by Jeremy Plonk
September 25, 2017
We live in a hyper-charged era of identity politics, and you need not look any further than Sunday’s NFL games and reactions from all corners. So it’s not surprising that the issue of the takeout (tax) in betting the races has become a single-issue voting bloc. Takeout is a deal-breaker for some, similar to political topics like abortion, gun control and national health care. You’re either against it or enable it to be a scourge if you don’t vehemently denounce it.
Takeout is the amount taken out of every bet before winning tickets are paid. I mention that not to talk down to those well-versed in the subject, but to inform the many horseplayers who don’t even know it exists. Roughly speaking, if you bet a dollar, about 20 cents of it is divided up to pay the racetracks, horsemen and state governments. Give or take a few pennies, nickels or, in extremes, a dime on every dollar bet, the nation’s racetracks all work within a 5 to 15-cent range of one-another in takeout.
Do you make more money when you win at a track with a takeout of 15 percent vs. one with an 18-percent takeout? Of course. The returns can add up over time and do make an impact on your overall bottom line. That’s indisputable. Are you more fiscally responsible to shop at tracks with lower takeouts? Again, it’s impossible to argue with that on the numbers.
Numbers matter. A lot.
Perhaps the most important number in the takeout discussion for you as a horseplayer is the number of bets you make. The more volume you produce, the more impact takeout will have. If you’re an everyday, professional-type or computer batch bettor, it’s undeniable that a few percentage points here and there can make all the difference. But if you’re making 10-20 bets per week, a weekender-type who loves the game but isn’t devoted 24/7, takeout’s impact is less significant.
Most horseplayers will lose 80-90 percent of all bets made (and they are the good ones), so takeout is meaningless on those plays. It’s the 10-20 percent of successful wagers where the percentage returned to winners actually swings into motion. So, if you make 20 bets per week, that’s about 1,000 per year. Of those, 100-200 bets will be impacted by the takeout upon hitting them successfully. The 3, 5 or 10-percent difference in returns on 100-200 winning tickets a year will be felt on the bottom line. But will it be enough to turn you away from the parts of the game you enjoy?
If you’re cashing 200 tickets per year even at a whopper average of $50 each, that’s $10,000 in returns. If you get 3,5,10-percent less on those returns, you’re talking $9700, $9500 or $9000 back. Over the course of 50 weeks for rounded numbers, your bottom line may be impacted by $6, $10, $20 less per week. If you’re handling $300-$400 over those 20 bets weekly, will $6, $10 or $20 less cause you a different outlook? That's where you have to decide as an individual.
The lower returns aren’t good; no way to spin that. But are they the difference between you playing or walking away from a track or industry that you enjoy? That’s what you have to ask yourself if you’re a once or twice-a-week horseplayer. Studies on takeout suggest that handle increases when takeout is lowered as more money is churned and bet back. But I’m not sure that works beyond a closed loop. If Ellis Park offers you more on your winnings and you cash a bet there while sitting at Santa Anita and then churn it back on the next race at Saratoga, what did Ellis (and its horsemen and Commonwealth of Kentucky) gain in its discounted pricing? Simulcasting has changed some of the economic axioms of horse racing.
Meanwhile, the takeout hawks do admirable work trying to get the lowest possible price for all horseplayers. They speak with unification and force.
We all would prefer lower taxes and cheaper goods and services. But sometimes in life you’re willing to shop at the local store vs. Wal-Mart even if it costs more; willing to pay $5 extra at your favorite steakhouse because you like the ambiance; or continue to live in your school district despite escalating taxes because it’s safe and you feel at home there.
Perhaps you’d rather your wagering dollars go to the state government in which you live, therefore you funnel most of your play through and upon local racing products. Maybe you have more confidence in a particular track because you appreciate the honesty and candor of the information and action presented. Some folks can only bet on night tracks or on a specific day of the week because of their lifestyle and schedules, regardless of how they may be priced in the pari-mutuel marketplace. What if you stink at handicapping turf racing? Are you to convert to a low takeout track with more grass races just to possibly help your bottom line a few percent if/when you’re winning?
The bottom line is that lower takeout should be every horseplayer’s first preference.
But the reality is that what you choose to spend your hard-earned upon often comes down to more than a single-issue vote. I respect all sides of the debate and the horseplayers making such decisions.