Horse Racing Open Thread

If a horse is 2-1 and you back every other runner in order to lay it what odds are you effectively giving? Much higher than 2-1. With a 20% takeout you can not make a profit by "laying" a runner greater than 4-1 using this method.

Quote: Aussie

If a horse is 2-1 and you back every other runner in order to lay it what odds are you effectively giving? Much higher than 2-1. With a 20% takeout you can not make a profit by "laying" a runner greater than 4-1 using this method.

And if there was a 20% takeout you also could not make a profit by a "lay" against a betting interest that was 2/1. And if the takeout was 1% for the lay wager, it would also be only 1% for the win, place, and show wagers, and using those wagers is equally effective at accomplishing the same result save for the need to do a simple arithmetic calculation.

The State determines the takeout, the wager format does not. To reach break even, the proportion of the pool of the wagering interests one is betting against must exceed the State mandated takeout rate, regardless of format, whether win, place, exacta, lay, or anything else. Doing it through a "lay" wager does not change this arithmetic. If win takeout is 20% (which it isn't for straight wagers anywhere in the US, but going with your example) then mandatory takeout will also be 20% for a lay, and a lay bet against an entry supported at 2/1 also cannot break even. If it is legally only 1% for a lay wager, then it will not be higher for a series of win, place, or show wagers in that jurisdiction either, and using those wagers would be equally efficient. Your 1% vs. 20% comparison has nothing whatsoever to do with the nature of the wager. It is due to State mandated takeout rates that will apply to both methods equally.

I don't know how to say it again and differently to achieve any more clarity. A lay wager does absolutely nothing to change the takeout rate that applies. If we are talking about the relative efficiency of 1% takeout or 15% or 20%, then in the US we are talking about the difference between legal wagering vs. evading taxation & compensation to the race venue by using forms of illegal wagering, not about what is inherent to different wager formats.

I am certainly in favor of 1% takeout. And a good five cent cigar. State governments in the US, not so much.

The takeout effects the final prices which effects the market percentage.

What is the true chance of a 2-1 priced horse winning? About 5-2 given 20% takeout and assuming no over/under-betting of any of the options. When you back all the others in this situation you'll be laying at effectively a much higher price - around 6-1. If the takeout was only 10% you'd be laying at around 13-4. Lower takeout = better effective lay price of you're backing every other runner. Pricing up something like this is quite simple so if you don't believe me then I suggest trying it yourself.

I'm not sure that you actually understand the betting exchange model. Jump on the Betfair website, run through the tutorials and it will show you exactly why a more efficient market is much better for laying than trying to do it manually by backing every other runner in a pari mutual pool.

With a betting exchange that 2-1 runner would be 5-2 and if you wanted lay it youd only have to give 7-4 at the most. What's better - giving 6-1 or 7-4??

Quote: Aussie

The takeout effects the final prices which effects the market percentage.

What is the true chance of a 2-1 priced horse winning? About 5-2 given 20% takeout and assuming no over/under-betting of any of the options. When you back all the others in this situation you'll be laying at effectively a much higher price - around 6-1. If the takeout was only 10% you'd be laying at around 13-4. Lower takeout = better effective lay price of you're backing every other runner. Pricing up something like this is quite simple so if you don't believe me then I suggest trying it yourself.

I'm not sure that you actually understand the betting exchange model. Jump on the Betfair website, run through the tutorials and it will show you exactly why a more efficient market is much better for laying than trying to do it manually by backing every other runner in a pari mutual pool.

Of course lower takeout results in better price, and the fact that it does so has nothing to do with wager format, whether pari-mutual or exchange, or lay vs. straight wager.

The reason for the difference in all of your examples is that THEY ARE NOT PAYING THE SAME TAKEOUT. I understand the exchange and parimutual models very well. They are potentially equally efficient GIVEN THE SAME TAKEOUT which would be required by law in the US. The greater "efficiency" does not come from anything whatsoever to do with the different wager format. A lay wager in the US would NOT HAVE A LOWER TAKEOUT. This is determined by law, not the format. Or to put it another way, State jurisdictions could just as easily apply a 1% takeout to win wagers with a 15% or 20% rate to exchange wagering. At this point I'm pretty confident you already know this, and have a particular interest in Betfair.

Try this (pretending for a moment that you really need to): apply the SAME legally mandated takeout rate using whichever number you wish so long as it is the same percentage, to the other formats, whether "lay" bets or other exchange betting, and see what you come up with when you calculate the result. It will be precisely the same, as I'm sure you already know. Changing formats does not repeal the arithmetic, if you pay the same tax. I am in favor of not paying it - not quite so much of it as current rates for legal US wagering - but it is what it is due entirely to law and administrative rule, and not at all due to the basic math of the wager format.

I've closely followed Betfair's long-running unsuccessful attempt to get their particular exchange wagering model approved in California and am quite familiar with every dot and tittle of it. The potential efficiency to the bettors was of course, as I'm quite sure you're aware, only based on the degree to which it could have involved not paying the State, the horseman's/woman's purse account, and the tracks the same proportion of the wagers as everyone else allowed to take legal wagers, and this is in large part why it generated the opposition of the rest of the business other than Betfair and was not allowed by the CHRB, along with Betfair's desire to keep the action in-house themselves, rather than have tracks handling the action on their own racing product.

Being taxed at a lower rate or none would obviously be more "efficient." Without regard to wager format. And if exchange wagering was taxed at double digits while parimutual straight wagers were at single digits? Uh-huh. I feel pretty sure you understand this. And Vito the bookie could give me a good price in either wager format, for exactly the same reasons. I'm quite sure anyone following this also gets it by now, and even very casual followers can do the simple calculations. Do you work for Betfair? I believe you most likely do. Not that there's anything wrong with that, but the right thing to do is to say so up front. This seems to have reached the point that any reasonably bright individual will also get it, and continuation of it can only amount to talking in circles due to attempts at obfuscation, which is not going to be the slightest bit helpful to Betfair's cause. Especially not after I forward this amusing little marketing exchange to the Chair of the CHRB. Have a nice day.