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Monday, April 26, 2010

Is the Pari-Mutuel System Running Off Our Fans?

Has horse racing, harness racing in particular, forced the casual bettor away? We know many of the serious or professional gamblers have left horse racing as a result of the high takeout, but let’s face it, for many of the weekend bettors is there something else at work discouraging them to wager on horses? Perhaps the pari-mutuel system has become obsolete, a detriment to the weekend bettor.

Professional gamblers have always had an advantage over the weekend (casual) gambler. A professional tended to go to the track every night to keep track of each race but the advantage they had was limited to whatever trip notes they could write from the observations they recalled regarding a particular race in addition to reviewing the previous night’s races before the evening’s program was underway. Other than that, the professional gambler was just as blind as the casual gambler when it came to horses that shipped in; there were no replays to review. However, while the professional gambler had the advantage, the advantage was not big enough to seriously impact the odds of a race so gambling on horses still was worthwhile to the casual gambler. The pari-mutuel system worked.

Now, with the internet and the low cost of a laptop, the professional gambler has an insurmountable advantage over the casual gambler. Where in the past everyone worked off the racing program, professionals have computer programs that do the handicapping for them looking back far past the last seven or ten starts a horse made. You no longer have to go to the track to watch a replay. With the internet, you have the ability to watch horses’ past races over and over, not only at your local track but their race at Anywhere Else Downs. Some gamblers have the ability to be sophisticated enough so they can wait until the last minute to wager, only if the price of a horse is at a certain rate or above. As for the casual bettor, while they may have access to a computer, they do not have at their disposal all the information the professional has. The end result? Horse racing has become like the stock market. The professional gambler is the institutional investor and the casual gambler is the retail customer. Even if we disregard the professional gambler getting a reduced commission for ‘trading’ (the rebate), the professional gambler has such an overwhelming advantage, the casual gambler gets crushed depending in some ways, more on luck than anything else (just like in the stock market). The pari-mutuel system is broken. The professional knows how to (legally) game the system resulting in the odds being so stacked against the casual gambler that they have abandoned the game.

Let’s look at a 10-1 long shot. In the old days, an astute casual bettor may have found a 10-1 longshot and even if the serious gamblers found the same horse, the final odds may have been 5-1. Nowadays, the same 10-1 longshot will may get crushed to 9-5. Hence it is harder for the casual bettor to make a profit. Where a casual gambler may have won in the past five races a night betting the favorites, the average favorite may have paid $6.00. Now, when the same gambler wins betting the favorites, the average favorite may pay $3.80. Assuming a $2 gambler betting on a ten race card, what may have been a $20 profit may now be a $1 loss. How long will you keep coming to the track winning half the races and yet lose money?

Maybe this is why people have left for casino games. Casino games, if nothing else are democratic. Sure, some people know how to play casino games better than others, but it doesn’t impact the odds. Everyone feels they have the same chance to win or lose. Many of our smart casual bettors have learned they don’t have a real chance wagering on horses.

We need to make wagering on horses more democratic to get casual bettors back. This may require scuttling the pari-mutuel system or supplementing it with another form of wagering. Perhaps it is time to introduce exchange betting so the professional gamblers have an efficient market for them to wager in, leaving pari-mutuel wagering for the casual gambler. Maybe it is fixed odds wagering so at least the casual gambler can make their wager when they want to and not see the odds crushed after; perhaps a combination of all three. I don’t pretend to know the solution, but it is clear we need to do something to make the game attractive to all of our gamblers. What I do know is in the current environment, the pari-mutuel system no longer meets racing’s needs.


ray2000 said...

I would like to see an experiment where the parimutuel odds are hidden from the bettors, no pool signals anywhere, surprise payoffs.

I think this would chase off the pros and maybe the bots in Harness.

Common sense would say no body's going to bet....but I'm not so sure, is there "value-added" excitement this way? or is the disappointment factor too great?

If promoted correctly, it would be interesting to see what would happen to the handle.

ITP said...

The obvious (chalk) would be overbet horribly in the beginning. Everybody would bet on the most likely winner and there would be no value betting opposition because you can't tell if the price is to high on horses that will only get bet because of that.

Anonymous said...

Liked your stuff on the pari mutuels.... However, even the pro gets crucified by the glut of information available as it's no longer possible (and hasn't been for decades) to observe something that could result in a score next time out...

Since Sports Eye and the charts (guilty) everybody knows when a horse was locked and raging thus its an automatic 1-5 next time around.

Back when (before replays, Sports Eye, charts, etc) you only saw the race ONE TIME therefore the expert racewatcher enjoyed a huge edge over the other players the overwhelming majority of which were ineligible to see what the expert saw thus "next time" represented a golden opportunity to a select few....

At this point have no idea how to address this situation...