Thoroughbred Racing League

[Boscar Obarra]

You\'re not getting it.

 What matters is the bottom line.

 How that\'s achieved is irrelevant.

 According to your theory, if they lower the takeout to zero, all the whales will go back to playing backgammon for big $.

 Understand now?

[miff]

What part of reduced net rebate will kill off some handle don\'t you get, I\'ll explain it.

[moosepalm]

Boscar Obarra Wrote:
-------------------------------------------------------
> What really matters is whether a whale or anyone
> else can WIN money.  
>
>  Everything else is just noise.
>
>  So if a lower real takeout = a lower rebate , so
> what?
>
>  If you can prove otherwise, then there\'s a
> discussion.

The rebate\'s a constant on the bottom line of money wagered.  The take-out only effects what you win.  So, if the rebate and take-out reduction were the same, it would work to the player\'s advantage if he was showing a profit.  Of course, if you\'re a consistent loser, you\'d only worry about the rebates, because the amount wagered is always the bigger number.  Then, you have to ask yourself why you\'re playing.  

Memo to self....

[Boscar Obarra]

I understand the argument.

 Again, if the takeout was zero, would the whales flee?

 A Simple question, and deals clearly with the issue of a \'guaranteed\' return of handle represented by a rebate.

 They are getting 10% back, but getting robbed on the other 90%.

 Is this rocket science?

[miff]

Hypothetical question without an answer and could never happen.Some whales rebaters feel their edge is they play for less than the players that pay full takeout price(no rebate)

Many whales have left the game. From it\'s highest point of app $15 billion, handle is down app $5 billion annually, staggering amount.

[Boscar Obarra]

They have left the game because whales, like the rest of us, are still engaged in horseplay, not some guaranteed pool arbitrage.

 My contention is, that a lower takeout would benefit everyone, unless you think that actual payoffs will somehow NOT increase under that scenario. In theory that could happen, but it\'s rather unlikely.

[Mathcapper]

While it’s true that takeout is only imposed on winning bets, a horseplayer’s bottom line (ROI) is a function of his overall handle. The only thing that matters is whether the whale can beat the track takeout by enough to produce a profit with the rebate. If the track takeout is lowered, rebate shop handle should be unaffected (provided the track take remains marginally higher than the signal cost).

Example:

Scenario 1
Takeout = 16%
Whale rebate = 10%
Rebate shop signal cost = 5%
Rebate shop keeps 1% of whale’s volume

Whale bets $100M/yr, his net ROI before rebate is -6% for a loss of -$6M.
He gets a rebate of 10% = $10M.
His profit = -$6M + $10M = $4M.
The rebate shop keeps 1% of whale’s volume = $1M.

Scenario 2
Takeout is reduced by 6% to 10%
Rebate shop reduces rebate by 6% to 4%
Rebate shop signal cost remains 5%
Rebate shop continues to keep 1% of whale’s volume

Whale bets same $100M/yr, and because of the lower takeout, his net ROI before rebates is now break-even (-6% +6% = 0%).
He gets a rebate of 4% = $4M.
His profit = $0M + $4M = $4M, the same as before.
The rebate shop takes 1% of whale’s volume = $1M, the same as before.

So a reduced takeout shouldn’t affect the rebate shop because the whale still makes the same net profit and therefore pushes through the same volume to the rebate shop.

It’s the source market fees like the 10% fee imposed by Pennsylvania that will kill the rebate handle, because these costs have to be absorbed by either the whale or the rebate shop. If the rebate shop passes them along to the whale, the less profitable whales will be forced out of business. Ditto for the rebate shops if they try to absorb it themselves.

[Dick Powell]

Richie,
Dana Parham donated $250,000 to the Permamently Disabled Jockey Foundation, the single largest contribution ever made at the time. RGS donated $25,000. Dana has consistently advocated for low takeout for all; not just whales.
Dick
Yes, I have RGS as a consulting client.

[smalltimer]

Help me out here Mike.  You say \"On reduced takeout, history shows a handle spike reverts back to previous volume within months.  Racing has highest takeout of any form of permitted wagering and yet requires subsidies to stay afloat.  How\'s that?\"
Explain this difference:  A whale\'s ROI is -6% and with a 10% rebate his \"ROI\" is a net 4%.  Looks to me the whale requires subsidies to stay afloat, also.
Looks like a poor man\'s derivative or a farmer on price supports.

[richiebee]

Dick:

I would love to be proven wrong, and that all Horseplayers, large and small,
care about racing issues beyond takeout, surcharges and taxation. I would
imagine that some see takeout reduction as a much more attainable goal than
fixing some of racing\'s more pervasive problems.

[moosepalm]

Mathcapper Wrote:
-------------------------------------------------------
> While it’s true that takeout is only imposed on
> winning bets, a horseplayer’s bottom line (ROI) is
> a function of his overall handle. The only thing
> that matters is whether the whale can beat the
> track takeout by enough to produce a profit with
> the rebate. If the track takeout is lowered,
> rebate shop handle should be unaffected (provided
> the track take remains marginally higher than the
> signal cost).
>

All true on the reasonable assumption that the rebate shop handles a balance between positive ROI players and negative.  For the individual player, if the changes for both take-out and rebate are similar, as you suggest, a reduced takeout is more beneficial to the player who can sustain a positive pre-rebate ROI because that\'s going to be a bigger number than the amount wagered, which is the basis for the rebate.  Conversely, the player with the negative ROI gets hurt more by the reduction in the rebate than the take-out.  Regardless, the shops shouldn\'t get hurt as long as their changes stay proportional to the take-out.

[miff]

Small,

Slot Subsidies have no real effect on players pool. That money is mandated to purses/breeding/capital and operating expenses.You would think that say NYRA,with massive slot subsidies, could reduce takeout but they say it\'s still not possible at this time.NYRA dragging it\'s feet on opening Off Track Restaurants simo centers in the 5 boroughs losing points on handle being bet with ADW\'s.

An interesting take by a whale friend. He believes that takeout is substantially mitigated by \"soft\" money in the pools.While the amount of soft money cannot be quantified, it\'s not a totally ridiculous argument.

Mike

[BitPlayer]

Mike -

What is \"soft\" money?  Money wagered by ill informed bettors?

[miff]

Bit,

Soft is probably what we might call less informed players.During the OTB days in NY,you would see people blindly betting a certain number, jockey,gray horse etc etc.Still happens everywhere there is gambling on horses but have no idea how much those types of wagers make up of the betting  pools on a regular basis.There are some sharp and disciplined players that only gamble into the huge pools we see on big race days solely because of their belief of extra soft money.

Judging from the fact that most horse players lose over the long term, I\'m not sure soft money helps a sophisticated player beat the game anyway.Beyond takeout, there is the ubiquitous X factor looming in every race.Racing still the greatest gambling game, imo.

Mike

[Boscar Obarra]

Yes, well, if there was so much soft money in the pools then you wouldn\'t need rebates at all.  It\'s minimal.

 I\'d guess the really dumb money is less than 10% of the handle.  Mediocre money is a higher %, and smart play 60-70%.

 Though truth be told, I\'ve been seeing some really ridiculous betting for the last year in the exotics.