TGJB -

You wrote: "It is worth noting that if they [large rebate players] are winning at a rate where they would be losing or breaking even without the rebate, they have no significant negative effect on the pools for other players-- the profit is then coming from the tracks etc. taking a lesser share, which they are compensated for in the form of increased handle."

Your statement is factually incorrect. If, for example, the track takeout on a pool (without regard to rebates) is 20%, for every dollar that one person loses (without regard to rebates) LESS than 20%, someone else has to lose MORE than 20%. It is, in that respect, a zero-sum game.

The way I think of it is as follows: The track is in the business of collecting and redistributing the non-takeout portion ($0.80) of every dollar bet. As to that amount, the track pays out 100% of what it takes in. Bettors pay for the privilege of being able to wager into that pool. For on-track players, the price to the bettor of doing so is the takeout ($0.20), and the track gets the whole $0.20. Rebate players get in for less. They only have to pay the difference between the takeout and the rebate (say $0.10; I'm just making up numbers). That $0.10 is split between that track as a fee for the signal (say, $0.04) and the rebate shop (say $0.06, to cover expenses and profit to the proprietor).

The track's incentive to allow the player into the pool for a measly $0.04 is that the track gets nothing if the player doesn't play, and the player won't pay $0.20. In most cases, he can't afford to do so and still make money. Whether that's a smart economic decision for the track is an issue that is hotly debated.

The economics for any player are simple. To win, his or her profit on the $0.80 portion of the pool has to be large enough to cover the cost of getting into the pool (20 cents for the on-track player and 10 cents for the rebate player). That profit has to come from the other players. Even if the rebate player is winning only 85 cents for every dollar bet, and thus suffering a 5% net loss after rebates, his effect on the other players in the pool is negative. When he jumps in and starts betting, for every 5 cents above 80 that he gets back, someone else has to lose an additional 5 cents.

Accordingly, as you have posted, the rebate player needs a significant handicapping edge or he'll leave the business quickly. If he has that edge, other players in the pool will be negatively affected by his presence. The better the rebate player does, the bigger the negative effect on the other players. That's the nature of the game.

The question isn't whether the rebate players are winning money from other players. They are. Read the NTRA study that asfufh mentioned. The question is whether the technological advantage (direct pool access) they are using to enhance their edge is fair to other players and in the long-term best interests of the sport.