Why Does Anyone Bet on the Races?

Interesting piece in the New York Times yesterday, about Jesus Leonardo, a 57-year-old New Yorker who makes $45,000-$50,000 a year as a professional "stooper," picking up discarded parimutuel tickets and cashing in the winners. Leonardo, who collects the tickets at various OTB parlors in the city, rather than the race track, appears to be doing far better than most bettors, or for that matter, than NYC OTB itself, which is the latest racing-related entity to fall on the mercy of the bankruptcy court.

That got me thinking about why any of us bet on the races at all. In my own case, I've noticed that I hardly bet these days, certainly a lot less than I did, say, 10-15 years ago, even though I'm still as much, or more, of a follower of racing.

It seems to me that there are two likely reasons, in my own case. These may be merely personal, but perhaps they shed some light on the death spiral that racing as a whole seems to be in.

First, I've become involved in owning horses -- in fact, in managing a partnership operation, Castle Village Farm, that makes it possible for lots of racetrackers and handicappers to become thoroughbred owners at a reasonable cost. The more I've become involved with the tremendous ups and downs of having our own race horses, the less the desire to bet on other peoples'. Of course, buying race horses might also be considered betting, and at a far larger scale than that of the average recreational handicapper, but if you go into the ownership game with your eyes wide open, knowing that you're not all that likely to make money, but that you'll get a lot of thrills along the way, the risk aspect seems to become less important.

Second, and perhaps most relevant for the general state of racing today, I've found that it's just too hard to beat the takeout. According to the Horseplayers' Association of North America (HANA) ratings, hardly any tracks take out less than 15% on win-place-show wagering or 19% on exactas and other multiples. Even if one is quicker and smarter than most of the other bettors, that's a huge hurdle. Now, if I bet a few million a year through a rebate shop, reducing my effective takeout to the single digits, it might be another story. But, alas, I don't have the kind of bankroll necessary for that, nor the patience for the mind-numbing computer-assisted search for miniscule overlays that's the heart of many big bettors' operations.

Fortunately for me, and for many others who might, in earlier times, have stayed with the race track because it was the only game in town, there are some much more attractive options for satisfying the gambling urge. For those who find all that handicapping too hard, and just want action, slot machines will do just fine, and they have a takeout that's usually below 10%. Of course, you don't have half an hour between plays at the slot machine, so the $20 that takes a whole afternoon to lose, in $2 bets, at the track can go in 15 minutes at the casino, even with the lower takeout. But millions of folks seem to find the mindlessness of the slots quite satisfying, and, if and when we ever get slots at Aqueduct, I'll be very happy to see some of their money make its way into the purse account.

But the real gambling rival to handicapping is poker. The game combines many of the same elements as trying to pick a winner at the track -- knowledge of the odds, good math skills, and an acceptance of fate -- you can make make a brilliant overlay bet in racing and see it ruined by a stupid jockey mistake, or you can make all the right bets in a hand of Texas Hold-Em and lose when some moron who shouldn't even have stayed in the hand gets the one card in the deck that could beat you on the river. So, in either case, you have to be satisfied with having made the right bet, even when you lose. Another similarity is that it takes stamina and determination to play the game well. Just as you have to put in the time handicapping to have even a shot at beating the races, so too do you have to put in the time at the poker table, whether real or virtual, to convert your advantage in skill into real money.

And, most important, poker has takeout rates that are far, far better than those in racing. The most you'll ever pay, in a low-stakes game at a casino, is about 10%, and the number is much less than that as the stakes rise, or in online poker, where the takeout ("rake") is generally only a couple of percent.

If we're looking for the racing fans of the future, I've seen them, and they're not coming to the races; they're at the poker tables. If racing could capture a tenth of the 20-somethings who are playing poker online or at casinos and card rooms these days, we wouldn't have to worry about declines in handle any more.

Those who argue against cutting takeout in racing say that most bettors don't even know what the takeout rates are; if they did, would anyone at all bet at NYC OTB, with its ludicrous 5% surcharge? But that argument is false even for racing; the big bettors go to the rebate shops, where they can get takeout reduced to a reasonable level. And all those young poker players are certainly conscious of the odds and the takeout rates. They're good at math, and they know what they're buying into, whether it's a lower rake, better "comps" from the casino, or a bigger jackpot (cf. Pick Six carryovers).

So, if we ever want to see those kids at the track, we have to give them a product they'll buy. And, given the competition from poker and, to a lesser extent, slots, that means reducing takeout to somewhere around 10%.

Now, the trick is to figure out how to run a race track and put enough in the purse account to keep the horsemen in the game, all the while relying on a 10% cut of the betting dollar.