Keeneland apparently raising takeout

[highnote]

Originally Posted by GMB@BP

I fundamentally have a problem with a sport that offers different rates for different players. I am not blaming anyone at all who benefits from this but just saying it certainly does not encourage people to play.

Volume discounts. If you're putting 200 million per year through the windows you're going to get treated differently than a 2,000 per year bettor.

[thaskalos]

Originally Posted by highnote

I hear you, but you're not explaining anything.

At least take a shot at stating why the total amount of error in a race can sum to something other than 1.

I will say it again:

In a match race where the betting public gives Horse AA a 60% chance of winning then they must give Horse BB and 40% chance of winning. It has to sum to 100% -- assuming they both finish the race.

If the people who think AA has a 60% of winning and it does win then they were 100% correct. Those who bet on BB were 0% correct.

In the long run, bettors on AA will be correct 60% of the time and bettors on BB will be correct 40% of the time. That means bettors on AA will be in error 40% of the time and bettors on BB will be in error 60% of the time. 100% of the time one of them will be right and one will be wrong.

The only time they will both be right is if all bettors who usually bet AA bet him and all bettors who bet on BB refrain from betting and AA wins.

In that case it can be said that AA bettors gave AA a 100% chance of winning and they were right. BB bettors gave BB a zero percent chance of winning and they were right. There is no betting error in this case.

I tried to explain...and so did several other people people here. You shrugged us all off...and told us all that we are wrong, and you are right. Your math is misguided...because they ignore the most fundamental rule that governs this game, from the horseplayer's perspective:

There is an exorbitant TAKEOUT that the horseplayer has to overcome in this game! Even if the horseplayer is mainly "entertainment-motivated", he still has to reduce that takeout down to size...otherwise, the expense of playing this game is sure to eventually rob him of whatever enjoyment the game initially offers him. Losses amount quickly in this game, even for the "hobbyists"...and that ain't much fun. The smart horseplayer looks to overcome that takeout by capitalizing on the mistakes that his competitors make...and, the more "complicated" the race is, from a handicapping perspective...the more likely it is for those "mistakes" to appear. Yes...we don't win as often OURSELVES when we venture into these "complicated" races...but the rewards are there to help us overcome the "variance" that such betting situations create. It's a "risk/reward" balance that the smart horseplayer must eventually reach...in accordance with his own temperament and personality.

Yes, I've heard you. "The short fields are better"..."the overlays are created by the horseplayer's skill"..."the guys who complain about the the field sizes need to work on their handicapping"..."the handicapping errors are the same whether there are 2 horses in the race or 20"...you've made all these assertions...and they are all wrong. But, since you appear to be a nice-enough guy...everybody here has been "gentle" in their criticism of your erroneous opinion. If it were someone OTHER than you...then, you can bet your bottom dollar that ReplayRandall would have been all over you.

I would LOVE to explain myself further on this issue...but I've already seen that it wouldn't do any good. Plus...you are entitled to your opinion...wrong though it may be. That's why I said that's it's too bad we aren't having this argument up-close...so we could put some "context" on what we type here. Disagreements don't get solved from behind computer screens.

[GMB@BP]

Originally Posted by highnote

Volume discounts. If you're putting 200 million per year through the windows you're going to get treated differently than a 2,000 per year bettor.

I would normally completely agree, but its a pari mutual game so that changes the dynamic of betting and discourages people to join the game. In the end its not going to grow the sport, just let it bleed more slowly.

[thaskalos]

Originally Posted by highnote

Volume discounts. If you're putting 200 million per year through the windows you're going to get treated differently than a 2,000 per year bettor.

There is one big difference though. Other businesses are open-and-aboveboard about offering these "volume discounts" to their biggest customers. But the horseracing industry handles these rebates in a secretive..."under-the-table" sort of way...where none of us can figure out how high these "rebates" can get.

If these rebates are just "business-as-usual", then...why all this "secrecy"? What's the racing industry so AFRAID of?

[highnote]

Originally Posted by thaskalos

There is an exorbitant TAKEOUT that the horseplayer has to overcome in this game!

We agree on this point. The higher the takeout the more the player is hurt. Takeout is the crux of the argument about Keeneland.

Some believe higher takeout will reduce handle. Others believe it will increase handle because purses will increase and there will be larger fields and larger fields produce more betting handle.

I don't doubt that larger fields improve handle.

What I don't believe is that higher takeout and larger fields make it easier to win.

I think it is easier to win with a lower takeout regardless of field size, but it depends on the skill of the handicapper. I explain it below with an example.

Originally Posted by thaskalos

Yes, I've heard you. "The short fields are better"

If I said that short fields are better, I misspoke, because there is no context to that statement. I don't think they are better or worse, in general, because a 2-1 shot in a short field has the same chance of winning as a 2-1 shot in a large field. I have no doubt about the validity of that statement. Anyone who disagrees does not understand basic probability.

If short fields are worse it is only because there is a perception by handicappers that it is harder to win in short fields. Therefore, handicappers prefer larger fields because they correctly perceive that there are more overlays in larger fields. This in turn drives handle higher.

However, there is a big caveat. More overlays in larger fields compared to smaller fields does not mean more profits. In the long run, the overlays in larger fields will tend to be smaller because the overlays have to be shared by more horses. There is only one overlay pie and each horse gets a piece of it, albeit in different sizes.

Now, I have no doubt that there are some handicappers who prefer large fields and can pick their spots and find big overlays and in the long run they will win. But the same is true of small fields.

What I'm saying is that if you handicap every race, at every track, every day, for the long run, field size does not make a difference. The only reason there is a difference is because of handicappers' bias toward larger fields. It's not mathematical. It psychological. And perhaps physiological due to brain function.

Originally Posted by thaskalos

..."the overlays are created by the horseplayer's skill"..."the guys who complain about the the field sizes need to work on their handicapping"..."the handicapping errors are the same whether there are 2 horses in the race or 20"...you've made all these assertions...and they are all wrong.

This last quote is where we disagree. If I said "overlays are created by horseplayer's skill" I misspoke. I meant that it is up to horseplayers to find overlays.

There might be more overlays in a 20 horse field than in a 2 horse field, but the overlays will be smaller in the long run because they have to be shared by every horse in the field.

Let's say you have a large field. One horse has odds of 99/1 and another has odds of 50/1 can you tell the difference in value and probability of each winning?

Now look at a short field. One horse has odds of 3/5 and another has odds of 2/5. Which one has more value and what's the difference in probability?

I argue that it is easier to find value between the 2/5 and 3/5 than the 50/1 compared to the 99/1.

Why? I'm glad you asked.

A 99/1 shot has a 1% chance of winning. A 50/1 has a 2% chance. If someone can tell the difference between a 1% and 2% chance of winning on a regular basis then why are they here reading this. They should be making a killing at the track.

The difference between a 3/5 and 2/5 is 20%. You have a lot more margin of error to work with.

Hell, the difference between a 3/1 and 5/2 is only about 4.3%!

I will give you this, though. Large fields are better for the $2 bettor because they can bet on and cheer for more longshots.

Computerized professional teams will make more money betting on low priced horses because they can bet a lot more money and not affect the odds as much. Professionals can assess low priced horses' relative chances better than the average $2 bettor who likes the larger fields simply because the $2 bettor doesn't have much to lose and will tend to treat the bet more like a lottery pick. It's cheap entertainment. $2 bettors don't like 3/5 shots. $2,000 bettors don't care as long as it's an overlay.

In summary, betting $2,000 on a 3/5 shot that should be 2/5 is more profitable than betting $2 on a 50/1 that is just as likely to be 99/1.

Originally Posted by thaskalos

But, since you appear to be a nice-enough guy...everybody here has been "gentle" in their criticism of your erroneous opinion.

My gambling name given to me by my friends at OTB used to be Gentleman John.

[highnote]

Originally Posted by GMB@BP

I would normally completely agree, but its a pari mutual game so that changes the dynamic of betting and discourages people to join the game. In the end its not going to grow the sport, just let it bleed more slowly.

There is some truth to what you say.

However, maybe those 200 million per year bettors are helping to keep the sport alive?

Remove them from the pools and see what effect it has.

[highnote]

Originally Posted by thaskalos

There is one big difference though. Other businesses are open-and-aboveboard about offering these "volume discounts" to their biggest customers. But the horseracing industry handles these rebates in a secretive..."under-the-table" sort of way...where none of us can figure out how high these "rebates" can get.

If these rebates are just "business-as-usual", then...why all this "secrecy"? What's the racing industry so AFRAID of?

Yep. I totally agree 100%. That's what I posted earlier about Haggerty's argument about Churchill Downs handle increasing. Without being able see all sources of CD's and Keeneland's handle it is impossible to say why growth is occurring even with higher takeouts. They can feed us any line they want because we have no way of checking the validity of their statements.

Regan said, "Trust, but verify." That's the same as saying don't trust.

So until I can verify why their handles increased I don't trust what they are saying.

[Parkview_Pirate]

Originally Posted by Jeff P

...
Why in the hell would anyone in their right mind think it will work this time?

No matter what reason Keeneland gives -- and no matter how Keeneland tries to sell this to its players -- I think the most likely outcome after Keeneland takes their turn with "raise takeout because we need bigger purses" will be:

a. Creation of some serious player badwill (much more than they anticipate.)

b. Purse cuts.

c. Or if they don't want publicly announced purse cuts because that would make them look bad: Having to step up the subsidizing of purses from sources other than betting handle on their own parimutuel pools. Re: Instead of throwing $6M of their own money at purses having to throw $8M or $9M at purses because handle on their own pools dropped that much.




-jp

.

Jeff, your post is well off the mark here, for the following reasons:

1. The examples you cite are for tracks in an overall declining industry. Yes, handle and purses declined, and have done so for almost all tracks in the last 20 years.

2. The relationship between cause and effect when it comes to purses and handle is far more complex than five factors, and anyone who is a horseplayer trying to analyze countless factors in picking winners should know that. Doubling purses at Fairmount or a racino versus Keeneland is bound to have different results. Taking into account the historical legacy of the circuit, and local fan base versus simulcast fan base is far more relevant than just takeout rates.

3. Just because someone has "PhD" as part of their signature block hardly means they're infallible. Their analysis and conclusions are limited to the data at hand, and based on many assumptions, which are often not worth the paper they're printed on.

4. Citing a 19 year old study is well, not substantial. The factors at play today are not necessarily the same as 1998. But even more importantly, the conclusions drawn cannot be applied to all tracks.

Show me a more recent study, one which takes into account more factors and correlates bettors' handle with monies derived from betting handle only, and then I'll be impressed.

I would argue that Keeneland may very well suffer a decline in handle, but as long as they offer 18-20 days of topnotch racing, they'll do as well as can be expected. If purses are cut, I'd bet a more thorough analysis of the big picture would still have Keeneland far better than the average track, and offering far better value to the average horseplayer.

If my local favorite steakhouse raises the price of a t-bone by $3, that doesn't mean it still isn't the best steak in town. And since I think this steakhouse may be going under or be totally priced out of reach in three years, please don't ask me not to enjoy the meals I can get now.

[camourous]

Originally Posted by Parkview_Pirate

If my local favorite steakhouse raises the price of a t-bone by $3, that doesn't mean it still isn't the best steak in town. And since I think this steakhouse may be going under or be totally priced out of reach in three years, please don't ask me not to enjoy the meals I can get now.

Yes but if they raise the price $3 and give you less Steak would you still go there?

[Tom]

...and charge you to park, admission to the restaurant, and sell you a menu. The cut off 25% of the steak and leave in the kitchen for the help to enjoy.

Now THAT is horse racing.

[AndyC]

Originally Posted by highnote

It is correct to say that it doesn't matter if there are two horses or twenty horses, the probability of a winner is 1.00. It can't be greater than 1 and it can't be less than zero.

OK. You can argue there are dead heats, coupled entries, and no-contests. Forget about those. In every race that has ever been declared official with one winner, there was a chance of 1.00 that the horse would win.

For example, you are at home watching the TV. You saw the race live earlier in the day. Someone asks you what the chance is that the horse would win. The answer is 100%.

If they asked you before the race then you might have a different answer. If you say 100% you might be right, but then again you might not be. If you are wrong you made an error and the horse actually had zero chance. In fact, every horse that lost had zero chance. If there are 10 horses in the race and there were nine losers then sum of the chances of the losers winning are 0%.

If it was a match race and Horse AA won where the public's betting gave AA a 60% chance of winning and BB a 40% chance of winning then the public made a 60% error before the race about BB and only a 40% error on AA's chances.

In reality, AA had a 100% chance of winning, but no one knew the true chances before the race. After the fact, the true error on AA was 0% and it was 100% on BB. However, the betting public made a 40% error on AA and 60% on BB.

There may have been some highly skilled bettors who knew AA was a lock. The error of the highly skilled bettors on AA and BB was smaller than the public in general, but the sum of the highly skilled bettors' errors was still 100%.

For any given horse in any give race the amount of betting error is going to range from 0% to 100%.

I don't know how to make it any clearer.

I think you miss my point because you are looking at each race in a macro sense and not a micro sense. It doesn't matter that the highly skilled bettor erred on horse BB because he was only betting horse AA. Erring on the size of an underlay is irrelevant.

There is no doubt that a large field high takeout rate race can cut both ways. Unskilled bettors are more likely to end up on underlays.

[highnote]

Originally Posted by AndyC

I think you miss my point because you are looking at each race in a macro sense and not a micro sense. It doesn't matter that the highly skilled bettor erred on horse BB because he was only betting horse AA. Erring on the size of an underlay is irrelevant.

There is no doubt that a large field high takeout rate race can cut both ways. Unskilled bettors are more likely to end up on underlays.

I agree that unskilled bettors are more likely to end up on underlays.

[GMB@BP]

Originally Posted by Tom

...and charge you to park, admission to the restaurant, and sell you a menu. The cut off 25% of the steak and leave in the kitchen for the help to enjoy.

Now THAT is horse racing.

[SandyW]

Originally Posted by Tom

...and charge you to park, admission to the restaurant, and sell you a menu. The cut off 25% of the steak and leave in the kitchen for the help to enjoy.

Now THAT is horse racing.

Don't forget those $5.00 hot dogs and $6.00 for a bottle of water.
Greed is the middle name of these thieves.

[AndyC]

Originally Posted by highnote

......However, there is a big caveat. More overlays in larger fields compared to smaller fields does not mean more profits. In the long run, the overlays in larger fields will tend to be smaller because the overlays have to be shared by more horses. There is only one overlay pie and each horse gets a piece of it, albeit in different sizes......

An analogy better suited for this discussion is a two-sided balance scale. Every race will always balance out to 1 minus the track take. One side of the scale can be loaded up with many or few overlays both large and small and the other side must be loaded up with offsetting underlays to maintain the balance. There is no set amount or overlay pie that restricts how much is in the overlay scale but there must be an offsetting amount of underlays in the second scale.