Jockey Change - Belmont, 6/10, 12th race

[miff]

Boxcar,


What I know for certain with the skim is that:

1.It only worked in large wagering pools. I understand that in 2003 at the entire SPA meet the computer made something like 75 thousand wagers in the exacta and tri pools but only half of that amount during the entire fall Belmont meet.

2.There are only certain races where the opportunity to make an overall profit presents itself,not every race.The rebate was of paramount importance in this instance.

3.Handicapping had very little, if anything, to do with this particular program but maybe there were tosses. I do not have every exact detail.The guy had $100k when he started and researched this for one year before pulling the trigger.

4.The guy who used it for 3 years made $1.2 million in profits on overall wagers of app $35million, app3.5% net net.The guy is out of business.

5.There was NOTHING illegal about what he did making the bets.

I have heard of several other variations, computer software, that is out there which involves more of a handicapping thing(as you stated)

I am as concerned about this as performance enhancing drugs. Who knows what the next genius geek will come up if allowed access to realtime betting pool info.


Mike

[TGJB]

Miff-- at some point in the process handicapping is done by somebody, before the program is applied. The person with the program usually hires others to do it. The computer then plays all combinations, that AT THE REDUCED TAKEOUT (after rebate) are overlays, according to the handicapping. It is worth noting that if they are winning at a rate where they would be losing or breaking even without the rebate, they have no significant negative effect on the pools for other players-- the profit is then coming from the tracks etc. taking a lesser share, which they are compensated for in the form of increased handle. The guy you described who was a gross loser but a net winner of 3.5% was good for the tracks (huge handle) and not a significant factor for others playing in the pools against him.

[Wrongly]

JB

It was my understanding that these computer programs generated a bet on each horse (or combination in exotics) in the race (amount according to odds) thus ensuring a certain profit margin.  This type of betting would lower any winning payouts.  Is this not the case?

[TGJB]

First of all, there is no way to do that and win-- if you do it in the most efficient manner, you will still lose the takeout, whatever it may be after rebate. Second of all, if someone dutched all the horses, it would have a neutral effect on the pool.

[Boscar Obarra]

  Jerry, I know its tempting to think these guys dont impact your results but I\'m skeptical.

  If that were true, they could bet UNLIMITED amounts.

  Since they can\'t do that, there must be an impact on the payoffs that self limit the bet size. They stop betting when they start to kill the return below an acceptable level.

  I\'m not sure what kind of mathematical proof needs to be offered here, but my instinct tells me it\'s true.

  Would love to know exactly what that guy , who is now out of business was actually doing.

[BitPlayer]

TGJB -

You wrote: \"It is worth noting that if they [large rebate players] are winning at a rate where they would be losing or breaking even without the rebate, they have no significant negative effect on the pools for other players-- the profit is then coming from the tracks etc. taking a lesser share, which they are compensated for in the form of increased handle.\"

Your statement is factually incorrect.  If, for example, the track takeout on a pool (without regard to rebates) is 20%, for every dollar that one person loses (without regard to rebates) LESS than 20%, someone else has to lose MORE than 20%.  It is, in that respect, a zero-sum game.  

The way I think of it is as follows:  The track is in the business of collecting and redistributing the non-takeout portion ($0.80) of every dollar bet.  As to that amount, the track pays out 100% of what it takes in.  Bettors pay for the privilege of being able to wager into that pool.  For on-track players, the price to the bettor of doing so is the takeout ($0.20), and the track gets the whole $0.20.  Rebate players get in for less.  They only have to pay the difference between the takeout and the rebate (say $0.10; I\'m just making up numbers).  That $0.10 is split between that track as a fee for the signal (say, $0.04) and the rebate shop (say $0.06, to cover expenses and profit to the proprietor).

The track\'s incentive to allow the player into the pool for a measly $0.04 is that the track gets nothing if the player doesn\'t play, and the player won\'t pay $0.20.  In most cases, he can\'t afford to do so and still make money.  Whether that\'s a smart economic decision for the track is an issue that is hotly debated.

The economics for any player are simple.  To win, his or her profit on the $0.80 portion of the pool has to be large enough to cover the cost of getting into the pool (20 cents for the on-track player and 10 cents for the rebate player).  That profit has to come from the other players.  Even if the rebate player is winning only 85 cents for every dollar bet, and thus suffering a 5% net loss after rebates, his effect on the other players in the pool is negative.  When he jumps in and starts betting, for every 5 cents above 80 that he gets back, someone else has to lose an additional 5 cents.

Accordingly, as you have posted, the rebate player needs a significant handicapping edge or he\'ll leave the business quickly.  If he has that edge, other players in the pool will be negatively affected by his presence.  The better the rebate player does, the bigger the negative effect on the other players.  That\'s the nature of the game.

The question isn\'t whether the rebate players are winning money from other players.  They are.  Read the NTRA study that asfufh mentioned.  The question is whether the technological advantage (direct pool access) they are using to enhance their edge is fair to other players and in the long-term best interests of the sport.

[asfufh]

BitPlayer.....great post.

JBTG, Here\'s a extract from the introduction (p. 4) of the NTRA task force report:
\"The Task Force identified the following areas for intensive review:
· Changing wagering patterns (e.g., from on-track to off-track);
· Rebating (e.g., under current regulatory rules and as practiced by some OTB or account
wagering operators);
· Reductions in normal winning payoffs due to computer-assisted pari-mutuel wagering;
and
· Internet-based betting exchanges.\"

Please note that item 4 uses the term, \"reductions\".

Asfufh

[imallin]

Think of it this way....

A person betting 20 million a year needs a rebate to compensate for the amount of money he\'s knocking his own price down by, which a 2 dollar bettor doesn\'t have to worry about. Here\'s an example.

If you bet 5,000 to win on a horse that\'s paying 8 bucks, you knock it down to 7 bucks (just throwing numbers out there).

If you bet 2 dollars on that same horse paying 8 bucks, it pays 8 bucks.

So, the large volume guy is actually paying a higher takeout rate because he\'s only getting a 7 dollar win price on a horse that you are getting 8 dollars on. The rebate goes to compensate that.

Why should a big bettor reduce his juice by 10 or 20 percent just because he bets a fortune? If people got locked in at their price, that would be one thing, but if no one got a rebate, the guy betting the 5,000 to win would go under very fast if he\'s taking 7 dollars on horses that the 2 dollar bettor is getting 8 dollars on.

So, the rebate is actually compensation and incentive to BET 5k on a horse. It wouldn\'t be fair to \'charge\' the larger volume guy a worse price.

When you buy in bulk in this country, you get discounts, thats just the way any smart business does it.

[BitPlayer]

Imallin -

Actually, I don\'t object to rebates.  As you say, rebates can be viewed as volume discounts for large players, and, as my previous post indicates, they come out of the track\'s hide, not mine (at least not directly).  If the rebate players happen to be good enough handicappers to take my money, so be it.

My hot buttons are direct pool access and batch wagering.  Admittedly, they are tools that are useless in the hands of a bad handicapper, but in the hands of a good handicapper, they provide an additional edge that allows the player to drain more money from other players.  I think the sport would be better off without them.  Horse racing should be a contest that rewards superior handicapping, not superior ability to access and process pool data.  Moreover, batch wagering produces late odds changes that make the game less fun for everyone, and the big money involved increases the incentive to cheat.  

At the very least, I would like to be told what tracks are accommodating the use of these tools, so that I can avoid playing against them if I so choose.  Tracks tend to announce loudly that they have cut off the rebate shops to protect smaller bettors, and then let them back into the pools without saying a word.

[TGJB]

Bit--

1-- The odds changes can be dealt with by closing batch bettors out a minute or two early. Some of us think they should close EVERYONE out when they start loading the gate, to remove even the appearance of past-posting.

2-- Should they bar software from the stock market too? How about barring TG, since it helps people win?

[BitPlayer]

TGJB -

I like your suggestion about closing the batch bettors out a minute or two early.  I don\'t think you\'ll get a lot of takers amongst the batch bettors.  As I recall, a similar suggestion was once taken up by the CHRB, and rejected.

I also like your suggestion about closing all betting when the first horse starts to load.  In addition to eliminating the suspicion of past-posting, it eliminates giving some bettors the advantage of being able to watch for who acts up in the gate.

I have no objection to handicapping software or TG.  I have previously posted (without response from you) my objections to your stock market analogy (see \"it\'s not a market, it\'s a zero-sum game\").  Nevertheless, if you insist on the analogy, I think the closest analogy to direct pool access would be concern preferential order execution and access to data regarding unfilled orders.  I\'m no expert, but I\'m guessing you\'ll find both are highly regulated to ensure fair treatment of all investors.

By the way, TG doesn\'t just help people win, it\'s \"everything you need to win.\"

[imallin]

But, you can say that the ability to process pool data IS part of superior handicapping. Who\'s to say what is and what is not \'handicapping\'.

Here\'s an example of something that would not be considered \'handicapping\'.

Lets say you are able to predict the weather and know that you are going to bet dirt specialists in the 3rd leg of the pick four at Saratoga and pray for rain and for the race to come off the turf. They have changed the rules in some instances to consider that race an \'all\'but why should someone who handicapped \'the weather\' be punished? Isn\'t that part of handicapping? I\'ve actually done that at the Spa....when there were ominous clouds, i would ask myself, \"if this race comes off the turf, who would i like\". Sometimes i\'ll take a shot and single a dirt horse and do my raindance. Crazy i know, but if thats handicapping to me, who\'s to argue? Anything we do could be considered \'handicapping\'.

My last point about the \'direct pool access\' is this. Anyone has the ability to have this access, thats why i can\'t be mad at it. If you were a multimillion dollar bettor who was a software/computer genius and were hooked up with a place that offers that service, you\'d take advantage of that too. Its not like they would tell you no. You do have the ability to access the pools yourself...its hard because you have to be a big enough bettor and get hooked up with the right place.

[TGJB]

Since I have a minute--

1-- It\'s both a market AND a zero sum game. And on that point, racing would do well to get involved with Betfair or follow their lead-- head to head fixed odds betting gives a big player a chance to bet a lot of money without affecting his odds, leading to more big bets.

2-- ANY player that does better than lose 20 cents on the dollar (before rebates) costs the others money-- that\'s the nature of the game. That has nothing to do with rebates or batch betting-- which is why the NYRA inquiry is misleading. It should be \"effect of good handicappers on the pools\". And it\'s in racing\'s interests to facilitate big players, who by their very nature must be doing better than the others to stay in business.

3-- The guy Miff mentioned, who was making only 3.5% AFTER rebates, was having a negligible effect on the pools overall, though of course he could hurt you with an individual result. Or help you on another.

4-- Again, most of the computer programs just bet YOUR opinion efficiently-- I know a fair amount about this. If your opinion is no good, it doesn\'t help at all, and if it\'s really bad...

5-- Thoro-Graph. Along with rebates and batch betting software, it\'s all you need to win.

Not as catchy.

[miff]

There are several opinions here and perhaps even one agenda.I do not believe that eveyone fully understands the big picture here.To me, it\'s painfully simple, everything is fine EXCEPT someone being able to access the live pools with computer software which generates many wagers in the last few seconds.

To that end, I have called Bill Nader SVP,NYRA to confirm that no one is being permitted access to the live NYRA pool data by any means whatsoever .He assured a group of us that was not happening some time ago but I wonder if NYRA lifted that restriction for pure financial reasons.I\'ll post his reply when/if he returns my call.

Mike

[marcus]

imallin - Very good points made on rebates and well taken , after consideration of much of what was disscused by You and Jerry ( and others too - everyone has made some good points pro or con ) on this thread , I think of the situation with Rebaters as fair and equitable and I\'m really not giving up any edge either - perhaps I was too quick to take a negative view without a full understanding of issues  .