Well, the logic quite simply is lower the takeout and you lower the profit margin from which rebates can be paid. With the presumption that this will inevitably reduce rebates.
Now if your point is that the guys living off their rebates who are now breaking even at a 15 percent takeout will now be also showing a 5 percent profit at a 10 percent takeout in addition to their reduced rebates, I don't think so. There are a hell of a lot of variables at play here, but let's just introduce one notion into the mix. In theory, a reduced takeout would bring smarter players into the game. With the result that horses that now go off at 9/2 and in theory should go off at 5-1 with a five percent reduction in takeout, might instead be going off at 4-1, because sharper handicappers are in the mix.
And I know that is simplistic but I do think there are a lot of natural forces at play in the parimutual system that inevitably are going to keep 10-1 horses going off at 10-1 and not 11-1. With the result that the guy who is losing three percent a year now, is not going to be winning two percent a year with a reduced takeout. It's an illusion. Like the illusion that a closer is running faster at the end of a race than at the beginning. He's just running less slower than everybody else. Reduce the takeout and the people who are making money now will make more money, and different people will come into the game and make more money, but the losers will still be losers.
Which brings us back to the rebate boys who are not really playing horses but are playing the parimutual system, or more precisely are playing off an aberration inherent in the economics of the racing industry.
As it is this idea of selling your signal to outlets that can't reciprocate with an income producing signal to you for 3% is an absurdly short-sighted business decision.
You know, not all of take out is fat. Purses and the legitimate expenses of running a racing operation come out of that takeout. But the track operators have decided that only the people who bet at the track should have to bear those expenses.
You go to the track. You pay all the expenses for the operation and get treated like crap. You bet offtrack you get rebates.
You would think that maybe it would be the other way around. That people who go to the track would maybe have to pay less of a takeout than people off-track, that this might bring people back into the stands, but the only thing most race track executives care about it cashing their paychecks, so why rock the boat. If the three percent they get from an Indian Casino is South Dakota pays for their raise next year why bother actually growing the game?
But back to the rebate boys. You know the irony is not that some of these guys are making a good living by breaking even at the races and pocketing their rebates. If you want to say that by staying even they are 15 percent smarter than everybody else, fine. But the truth of the matter is that the way the rebate economics are structered now people can make a nice income while losing at the races. Bet a million a year, lose 2%, get a 7% percent rebate and you're still $50,000 a year ahead of the game.
There's just something wrong with that picture to me. I mean the backstretch help live in dumps, beers are $6.50, the TVs at least in New York are not clear enough to tell the differnce between the red one and the orange seven as they come down the stretch,[Has anyone in the NYRA heard of HDTVs]and in the midst of all this austerity a select few are making nice incomes by actually losing on the races. Who wudda thunk it?
Now I want to clarify just one thing I said in my earlier post. I might have left the impression that I thought the "Rebate Players" were running a scam. Actually, I don't think badly of them at all. I think they are smart businessmen taking advantage of a loop hole. The scam is being run by the executives of race tracks, who are sacrificing the long term health of their enterprise for a quick infusion into their bottom lines. That's the scam.
I mean carried to its logical conclusion everybody should bet off-track, everybody should bet a rebate, and there is no money for purses. Yeah, sounds like a good growth plan to me.



Post Edited (01-17-04 10:15)