TGJB -

Short-term, you are certainly right. Longer term, the argument is that the losing players (pitiful fools) would not be better off, but would react to their decreased loss rate by betting more, thus returning their overall losses to their original level and offsetting the impact on the tracks of losing the big bettors.

Your argument assumes that the losing bettors are largely insensitive to the effective takeout rate. That may be right, but push it too far and it may also be wrong, and once you've driven a player to poker, it may be hard to win him back. Without losing players, there is no game.

I think one of the reasons the late odds changes are such a big deal for the tracks is that they make it obvious to the losing players that they're being hustled. The losses then stop being an acceptable price for a day at the track and start being a badge of stupidity.