Bettors get a chance at bigger payouts; tracks get a smaller takeout but profit from more wagers.


In a photo provided by Benoit Photo, Farm's Enterprising and jockey Mike Smith win the Grade III, $150,000 La Jolla Handicap horse race, Saturday at Del Mar Thoroughbred Club in Del Mar, Calif. (AP Photo/Benoit Photo) (AP/Benoit Photo)
Columnist August 11, 2014

On the day Del Mar opened its summer racing season, fans at the seaside track and horseplayers around the country began betting with gusto. The wager known as the Player’s Pick Five, comprising the first five races on the card, attracted a stunning $620,426 in wagers, more than double the size of almost every exacta pool and triple the amount on the Pick Six, a California institution.

The Pick Five’s success since it was introduced in the state in 2011 is due to two player-friendly features: a 50-cent wagering unit and a 14 percent takeout rate. It is arguably the most attractive bet in horse racing, and it has been adopted in other jurisdictions, notably New York. But the evolution of the Pick Five in California holds significance for the entire racing industry, because it is closely tied to a crucial issue: takeout.

Andrew Beyer has been The Washington Post’s horse racing columnist since 1978 and is considered one of the leading experts on the subject. View Archive

Takeout is the money extracted from the betting dollar that goes to the track or to purse money. It is as important to a gambler as tax rates are to a wage earner or an investor. Takeout rates are crucial to tracks, too. In the mid-1980s, economist and gambler Maury Wolff published an influential study proving that takeout raises often hurt tracks’ business by removing from circulation money with which horseplayers would bet and bet again.

Yet tracks and players often seem oblivious to economic facts. Whenever racetracks or horsemen face economic problems, they believed that raising the take will be a panacea. And horseplayers pay little attention. “I’ve always been amazed, “said Craig Dado, Del Mar’s marketing director, “by the average race player’s lack of knowledge about takeout rates.”

With California’s racing business in the doldrums in 2011, the industry sought a takeout increase in order to boost purses, and the state legislature approved a whopper.

This time, however, horseplayers did not react passively. Jeff Platt is the president of the Horseplayers Association of North America, an organization that tries to represent the interests of bettors — traditionally a futile task. Enraged and frustrated, Platt said, “The only way we could fight it was a boycott.” HANA got attention and publicity when it urged horseplayers not to bet on Santa Anita races when the new rates went into effect on its opening day, Dec. 26, 2010. Santa Anita’s business plummeted, with wagering down nearly $1 million a day compared to the previous season.

Hollywood Park followed Santa Anita on the California racing schedule, and Hollywood was worried. “The backlash [against the takeout hike] had an effect,” said vice president Martin Panza (now an executive at the New York Racing Association). Hollywood convened a series of meetings involving the various constituencies in the industry, and Panza said, “We were looking for a way to appease the gamblers by offering a new bet.” HANA suggested a low-takeout Pick Five like the one offered at Monmouth Park. Hollywood instituted the wager with little expectation that it would succeed, because it would span the early races that are traditionally the weakest on the California cards.

But players loved it. They recognized that the 14 percent rate was a rare bargain. They loved the fact that the 50-cent unit allowed them to cover many more possible outcomes than a $2 Pick Six. Yet even with the low cost of a ticket, they had the chance to make a big score. The Pick Five has paid more than $7,000 for 50 cents on the majority of the 19 days at the current Del Mar meeting, and on two occasions the payoff exceeded $90,000.

Even with the low takeout, it benefited the industry. When horseplayers handicapped the Pick Five, they formulated opinions that led them to the races individually. When the wager was introduced at Hollywood, Panza said betting increased significantly on the early races. The Pick Five became the best argument ever made for the virtues of lower takeout.

Empowered, HANA took up another takeout fight this year. When Churchill Downs announced a substantial increase in its takeout, the organization called for a boycott. HANA’s Andy Asaro bombarded the racing world with e-mails denouncing Churchill’s iniquity. Betting at the track’s spring meeting dropped $48 million from the total in 2013.

There is no way to measure the boycotts’ impact. Like most tracks, Santa Anita and Churchill were affected by other factors (such as a shortage of horses) that hurt their bottom line. The impact of the takeout increases is also hard to measure because simulcasting allows horseplayers to bet a mixture of high- and low-takeout tracks and muddies the data about their behavior.

Yet HANA has made a persuasive case to horseplayers that takeout is an issue worth fighting for, and it has demonstrated that takeout increases don’t lead to free money for racetracks.

At the same time another trend in the game has sent opposite messages. Spurred by the success of Gulfstream Park’s Rainbow Six, many tracks offered “jackpot” bets that pay out the entire wagering pool on a Pick Six, Pick Five or Super High-Five only when there is a single perfect ticket. In addition to the usual takeout, the tracks withhold a significant portion of each day’s pool to fund the jackpot. Occasionally a high-roller will make headlines with a giant win, but on most occasions bettors will be collecting as little as 30 or 40 percent of the money wagered that day — an effective takeout of 60 or 70 percent. Wolff observed, “The ultimate idiocy is the Jackpot Pick Five, which takes a bet that people actively want and turns it into the worst bet in America.”

Many fans continue to play these bets because they don’t understand the math, and tracks don’t recognize how unfair these bets are to the majority of their customers. So there is plenty of education left to be done on the subject of takeout. But HANA and the Player’s Pick Five have at least started the process.

For more by Andrew Beyer, visit washingtonpost.com/beyer.

Continue reading
Comments
Show Comments