I'm not sure if it's considered a sacrilege to mention Rogozin on this page, but he does make the point in The Odds Must Be Crazy that if you're smart and disciplined enough to be making $50,000 a year at the race track you should be using your skills to be making a few million a year on Wall Street.
The point being is that there is relatively little money to be made at the track and therefore it holds little allure to serious money.
Although I agree with the thrust of your argument that the more these rebate shops proliferate the more chance more low-level operaters will move in and exploit the system. This is the bargain track executives are making with the devil. For again, take out is a necessity. The level of necessary take out is certainly open to debate and ecominic projection, but the reality is that tracks are very expensive operations to run and somebody has to pay the bills. But what's happening with rebates (and this is especially true in situations where the betting outlet doesn't offer a signal in return) is that the "take out" is not going into purses, plant maintainance or customer service.
I mean at some point, and that point is rapidly approaching, why would any sane person go to the track to make a bet? And here I have to ask myself, if I'm not missing the larger picture when I say that track executives have a short-term vision. Maybe it's much longer than I think. And their vision doesn't include horses at all, but the gaming emporiums they can build in their plants when they go to the legislature and prove to them that "tracks" can't generate money for the State.
So the "politics" of what's going on here are so screwy to begin with--basically track managemnts are saying to their customers, screaming at their customers, you are fools for being here, go bet someplace else--that I'm not sure these issues could be resolved by reasonable argument. I'm not sure all the parties involved want them resolved. But..
But if we accept that the dynamics of the capitilistic system are at play here, that cost competition is not only good but salurbrious for any industry, then logic would dictate that the tracks will be forced to lower the cost of their product to their live patrons either through rebates or takeout reduction. Now, it seems perfectly reasonable to me that takeout should never be higher than a track needs to fulfill its obligations in a professional manner, and almost by definition the rebated monies would be monies that tracks have admitted represent an excessive levy; monies they can afford to return to the public. So it would be so logical to assume that the way to go would be to lower takeouts. But no, the politics are now on the side of the rebate guys. They control and will increasingly be controlling the money that make the handles look good. And the last thing they want is an even playing field. Because, again they are not playing horses, per se, they are playing a glitch in the parimutual system.
And yeah, they have to have a rudimentary knowlege of handicapping. But I really don't think it takes a whole lot of knowledge or skill to break even at the track. I'll give you a methodology right now for making $5,000 a year profit from the windows. You can take any of twenty angles. But for now let's say bet only horses that have never run for a lower claiming price in their life and are going off at at least 15-1. Or if you want a little more action 12-1. You buy the PPs every day, you go to the track every day, and you wait these out. Bet $100 to win on every one of them (you should get three or four opportunities a week, at least one winner every two weeks) and at the end of the year you'll show a profit. I'll even give you one to start. Weds. 6th race at Aqueduct, Your Abc's paid $31.60. You're already ahead $1480. But at the end of the year even though you may show a profit, you're really a loser, unless you can live on the $5,000 minus expenses you have won. And again the irony inherent in the contrast between this "winner" at the windows who is a loser at the end of the year and the "loser" at the windows who is a winner at the end of the year because of rebates is both starkly hilarious and illuminating. As in "What the hell is going on with that?"
So anyway, I'm not impressed with guys who make a little money at the track. Good for them, but..You know I think Allen Iverson could probably lead the league in field goal percentage if he so wanted. He wouldn't help his team, he would be out the league in a year, but if he sat on his shots, and waited only for those break aways he could get himself a nice plaque for his wall. So yes I'm saying its a good thing that Allen Iverson misses a lot of shots. He's a better basketball player because he is willing to miss a lot of shots. So it should be with horseplayers. If you're losing I hope it's because you're trying to win big, not because you're trying to break even. And always remember this adage: The track Gods hate fools and cowards, but they are more inclined to throw the fool a bone once in awhile. Again, my feeling is if you're not at the track to win big money, or at least trying to learn how to win big money, you really should be doing something else.
Which brings us back to my contention that lower takeouts won't automatically turn small losers into winners. Listen the takeout at the track is not perfectaly akin to the takeout at the casino. Casino takeouts are perfectly wedded to probability, while the probability of any horse winning in any given race generally bears little relationship to the odds being offered at the windows. How to take advantage of these discrepancies is, of course, the art of hanicapping, the grist of horseplaying. And here is where the takeout does come into play. At the casino you can never be "smarter" than the probabilities. On the other hand, to be 15 percent smarter than the probabilities (to break even) is a pretty onerous task. Again considering how much money there is to be made at other endeavors not necessarily a pursuit that is going to interest, as presently structured, truly intelligent people. And I don't know how much time you've spent at racetracks, but I can tell you this: for the most part the race crowd doesn't attract the best and the brightest. (Though, I feel obliged to say at this time, the reason I'm even bothering to post on this site, is because I do think there are some very bright contributors to this page who have thought about these issues, with whom meaningful and hopefully mutually influential dialogue is possible. Which itself is a rarity in my travels through the horse world in both the real time and cyberspace)
Anyway to get back to the best and the brightest coming to the track, the lower the take out is the greater the chance truly smart people will motivated to play this game. Because the same people who now look at the situation now and say I can work the probabilites in my favor, but not more than fifteen percent in my favor, very well may confidently decide they can be more than ten percent smarter than the crowd. But the larger point is that you don't need a whole lot of these people to change the dynamics of the game. One person who bets a thousand dollars can make the differnance between a horse being 9/2 or 4-1. And if this new blood really does know what he is doing because well he's smarter than everybody else, he's taking home the reduced take out money not you.
And you're right, at some point it is a zero sum game. At some point the super-computers will all be playing each other and the payoffs will be $2.10, $2.10, $2.10, $2.10, $870.00.
So my advice is if you want to make money at the track you better figure out how to do it now, rather than wait for the takeout to be reduced to five percent. That seems like a long and perhaps unnecessary wait to me.