Saturday, 13 December 2014

Takeout Matters, it's a Fact

Some people want to keep debating this.

      Let's play a hypothetical game. We've got a field of five horses and a win pool of $10,000. Below are the amounts of money wagered on each horse.

  1. $2,000
  2. $1,500
  3. $750
  4. $4,000
  5. $1,750
     The takeout of this pool is 20%. That leaves $8,000 to be paid out to the winners. Below are the odds of each horse at this takeout.

  1. 3-1 ($8)
  2. 4.3-1 ($10.60)
  3. 9.6-1 ($21.20)
  4. 1-1 ($4)
  5. 7-2 ($9)
     But if we slash the takeout to 10%, the odds become
  1. 7-2 ($9)
  2. 5-1 ($12)
  3. 11-1 ($24)
  4. 1.25-1 ($4.50)
  5. 4.1-1 ($10.20)
    By cutting the takeout, your $2 win payout have increased by 12-13%. Which pool would you rather play into?

    One of the arguments that's been used against me is "human nature," saying that if a horse goes up from say 3-1 to 7-2, more people will bet him and his odds will go back down to 3-1. There are two major flaws in this: a) the odds on every horse goes up with lower takeout, and therefore each horse will take more money. However, since a higher percentage of the pool will be paid out, the odds will be higher, and b) if that horse suddenly does take way more money than it normally would at the lower take, the odds on every other goes up. It would even out. 

     The other big argument against lower takeout is that "nobody cares." Let's take a look at a group of gamblers who definitely don't care, slots players. Slots players are people who just want the action, nothing more, nothing less. They are aware that it's a game rigged against them. However, the takeout on a slot machine is (generally) 8%. Not 21%. 8%. Now, if you're dealing with a group of gamblers who blatantly don't care and are playing a game they can never win, why not rake 30%? 40%? Hell, why not rake 87.32%? They don't care. The reason is simple: when people win more, they play more. Churn is an important driver of handle. If a slots player cuts a profit just one night, which he is far more likely to do at 8% takeout than 21%, he is more likely to want to come back and keep playing.

     Takeout makes a difference. Higher takeout leads to lower handle. Lower takeout leads to higher handle and growth for the game. This is a fact. Stop denying it. Stop wallowing in your own ignorance, accept reality, and join the fight to revive horse racing. Racing is losing customers to poker and daily fantasy sports. I don't mean losing potential new customers, I mean losing people who were betting on racing but have left the sport and have started playing other games. It's not because horse racing is for old people. It's because it's a hell of a lot easier to win against a 5% house edge than 21%.

     Maybe takeout doesn't matter to you as an individual. Maybe it's not something you think about when placing a wager. However, regardless of your position as a bettor, fan, horseperson or whoever, understand this: lower takeout will create long term growth for the racing industry. If you want to continue to deny the role that takeout plays, by all means continue to wallow in your own ignorance. I can't force you to believe anything. However, if you want to see racing grow, support lower takeout.

1 comment:

  1. You're preaching to unbelievably stupid 'Muricans who most likely are and vote for republiKKKlans despite the fact that the ones they vote for look on them with utter contempt for doing so and shit on them with impunity. A reason we are leaving this sick country for one populated by sentient, civilized beings.