Rebate Shops

[derby1592]

As is the case with most of you, I would like to know more about exactly what the so-called \"computer geeks\" are doing.

I can guess at what they are doing and, if my understanding is correct (I don\'t know if it is), then you have to admire them for developing a clever, winning process that is entirely within the current rules.

I don\'t think they are doing anything that \"guarantees\" a profit on every race or that magically finds true \"underlays\" but I do think they have found a system that gives them an edge.

It sounds like some of them focus on exactas and they find \"underlays\" in the way a few others mentioned. That is, they assume that in the typical race the pari-mutuel win odds reflect pretty closely the true odds for each horse. They then look at the exacta payoffs and using a computer program (that assumes an algorithmic relationship between the chance of winning and the chance of being in the exacta) to find which exacta payoffs are underbet relative to the win odds. You and I could do this as well but without a computer it is very hard to do it for all the possible exacta combinations in the last few seconds just before wagering closes. It is even harder then to make a bunch of bets on all the overlays before the bell and it is even harder still to figure out how much you can bet (these guys obviously bet a lot) and not completely washout the overlay you are betting into (every dollar you bet will lower the effective odds).

Unless you have special direct computer access, you could not possibly do this. A few have such access. Most do not. Still it is not illegal and it does not "guarantee" a profit. There is no way you can guarantee a profit unless you are cheating (which direct access to the computer may help facilitate but that is another issue) but if the assumption that the public win odds provide a good indication of true exacta odds and that the public is sometimes inefficient in betting exactas because of the complexity involved, then you will show a long-term profit assuming that your edge plus your rebate exceeds the take.

If what I described is what is happening then you have to applaud them for maximizing their edge completely within the rules. They did not make the rules, they just figured out how to win within them.

I would agree this may be unfair to most and maybe the rules should be changed to prevent or mitigate this advantage that a limited few now enjoy but I certainly don\'t blame those who have taken advantage of the circumstances.

Where I get concerned is if they are getting access to pool info in other exotic pools that are currently completely hidden to the public (e.g., trifecta, superfecta, pick-3, pick-4, etc.). In my opinion, this would cross the line between being clever and cheating. It is one thing to try to optimize the way you work with the information that is available to all. It is another to be privy to information that others are not allowed to see. Imagine if only you could see the trifecta payoffs or Pick-3 payoffs prior to post? That would be huge advantage. I am not saying this is happening but what would stop those with direct computer access from getting such info?

The other place I get concerned is the Pick-6 scam angle. With direct computer access who knows what clever ways the computer "geeks" might devise to past-post bets.

One final note regarding offshore bookmakers. The current buzz is that these guys are now laying off money through the rebate shops as a way to hedge.

I thought the NTRA report was pretty well done. However, the one recommendation about creating some sort of \"lottery\" in the pari-mutuel pool was pretty silly. If I want to buy a lottery ticket, then I will buy a lottery ticket. I sure hope that one never takes off...

Chris

[JimP]

Jimbo66: \"If I understand you correctly, it almost sounds like the computer looks at a horse that is 5-2 and checks to see if he is also 5-2 in the exacta and trifecta pool, if he is \'longer\' in that pool, it places exotic bets on that horse.\"

You don\'t. It\'s not nearly that simplistic. Also 2 of these programmatic players can clash in the same pool, so the software has to be very adept. Because of that, and other factors, there is some inherent risk involved. It just isn\'t the handicapping risk that most of us play against. And, in fact, play for. If there wasn\'t any risk, we wouldn\'t be playing.  And one more point: The geeks aren\'t the persons using these tools. The geeks develop the tools.  

I love this entire thread started with the posted quote from  Bobby Geiger. One for the ages. It has been very revealing in many aspects.

[Boscar Obarra]

    I\'m not at all convinced that the entire story of the computer players is being revealed. As TGJB has asked, without answer, \"Okay, explain to me that little part where the computer finds the overlays...\".

    For one thing, I\'ve done considerable work looking at the exacta pool. I can say this with certainty, that the VAST MAJORITY of winning exacta payoffs in NY are statistical UNDERLAY\'s. If that is true, then the whole theory of what the geeks are doing is in error.  No one is going to bet an underlay, looking for an edge.

    So , if that\'s true ,they have somehow calculated the bets using information and data that differs from the raw exacta par calculation.  Could be they are excellent handicappers. Could be something else.

    Another thing, to test the theory, all you have to do is plot how often the WINNING combination in the exacta is bet down at the end. If the geeks are doing what is claimed, and winning with great frequency , you should see that.  I suspect you will NOT.

    In order the get back 95% of your money, you\'d have to beat the exotic takout by something like 15%.  Consistently.  Doing that entirely by \'value\' mining, with no other input ,  would be extremely difficult, if not impossible.

[Saddlecloth]

I have a hard time believing that nothing is going on, look at how much money is coming in at the last second on these exacta pools.  

Where there is smoke there is fire, right?

[miff]

Guys,

It seems many of the people posting are close, but the plot is much thicker.Ponder this.

Isn\'t it inviting trouble to allow some brilliant computer geek full access to the tote info. Isn\'t it a matter of time before he figures a way to beat the system or gain a substantial betting advantage over you and I? This is not like someone handicapping so well that he wins more that the rest of us, this is far more sinister.I fail to understand how anyone can say they don\'t mind that a small number of players have access to better info than the rest of us.

Why would ANY race track allow such a situation to exist.

[Saddlecloth]

miff wrote:


>
> Why would ANY race track allow such a situation to exist.
>
>

Money, they dont care about anything else

[miff]

Money hungry Mis-Managers helped bring NY Harness Racing to it\'s present \"JOKE\' status, and it looks like the runners could go the same route if the big issues aren\'t addressed soon.

[asfufh]

Something doesn\'t seem to add up to me in Bobby Geiger\'s explanation of the computer betting advantage. He says the computer players win back 97 % of the money they bet and then wind up making money by adding back their rebate (7%).
In order to do this BASED on track payoffs, doesn\'t that mean they are already winning at a clip that recoups 14% of the 17% win takeout.
If these computer programs are that good, I want me one.

Asfufh



Post Edited (09-21-04 19:32)

I think the key is identifying and exploiting inefficiencies in the various pools in combination with the rebates.

Assume the take is \"x\".

Not all odds categories have a loss  expectation of \"x\" even though the take is \"x\". There are public betting tendencies that create inefficiencies in the pools relative to the take. (ex. huge longshots tend to be overbet and lose more than \"x\")

If you do some research and combine those inefficiencies  with the inefficiencies that exist between pools (win, exacta, double, triple etc..) you can really chop into the take without doing any handicapping at all.

If you combine the above with a rebate, you have got to be really close to break even or better. Even a little handicapping skill relative to the take and you are beating the game.

Of course, all this assumes that you have the technology to process all the information and place the bets in a timely enough fashion to exploit these efficiencies.

Anyone can do this on a very limited basis  manually.

Ex. Suppose a horse is paying $8.00 in the win pool. Sometimes, if you wheel him in the exacta in a way that guarantees an equal payout no matter which horse comes in second ($2 on a $20 ex, $4 on a $10 ex, $1 on a $40 ex etc..) you might find that the exacta produces a payoff of $8.60. That extra 60 cents is an inefficiency that should be exploited.

It is clear to me that many people are monitoring and exploiting this kind of stuff (and have been for many many years) because the inefficiencies are usually corrected by a flurry of late betting (and probably were long before I examined this manually 15 years ago).

The price changes are so rapid, it becomes almost usless to try to deal with it manually. However, a computer program can examine multiple horses in multiple pools and do sophisticated calculations quickly. So there must be a way of doing this in combination with the rebate and other information to get to profitability with only limited handicapping skills.

[msola1]

Jerry,

If you had the equation, which is not a state secret after all, the computer would keep updating the odds and therefore the expected exacta payoffs. Differences of a selected magnitude could then easily be determined and acted on.

[BitPlayer]

Does anyone know if the computer bettors have access to pool info (e.g., trifectas) not available to the public?  I note that, according to the NTRA report, their edge is greater in those pools than in the win-place-show and double-and-exacta categories.

With respect to their handicapping techniques, the NTRA report cites the following article from Wired (\"The High Tech Trifecta\") that addresses that topic as well as others (regarding Hong Kong operations) and is pretty interesting:

http://www.wired.com/wired/archive/10.03/betting.html

[OPM]

Players deserve rebates, no question.  Horseracing is competing with other gambling entities and the take is usu only 5% and in racing it is a blended 20%.  Casino comp their biggest players and horseracing should do the same.  Every study that has been done shows that handle increases if the takeout is decreased.  The only ones who don\'t know how to read these studies are politicians and Horse owners.  In NY, they recently proposed increasing the takeout!!!!
The other part of the NTRA is the batch wagering question which gives certain players and huge advantage in placing bets.  Some people are able to place 1300 bets/minute.  I think this is totally unfair and should be stopped. But players need rebates or lower takeout or else we are just spinning our wheels in a downward spiral.

[Saddlecloth]

OPM wrote:

> Players deserve rebates, no question.  Horseracing is competing
> with other gambling entities and the take is usu only 5% and in
> racing it is a blended 20%.  Casino comp their biggest players
> and horseracing should do the same.  Every study that has been
> done shows that handle increases if the takeout is decreased.
> The only ones who don\'t know how to read these studies are
> politicians and Horse owners.  In NY, they recently proposed
> increasing the takeout!!!!
> The other part of the NTRA is the batch wagering question which
> gives certain players and huge advantage in placing bets.  Some
> people are able to place 1300 bets/minute.  I think this is
> totally unfair and should be stopped. But players need rebates
> or lower takeout or else we are just spinning our wheels in a
> downward spiral.

I dont think the rebates are the problem, but the technology to bet this system within seconds of the gates opening is the real issue.  I think rebates are a good thing to a certain extent.  Obviously here they are being abused.

[Mall]

I agree with what Oaklawn did, but you should keep in mind that when Mr Geiger refers to a reduction in \"effective\" takeout, he is not talking about actually lowering the rates. In the Alice-in-Wonderland world of track execs, you can take credit for reducing the \"effective\" takeout by keeping the rates the same & excluding rebate shops.

The NTRA Study makes it clear that the people who support racing the most, financially & otherwise, by actually going to the track, are getting the worst of it from just about every angle. You\'re lucky if the track will provide an electrical outlet, let alone direct or computer access to the pools. At a bare minimum, no gambler who is paying attention is going to be willing to participate absent a level playing field, which is decidedly not the case when you bet into exacta & double pools where they allow batch wagering. The tracks understand this, which is why, with few exceptions, it is next to impossible to find out which tracks do & do not allow the practice. Unless you have detailed evidence to the contrary for a specific track, the safe & logical assumption is to assume batch wagering is permitted, & avoid exactas & doubles at that track. Woodbine, which is applauded for its efforts in the Report, is an example of the kind of detail you need to know. Its execs, who have argued publicly in the past that all bettors are better off with higher takeout rates because they\'re just going to lose the money eventually anyway, leveled the playing field by restricting the number of batch wagers to, I want to say, something like 500 different wagers in the last 15 seconds before the race goes off. I\'m still interested in meeting the person who can make half that many bets at the track through a mutuel clerk or betting machine.

Also, as many have already pointed out directly & indirectly, it\'s always a good idea to keep in mind the financial interests of the speaker, or in the case of the NTRA Report, the financial interests of the parties who paid the authors. Notice that one subject which the Report carefully avoids is whose shortsightedness is responsible for the current state of affairs, & whether it is logical to assume that those who are responsible will be able to solve the problems they created. You knew my answer to that question before you began reading this post.

[cozzene]

Gentlemen

I recently posted a reply to the discussion on drugged horses.

The reply to this issue is the same; Pacific Poker, Ultimate Bet, Party Poker.

The only thing the horse racing industry understands is a sledgehammer.  Take away your action, stop betting on horses.

If the handle drops enough positive changes will be made or the industry dies.  If the game is fixed by the fact and no changes are made then it deserves to die.

Personally I have made it to MTH only twice all summer.  I used to go at least twice a week.  

Vote for change by boycotting wagering on horses.

Thank You

Cozzene