REBATES OK FOR BIG PLAYERS

[Mall]

Once again, I find myself agreeing with the vast majority of your pts, particularly the one regarding mutual & meaningful dialogue. The argument typically thought to favor racetrack gambling is that unlike casino games, one doesn\'t have to deal with a mathematically based negative expectation. However, in 10 mins or less one can learn to play craps in such a way that the negative expectation is .25%, & there are certain video poker games, most located off the strip, which have a positive expectation. In contrast, learning how to handicap at a skill level high enough to overcome much higher \"juice\" takes a very long time & a lot of hard work. The problem with craps & video poker, & almost every other alternative, however, is that they are mind numbingly boring over any extended period of time. My take,then, is that handicapping has more appeal to intellectual-types than other forms of gambling.

While it might be correct to say that the probability of any horse winning in any given race is not related to its odds, the percentages over the longer haul have remained pretty much the same since they were 1st calculated. Two thirds of races are won by the 3 horses with the lowest odds, & the others win at the percentage suggested by their odds.

Finally, I could not possibly agree more that if one can make money handicapping, then the same set of skills can be used to make much more money in just about any field other than handicapping. In fact, I vaguely recall saying just that to a poster who announced on this Bd that he had decided to quit his job & become a professional. Not that the source of such wisdom is important, but I\'m pretty sure that this concept originated in an article written by a handicapped handicapper yrs before the Ragozin book was published. I remember the article & that it influenced my thinking, but I can\'t for the life of me remember the name of the author. That alone should tell you something about how many yrs I\'ve been going to racetracks.

[derby1592]

Intersting discussion. Rebate shops have definitely changed the dynamics of the game and have temporarily created some new winners/losers. I use the word temporarily because, as is always the case, \"If its in the papers, its in the price.\" This is no longer a secret and everyone is now trying to get into the action. Many examples have already been mentioned.

As has also been mentioned, the fundamentals have been screwed up for a long time and the takeout has simply been too high. Technology enabled rebate shops to take advantage of this and the track management let it happen because they stood to gain for the reasons already mentioned. However, the horseman and horseplayers not currently using rebates have been the big losers for all the reasons already mentioned. Both those groups are now trying to rectify the situation and I am sure they will. Track Management and the Rebate shops will have to respond to this development in some fashion and eventually things will probably settle down once the \"net\" takout (takeout - average rebate to bettor) finds its \"natural\" level and is more evenly distributed across all parties involved.

I am not sure where things will land but I have to believe it will get better for the horseman and the current non-rebate players. How much and how it will happen is hard to tell. Right now it looks like everyone will start going the \"legal\" rebate route at least for a while (sort of like buying a car in recent years) but maybe that will shift toward an overall lower takout or some combination of lower takeout and rebates.

Right now I am trying to figure out if I am \"sociable\" or \"think I am smarter than everyone else\" or \"all of the above\"...

Chris

[P.Eckhart]

PRICE  ROI
4-6   -1.9%  
8-11  -2.3%  
4-5   -9.4%  
5-6   -14.1%  
10-11 -2.3%  
Evens -3.4%  
11-10 -6.5%  
6-5   -6.5%  
5-4   +3.9%  
11-8  -6.9%  
6-4   -6.5%
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snip
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9-2  -12.1%  
5-1  -11.5%  
6-1  -14.2%  
7-1  -19.6%
8-1  -19.2%
------
snip
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14-1  -33.8%  
16-1  -37.7%  
20-1  -37.3%  
25-1  -47.3%

This is the so called \'favourite longshot bias\' market inefficiency in all its glory. This is how you would do blindly backing all horses at these starting prices over the last 10 years. Ok, it\'s a UK example but it wont be hugely different for you. After all, the f/l bias was originally found in US pari-mutuel markets over 30 years ago. Currently, sane and serious rebaters channel their action in one direction only, on to favourites.

But as you tinker or hopefully root and branch prune your system, change will occur that will alter the dynamics of the market.
It is entirely predictible what will happen to the market if you do X or Y, only the extent of the change is debatable.

For instance if a 20% take actually did result in a loss on favs of -7% and on longshots of -33%, would a 10% take result in a loss on favs of -3.5% and on longshots -16.5% ie a linear change, or would it be something else. I\'d say \'else\' and in a specific direction, what I can\'t say is by how much. Either way, 10% or lower would would be decent step in the right direction. But from here, it looks like tinkering is what the \'horsemen\' have in mind, if anything.

Several years ago I did a two year study in NY on this supposed betting bias and it wasn\'t even near this pronounced.

[P.Eckhart]

You\'re right it definitely isn\'t as pronounced. I also did it about 4 years ago using the results from about 15000 american races and would\'ve posted them instead if I hadn\'t changed computer in the interim and lost them.

The pari-mutuel machine doesn\'t have the additional risk aversion to insider trading on longshots like flesh and blood bookmakers, which accounts for a deal of the difference. Nevertheless, the f/l bias was there and it was pronounced. So we\'ll have to agree to disgree on this point.

Rebates are bound to reduce the f/l bias and not just from wiseguy action. So would takeout reductions and in a non-linear fashion. Think of this rebate corollory - when UK bookmakers stopped surcharging their customers 9% (due to govt. abolishing General Betting Duty) total handle went up, predictably. But also, significantly, punters began to bet proportionately more on favs, so much so that horseracing profit margins are significantly down. (But there is compensation by the increase in handle) The point is that in this case it was not organised behavior it was \'organic\'. (That is why I\'d guess your wiseguy computer traders wouldn\'t be keen on takeout reductions.) Why proportionately more money will be bet on favs through rebates or takeout reductions is because takeout itself does not affect everyone equally. Who pays most for takeout? Rebates or reductions cause a greater incentive to bet on favs. I have given the example above to show it. Also, how else would we get to an efficient market at near 0% takeout, but to eliminate the f/l bias and to eliminate it means proportionately more money will be bet organically on favs. The lack of f/l bias in Hong Kong if it is true, and I have no reason to doubt it, I would describe as entirely artificial. Artificial in the sense that there are serious minded people (who know fully about the f/l bias) that are deliberately driving their market to theoretical efficiency with some obvious gain. The f/l bias I would describe as an entirely understandable human market inefficency caused by the unaturally high and skewed costs of market entry. (And of course for some like Explayer these barrier costs are judged too high) (PS When I refer to favs, I dont literally mean \"THE fav\")

Sincere apologies to all for this drivel, I am getting boring beyond belief now. Time to go, back (hopefully) in October, to see Russian Rhythm take over the tiara from the great Islington. Cheers.