menu as the WPS options will almost certainly make their cash last longer.

• Player E: we can only Rip was left a huge inheritance and plays every pool with both fists.

To say “exotic bets are more expensive” doesn’t tell the entire story imo; it depends on what player you’re talking about.

On that subject; the famous poker player Daniel Negreanu has a philosophy called “small ball”. I don’t pretend to know my poker terminology but it’s somewhat seeing many flops / as cheaply as possible and trying to out play your opponents as the hand develops.

A good friend is applying this to serial bets with great success where he re-evaluates his wagers (in progress) during each event and plays a complex series of “insurance wagers” depending upon “pot odds” as the poker world likes to say.

That is to say; His P4 wager is evaluated according to result in the 2nd leg (after the flop) when a P3 is entered and a rolling DD if offered. Again after 3rd leg (4th street in poker) the same process and of course again in the last leg;(on the River). If the exotic menu was limited this man would basically be out of the game as he just dissolved a P6 team that was together for decades.

Long / poorly explained way of saying; “usually” the more wagering opportunities you offer a serious player / the more likely they are to take advantage and get involved. If you’re saying someone who is at a disadvantage before the cards are dealt will be hurt by the complex wagering offered (and promoted) you could very well be right.

[SMOO]

Originally Posted by DSB

This is a quite interesting thread. Stuff that I've given a lot of thought over the years.....

For what it's worth, here's my take on the subject:

Of all of the reasons why racing has been in a steady decline for decades, I think the betting menus and takeout rates have been the biggest culprit.

Way back when, when racing was healthy, they had win, place show, and a daily double. Attendances where large, handles very good (all on track), takeout on w,p,s was as low as 10%, and some tracks broke to a nickle.

No doubt about it, racing was big business. Track operators raked in the dough, states added to their coffers, fields were big, and there were plenty of venues.

But, as with many businesses, greed took over. States wanted more of the pie. Operators looked for a way to make even more money. The old model wasn't robbing the suckers fast enough. Something had to be done.

At first, it was just a raise in the parimutuel take. It worked its way up to around 17% at most places - and probably only stopped at that point because anything beyond that amount would have had too noticeable an effect on payoffs. To my knowledge, daily double bets always had an increased take - 20% or so - and the wager was instituted as a way to induce fans to get to the track early.

Anyway, once the upper limit had been reached on w,p,s, another avenue had to be explored to extract the money. Enter exotic wagering. First, a couple of exactas a day. So far, so good. Those pools could be cut at a higher rate, and the suckers wouldn't even notice. Hmmmm. Why not make EVERY race an exacta race? Didn't take long to do that. Hmmmm. Why not add something a little harder, with bigger payoffs to wean the bettors off w,p,s? Trifectas? Great idea! Hell, we can even take a bigger cut of them... they will never notice that we are returning even less from the pool because of the payoffs.... this is great! And instead of buying a couple of tickets, they are spreading combinations all over the place! Why didn't we think of this sooner?

Tracks sold everyone on the idea that exotic betting was just giving fans "more options, more ways of having fun", but the real reason was extra profits for them, pure and simple.

Well, the only problem with all of this is that the operators were making it damn near impossible to leave the track a winner. It was hard enough to survive 9 races of betting with a 17% cut, but surviving 20-25% takeouts with fewer winning combinations was disastrous for most bettors.

From what I've read on this site, there seems to be some good mathmaticians around here. Try this exercise:

Start with a small number for simplicity's sake, say $100.

Have a card game where the rake is $27%. That represents a 22% take out rate plus breakage to a dime.

after 10 rounds, how much money is left? Game over.

If racing really wanted to do something to increase business, they ought to revert to the model that made the game great in the first place.

I've long known that personally my flat bet wagers are about break even at the current rates of takeout. 17% plus an average of almost 5% breakage = 22%

If there was a major track with a 10% take on w,p,s and breakage to a nickle, I (and I'm sure many others) would bet horses for a living. As it stands now, I only make occasional bets. Why? Because the profit I would be making on a consistent basis lies somewhere between the old rate of takeout and the current rate. In short, I would expect to make 7% - 10% profit instead of nothing.

Couldn't tracks "sacrifice" take on their w,p,s pools to attract more betting? My guess is that tracks would very quickly realize even more profit at the lower takeout rate than they do now because of the increase in betting volume.

This is a great post and one that anyone involved in the industry should read and learn from.

[DSB]

Thanks for the reply, Dan

Let me make one small, but important, correction. What I said was "Btw, I'm sticking with my original claim that single race exotic wagers are always more expensive than a w,p,s bet in the same race, regardless of how many horses are involved in the exotic."

I indeed believe it's not the case with multiple race wagers, like the ones your friend plays.

And there is no doubt that player skill is the determining factor in consistently overcoming the take in any pool.

If your friend, or anyone else, bets into a single race exotic he will pay more than if he had made a w,p,s bet. The fact that his skill may make it possible for him to overcome it is largely irrelevant. Everybody gets hit the same.

Interesting how your friend has chosen to insure his multiple race wagers. I've done so plenty of times, but using a much simpler approach.

When I'm alive in a DD, P3, P4 and I survive to the final leg, sometimes I look to insure with win bets on selected horses I've left out of the wager. Usually I won't consider it unless the wager will pay enough to sacrifice some profit for the insurance. A simplistic approach for sure, but it's saved me a few times.

[Cangamble]

DSB, breakage is not 5%. Not even close. If the average collective payoff is (and I'm taking a conservative stab here) $40.05, the breakage is very minute.
If the average show payoff is 3.45, then it is more significant (11% on profits).

Average exotic payoffs at Woodbine:
EXOTICS PAYOFF Daily Double: 108.32 Triactor: 969.35 Pick 3: 425.67 Superfecta: 9,049.29 Pick 6: 22,823.10 Pick 4: 4,251.62 Pick 7: 42,691.70 Exactor: 108.71

Also, when you make a parlay, expect the odds to be affected in the third leg at many small tracks especially.

[Cangamble]

Originally Posted by Cangamble

DSB, breakage is not 5%. Not even close. If the average collective payoff is (and I'm taking a conservative stab here) $40.05, the breakage is very minute.
If the average show payoff is 3.45, then it is more significant (11% on profits).

Average exotic payoffs at Woodbine:
EXOTICS PAYOFF Daily Double: 108.32 Triactor: 969.35 Pick 3: 425.67 Superfecta: 9,049.29 Pick 6: 22,823.10 Pick 4: 4,251.62 Pick 7: 42,691.70 Exactor: 108.71

Also, when you make a parlay, expect the odds to be affected in the third leg at many small tracks especially.

For a $3.45, breakage is only 3.4%. I don't know what I was thinking. It is 5% for a $3.05 payoff.

[DanG]

Originally Posted by DSB

Let me make one small, but important, correction. What I said was "Btw, I'm sticking with my original claim that single race exotic wagers are always more expensive than a w,p,s bet in the same race, regardless of how many horses are involved in the exotic."

If your friend, or anyone else, bets into a single race exotic he will pay more than if he had made a w,p,s bet. The fact that his skill may make it possible for him to overcome it is largely irrelevant. Everybody gets hit the same.

Gotcha DSB; my mistake.

There are plenty of real world examples however where you can turn the +- 20% exacta skim into a better investment then a +- 17% win rake. Many times ones odds line doesn’t offer a single overlay in the win pool; but in weighted exactas even a 2-1 favorite can have their “win” expectation doubled depending on your under opinions.

Again; we always get back to the 300lbs gorilla in any speculation and that’s net.

[DSB]

DSB, breakage is not 5%. Not even close.

Hmmm. and to think I thought I knew what I was doing when I made a morning line for nearly 30 years.

Breakage at venues that break to a dime is on average nearly 5%. That is halfway between two even payoffs with no breakage left over.

Breakage at venues that break to a nickle is on average nearly 2.5%. That is halfway between two even payoffs with no breakage left over.

Breakage has nothing to do with odds to a dollar other than how much it takes to reach the next even dime or nickle - whichever the case may be - to a dollar.

A track breaking to a dime would return $8.00 if the odds were 3.19 to 1.
Thats 9.5% The same track would return $8.00 if the odds were 3.01 to 1. That would be .5% An average of the two is almost 5%. The reason it is "almost" is because occasionally the odds will be exact - 3.00 to one.

I'm not going to go through this exercise for breakage to a nickle. It's essentially the same except it's in half.

Now, as far as your astute observation that "expect the odds to be affected in the third leg at many small tracks especially." No joke. If anything, you're helping make my case that generally bettors are better off playing a multiple race wager than a parlay.

The sloppiest morning lines are done by those who ignore breakage in their calculations, btw.

You don't happen to make one, do you?

[badcompany]

Originally Posted by DanG

On that subject; the famous poker player Daniel Negreanu has a philosophy called “small ball”. I don’t pretend to know my poker terminology but it’s somewhat seeing many flops / as cheaply as possible and trying to out play your opponents as the hand develops.


Long / poorly explained way of saying; “usually” the more wagering opportunities you offer a serious player / the more likely they are to take advantage and get involved. If you’re saying someone who is at a disadvantage before the cards are dealt will be hurt by the complex wagering offered (and promoted) you could very well be right.

Since you brought up poker, I recently caught an episode of Poker after Dark. The players were all guys who got started at the Mayfair Club, a poker room in NYC, back in the day, that produced a lot of world champion players like Dan Harrington and Howard Lederer.

During the show, the guys started talking about other types gambling. To a man, they all said that they would never try to play horses professionally BECAUSE OF THE RAKE.

I would agree with your assertion that more types of wagers give a bettor more opportunities to spot inefficiences. However, with the huge takeout, these "opportunities" are just more ways for the track to sucker the public, as pointed out by DSB.

[Cangamble]

Originally Posted by DSB

DSB, breakage is not 5%. Not even close.

Hmmm. and to think I thought I knew what I was doing when I made a morning line for nearly 30 years.

Breakage at venues that break to a dime is on average nearly 5%. That is halfway between two even payoffs with no breakage left over.

Breakage at venues that break to a nickle is on average nearly 2.5%. That is halfway between two even payoffs with no breakage left over.

Breakage has nothing to do with odds to a dollar other than how much it takes to reach the next even dime or nickle - whichever the case may be - to a dollar.

A track breaking to a dime would return $8.00 if the odds were 3.19 to 1.
Thats 9.5% The same track would return $8.00 if the odds were 3.01 to 1. That would be .5% An average of the two is almost 5%. The reason it is "almost" is because occasionally the odds will be exact - 3.00 to one.

I'm not going to go through this exercise for breakage to a nickle. It's essentially the same except it's in half.

Now, as far as your astute observation that "expect the odds to be affected in the third leg at many small tracks especially." No joke. If anything, you're helping make my case that generally bettors are better off playing a multiple race wager than a parlay.

The sloppiest morning lines are done by those who ignore breakage in their calculations, btw.

You don't happen to make one, do you?

A track breaking to a dime would return $8.00 if the odds were 3.19 to 1.
Thats 9.5% The same track would return $8.00 if the odds were 3.01 to 1.
********************************************
A track breaking to a dime still has $8.10, $8.20 and $8.30 payoffs, so what you say is happening, aint happening.

And of course it matters what the payoff is. The way to look at breakage is (when they pay to the dime) that is costs a nickel on average to cash a two dollar bet. A ten dollar bet cashed costs the bettor on average 25 cents, and a $100 ticket cashed costs the player $2.50 on average. But remember, a $100 ticket probably averages a payoff of $8 or so, or winnings of $300. So the player loses less than 1% in this example.

[DSB]

Ok, this is officially getting ridiculous.

Any example you give of a track that has payoffs of $8.10 or $8.30 is breaking to a nickle, not a dime.

Breakage occurs on every dollar bet, not in relation to the payoff, but on EVERY SINGLE DOLLAR bet.

Look at it any way you like.

But it IS happening, and it costs bettors an average of nearly 5% at tracks that break to a dime and nearly 2.5% at tracks that break to a nickle.

I suppose there's a lot of truth in the saying "ignorance is bliss".

Go forth and be blissful.