When Vegas used to book bets on U.S. tracks

[Imriledup]

Back about 20 years ago, Las Vegas used to 'book' bets on U.S. racetracks. Now, Vegas doesn't book bets anymore as the money goes directly into the pools.

Here's something i was thinking about and i don't know the answer to this. If Vegas had the ability to use racetracks property and handle betting, why can't Vegas (hypothetically) open up their own pari mutuel pool and just lower the takeouts substantially? Vegas has basically zero overhead, so they can lower the takeouts to very low levels and just make their own parimutuel pool on the races from any tracks they want to accept bets on.

As it stands now, there must be some law that prevents me or you from opening a racetrack and accepting bets on other tracks with our own parimutuel pool at a much lower takeout than the host track is charging.

Each track has a monopoly on their own races, there's no competition. You have to take it or leave it, you can't pick and choose which parimutuel pool offers the best prices.

Also, why are racetracks not price fixing? There's no racetrack that has a 10 pct WPS across the board, it seems that all the major racetracks are in bed with each other and the prices are fixed to approximately 15 pct WPS and 20/25 pct for exotics. Its the same with gas stations. If you see two gas stations owned by different companies that are across the street from each other, they will pretty much have the same exact price, even though they know the competition is across the street and they would get more business by lowering their prices by 1 cent, yet they don't.

[CBedo]

My guess is that one reason is liquidity. Even a large group of casinos like the MGM properties wouldn't have enough handle probably (as long as they don't let us bet online into their pools) to give them enough protection, especially in most of the exotic pools.

The bigger reason is probably profitability. I'm guessing that the profitability of the race book is a very small percentage of the casino's profits, and the cost to set up such a system would be a negative payback investment for them.

[Imriledup]

Originally Posted by CBedo

My guess is that one reason is liquidity. Even a large group of casinos like the MGM properties wouldn't have enough handle probably (as long as they don't let us bet online into their pools) to give them enough protection, especially in most of the exotic pools.

The bigger reason is probably profitability. I'm guessing that the profitability of the race book is a very small percentage of the casino's profits, and the cost to set up such a system would be a negative payback investment for them.

My point is that they make their own parimutuel pool with a very low takeout. they don't need protection if its pari. I guess the problem would be that if the host track will find out what they are doing they'll pull the signal. i think bettors wouldn't mind bringing their laptops and watching the races online in the sportsbook while betting into a small takeout and having beautiful waitresses bring them free drinks. If Vegas offered a 7% across the board (just picked a random number out of the air) takeout on all races at NYRA or Del Mar, etc would you go to vegas and bet into those pools?

[andymays]

I remember when they did book em they had to get approval for just about every exotic bet of $20 and up. I don't believe there is anything from stopping them if they wanted to book a horse bet today!

[dvlander]

Besides the too low handle argument, the Vegas payoffs would undoubtedly be much different than the tracks. Most nonchalont players would freak if the win payoff is showing $15.60 on the monitor and the casino book is paying you $6.20.

I was playing at Harvey's casino in Tahoe a few years ago and did not realize that they were not part of the track's pari-mutuel system. They were paying track payoffs with "limits". I hit a $1,600 exacta on a $5.00 bet and was jumping for joy until they paid me with the 150-1 limit (i.e., $755). I was still happy I won but was very distraught with the $850 mandatory donation I had made to the casino.

It was certainly my fault for not checking it out beforehand but even at that time I thought all the casinos had gone to track-commingled pari-mutuel. My bad and I paid the price. Had I made the bet across the street at Caesars, I would have received the entire payoff.

Dale

[CBedo]

Originally Posted by Imriledup

My point is that they make their own parimutuel pool with a very low takeout. they don't need protection if its pari. I guess the problem would be that if the host track will find out what they are doing they'll pull the signal. i think bettors wouldn't mind bringing their laptops and watching the races online in the sportsbook while betting into a small takeout and having beautiful waitresses bring them free drinks. If Vegas offered a 7% across the board (just picked a random number out of the air) takeout on all races at NYRA or Del Mar, etc would you go to vegas and bet into those pools?

The casinos didn't have to switch from booking bets to comingling their funds in the tracks pools, but they did, which you can only assume means that that it was a better business decision for them to do so.

In fact, there was one place that opened as the casinos all were going that route, with the intention of booking bets themselves and being "the" place for horseplayers (they had nothing but a racebook). I can't remember the name now (Sport of Kings maybe?). They went out of business in a hurry.

[macguy]

Vegas can still book bets on racetracks if they wanted to, there is no law against it. For whatever reason they all choose not to, so I assume it is more profitable for them to host direct wagering into the pools.

For a single racebook, or even all of Nevada to set up their own pools for horse racing doesn't make much sense. As mentioned above, liquidity would be a major problem. If you've got these small pools, and someone wants to go and plunk a few thousand down on a horse, the one person will simply destroy the pool. Why would people want to be betting into thousand dollar pools, when they can now bet directly into the tracks with tens (hundreds) of thousands in the pools.

Before Net Pool pricing was brought in, up in Canada we could not bet into US pools. Nothing was more frustrating than seeing the nice big pools down at the major tracks, then looking at the Canadian pool and seeing similar odds but with only a few thousand in bets. You really couldn't bet any kind of significant amount of cash without moving the odds.

[startngate]

Not to mention they would not be able to show the live video of the races in the books without a contract with the host track ... which isn't likely to happen if the books aren't sending money through the pools.

[BobbyMcMuffin]

Originally Posted by dvlander

Besides the too low handle argument, the Vegas payoffs would undoubtedly be much different than the tracks. Most nonchalont players would freak if the win payoff is showing $15.60 on the monitor and the casino book is paying you $6.20.

Dale

Happen to me in Canada. I hit a 15-1 at Maywood with 10 to win. BUT didnt look at the Canadian pool where it was only 6-1...boy was I pissed.

[CBedo]

Don't some casinos still book bets in the form of the "house quinella" (win place * 1/2 the place price I think)? I've never bet one, so I don't know.

[dvlander]

Don't some casinos still book bets in the form of the "house quinella" (win place * 1/2 the place price I think)? I've never bet one, so I don't know.

I don't go to Vegas much anymore but these used to be everywhere. They were actually a good paying exotic if you could eliminate low-priced favorites.

Dale

[Charli125]

In my opinion, the reason Vegas doesn't book bets on horses is because they don't want to deal with the risk. There would be minimal liquidity in their pools, and they would be left having to make a stand more than they like. When putting the money into the pools they take their commission, with ZERO risk. Vegas is all about small, guaranteed margins.

With sports betting they have huge pools, and they control the lines, thus mitigating the risk.

[Tom Barrister]

Short answer: there's no incentive for them to set up their own parimutuel pool. I don't know what the current percentage paid to tracks is, but it's probably higher than the 7-8% that's been suggested. It would have to be approved by the Gaming Control Board, and the system would have to be set up. It would be hard to get customers interested in a local-parimutuel system, since the "live ones" would partly be visitors; the main advocates would probably be professional players and locals; the former would only supress the payouts, the latter would generally be small bettors. Prices would suffer.

And now for a bit of history and a few anecdotes.

Nevada started commingling in 1990. Most racebook managers said that they were holding (net win) about 7% of the straight-pool bets and about 11% of the exotics. The difference between that and the track takeout of 14-20% for win bets and 19-35% for exotics is attributed to informed money (from whatever source). In other words, the aggregate money bet into Nevada books was about 10% smarter than the take. Naturally, there were several scores made against the books, undoubtedly by or with the aid of horsemen, and the books had to be on the lookout at all times.

In 1989 Caesers and a few other books lobbied for parimutuel commingling. After being granted and set up, it didn't take long for most of the casinos to hop on the bandwagon (Binion's Horseshoe being one of the last to join, more on that later). They were paying about 3% to the tracks, which meant that they were keeping from 11-30+% for themselves, more than they were holding by booking the action, with no risk whatsoever.

This fit in with the mindset of the now-corporate-minded casinos, and many of them joined the network. A few, Binion's being the most prominent, didn't join. Jack Binion realized that the casino was keeping about 7% of the action, vs. 11+ by commingling, but he also realized that by continuing to book, he would now get all of the heavy hitters who didn't want their money to go into the pools. Binion knew that he might end up taking a bath from the "smart" action, but he was willing to take that risk to see how he did. As predicted, a few big local players and runners for big players from out of town, headed for Binions.

Then there was the Stu Ungar factor. Stuey, who would have a half-million one day and be broke the next, loved the horses (and greyhounds), and he made big enough bets to care whether or not the money went into the pools. It wasn't unusual for Stuey to make a five-figure bet on a horse, and Jack's policy was that Ungar could bet just about as much as he wanted on whatever he wanted (more on that later). Nor was Stu the only "live" heavy-hitter.

The bottom line is that Binions took a bit of a bath on the booked bets, and they finally joined commingling, limiting action on tracks that weren't commingled (e.g. greyhounds and those without parimutuel agreements with Nevada).

One of the reasons Stu and some others were allowed to bet as they pleased is because Jack Binion knew that many of them would give it back at the racebook, sports, or the tables. That fact is well-illustrated by the following: Late one Friday afternoon in the fall of (I believe) 1992, Ungar came into Binions, more agitated then he usually was. The locals in-the-know thought that the reason for the hyper-ness was that Stuey might be broke (and thus hadn't had a drug fix that day). It didn't matter that Stu had been seen with about $300,000 at table 31 at the Mirage the night before; Stuey was in and out of money constantly, and six figures could disappear in a few minutes---or it could turn into much more if the races, cards, dice, or sports were running well.

The notion that Stu was broke was quickly dispelled. He walked up to a window, glanced up at the many TV screens, pulled a yellow ($1,000) chip out of his pouch, plunked it down, and asked for a house quinella (For those of you who aren't familiar with this, the house quinella was a bet booked by the house, which paid the win mutel times half of the place mutuel on the horse which finished second. The house quinella generally paid worse than a track quinella would, and even the "smart" bettors had trouble making money on them. Binion's continued to book the bet long after commingling). The manager on duty (a man named Mark) was already standing next to the teller to key in approval.

Neither horse hit the board. Ungar started swearing up a storm about how unlucky he'd been thus far that day. Pulling out two more yellows, he played another house Q. This also lost, as did the next. Ungar was now ranting and raving about how he hadn't cashed a bet all day. Wild-eyed, he grabbed the nearest thing in reach, a greyhound program. "I'm going to break this losing streak if I have to bet a one-to-nine shot to show!" he hollered. He looked through the program. After a minute or so, he said: "Here it is!". Out from the pouch came ten chocolates ($5,000 chips). He half-slammed them onto the counter. "Fifty thousand to show on this dog!" he ordered.

Even though Stuey got almost any bet he wanted, the racebook managers could only go so far; anything bigger had to go through Jack. Mark looked at the program as he got on the phone. The dog in question was in a Grade A race (the highest on the grounds) at whichever of the three Florida tracks (Biscayne, Flagler, Hollywood) the Horseshoe booked was currently running. The dog, the best on the grounds at the time, had 24 starts at the track, and was 19-4-0-1. He'd just finished running in, and winning, three stakes races and was now facing an ordinary "A" field. The dog was odds-on in all of its last six races. It figured to pay about $2.40 to win and probably less to show.

Already knowing the answer, but required by policy to call anyway, Mark got through to Jack and explained the situation, noting that the race was two away, or about a half hour.

Jack's reply was straightforward: "Take it".

One of the regulars there (who I got the direct story from, as I wasn't there to see it myself) looked at the program. The dog Stuey bet was a very likely winner, facing six good A dogs, and he was breaking from his favorite box: 1. The other dog was out of his league there. The dog, who showed a "D" race at the bottom of his six performances, had won a "C" race two races ago from the 1 box, at about 15-1 odds, showing the comment "benifited" (meaning that he had escaped the frequently traffic jams that knock greyhounds out of the race). Last race, he had also won from the 1 box, at 20-1 odds. The comment again was "benefited". Neither winning time was close to being in league with any of today's dogs. The dog was coming from the 4 box, the worst at the track in terms in win percentage. It didn't figure to benefit today. Most likely, it would get roughed up by the superior dogs and end up being badly beaten before even the backstretch. The odds of it even finishing in the money were probably 25-1. The regular already had an idea of what might be going down, and he sat down at the longtable behind Stuey, deciding what to do.

Stuey spent the next fifteen minutes making a few more bets, winning one of them. Then he walked up the stairs towards the sports book, which was about a hundred feet away. The regular followed him. Stuey didn't stop to make a bet. Saying a quick "hi" to sportsbook manager Nick Bogdanovich, he headed behind the book to the pay phones. Waiting his turn for the sports-bet runners to call in the latest sports-line changes, he got on the phone and called a number. The regular stood in line at the other phone. He heard Ungar say, among other things "He's inside now?" "Yeah, I got it in."

The regular waited until Stuey had left before leaving himself. He thought a minute, then headed across the street to the Fremont, getting a $10 bet in across the board (the book wouldn't take more than $10 per spot on a greyhound race, and would only take a show bet with an accompanying win bet). He walked cross-corner to the Nugget, where he was allowed a $50 bet across the board, then down the street to the Plaza, where he got another $10 bet in across the board. He passed up betting at the Horseshoe, where he was a frequent player (and where he could have gotten a $100 bet in), because he didn't want to be tied into what was about to go down. He headed back to the 'Shoe and seated himself behind Ungar again.

The race went off. Stuey's dog got out fast, as usual, opened up five lengths by the eighth (about the top of the backstretch), and coasted to an easy win. The other dog got bumped twice before the dogs were 100 feet out of the box and cowered back to last, where he stayed, finishing a good ten lengths behind the seventh-place dog.

The payoffs were up shortly: Stuey's dog paid $2.40 to win, $2.20 to place.... and (if memoery serves me well) $16.40 to show. What the regular had guessed, and what everybody else soon figured out, was that Stuey had a man at the track bet a large amount to show on the dog who didn't figure to be in the money. He knew that the show pool wouldn't be bigger than a hundred or two, and he also knew that those pools weren't shown on TV for the greyhounds (except at Multnomah in Oregon).

Stuey hadn't let anybody in on his coup; there wasn't any talk about other books being hit by the same race (unless you count the nominal amount the regular won). The regular was limited to an $8.00 cap on the show pool at his three books (and would have been limited to $10 at Binions, had he bet there). Stuey had no such limit; he collected the full $410,000 ($360,000 win).

Of course, word got around the casino quickly, and Jack eventually showed up. After Mark had given him the figures and a quick guess as to what happened, Jack shrugged and said that the chips were just a loan, and that Stuey (who did most of his gambling at the Horseshoe) would give it all back soon enough.

True to Jack's prediction, Ungar, who in addition to everything else, bet heavily on sports, was broke before the 1:00 P.M. (Pacific) Sunday NFL games had started.

[macguy]

Great story Tom.

Loved the fact that Jack didn't bat an eyelash at the coupe.

[JohnGalt1]

Another thing I read (in Sartin's Pace Makes the Race book) was back in those days, they wouldn't let players bet 2 horses to win in the same race.

Can any one confirm that?