HANDICAPPING INSIGHTS
NOVEMBER 14, 2014
by Dick Powell
There are whales in the pool. They have always been there. I can’t say if
there are more whales than there used to be but they certainly have an impact in
the pari-mutuel pool.
A whale in a small pool just doesn’t fit. A whale in the ocean is hardly
noticed. Horse racing in America is shrinking and as the waters go down, the
whales are being exposed more.
We all say we want our racing to be robust like Hong Kong’s but our words do
not match our actions. There are more whales in the Hong Kong pari-mutuel pools
than anywhere else. The main reason is that the Hong Kong Jockey Club embraces
and encourages their presence. And they include many computer bettors who have
been demonized over here.
Some of you know that my consulting business has had the rebate shop Racing
and Gaming Services as a client for the past 10 years. This relationship has
given me a perspective and knowledge of how big bettors conduct their business
and their importance to the American horse racing industry.
For some reason, there are some writers that feel that giving rebates to big
bettors is unfair. Worse, they mistakenly believe that big bettors are in favor
of higher takeout even though there are numerous public examples of big bettors
advocating lower takeout.
At a Thoroughbred Racing Associations Simulcast Conference a few years ago,
there was a panel discussion on whales with all the panelists being whales or
representatives of whales. Each and every one of them said that they supported
lower takeout for all and that a healthy racing industry is in their interest.
Dana Parham, the biggest horse bettor in America, said it best: “When you bet
a horse at 10 to 1, you get 10 to 1. When I bet a horse at 10 to 1, I get 9 to
1.”
This is because the size of Parham’s wager affects the odds of the horse(s)
that he bets. The bigger the betting pool, the less his bet affects the odds.
Clearly, it is in his interest to have the biggest betting pools so that his
bets have the least negative impact on his price. Lowering takeout for everybody
will increase the size of the betting pools so big bettors support it no matter
what you might read elsewhere.
The false narrative that has been repeated is that rebates are unfair; that
they should be given across the board no matter what the bettor’s playing level
is. Even though the rebate does not have any effect on the actual odds, the
giving of rebates is sold as being bad for the small bettor.
Whether it’s a car dealership that gives a volume discount to a rental agency
that is going to buy a thousand cars for its fleet or a big bettor showing up at
a Las Vegas casino that is going to bet millions of dollars, the more you buy,
the lower your cost. There is nothing stopping a small bettor from getting a big
rebate. All you have to do is start betting like a big bettor.
What’s the difference between poker and horse racing? Well, there are a few.
Poker is a growing business while horse racing has declined from $15 billion
handle per year to $11.5 billion per year.
But, one reason why the poker industry has thrived is that they glorify their
most successful players while horse racing demonizes theirs. We all know who the
top poker players are and it encourages many to aspire to be like them.
In horse racing, the most successful players are driven underground by a tax
system that is destructive to the game and its players but also by an industry
that has demonized players that win disproportionately more than everyone else.
Instead of opening up the tote system with a gold standard computer security
system that would encourage young, high-tech players that might want to design
their own handicapping/betting models, our industry makes it difficult. It can
be done but with the exception of Parham, most of the major computer players are
international ones that learned the ropes by betting into Hong Kong.
So the next time you read unfounded opinions about big bettors are against
lowering takeout, understand that it is not true and defies the logic that
whales want to live in the ocean, not in a backyard swimming pool.