The Italians like to gamble. With recent changes liberalizing Italian gaming regulation, it is estimated that about $91 billion will be wagered in the country annually by the year 2010. The problem is, too many Italian gamblers are choosing to bet on something other than horse racing.
The takeout in Italy is exorbitant, as much as 40 percent on the trio, which is the Italian version of our trifecta. According to Barsotti, it wasn't always this way, but Italian racing regulators have decided to allow major increases in the takeout rate over the years.
Too many gamblers are going broke, which has created smaller betting pools. With smaller betting pools, it's hard to make a large bet. Anyone wanting to make a big wager on a horse will drive the horse's price down to unacceptable levels. That has caused big bettors to flee the game, which makes the pools smaller yet. It's an unending cycle.
Further, this interesting tid bit. In looking at lottery takeout rates I see that the state of Massachusetts has done the opposite. They have lowered and lowered and lowered the state take on the lottery. They now have approximately a 30% takeout on their lottery. 30%! Or ten percent lower than the Italian trifecta. How did they do? Judge for yourself in this pdf. They have well over $600M in sales, almost double that of the second place state.
By the way, the lottery in Mass and the takeout on the superfecta in Pennsylvania are about equal. Technically you might have a better chance to make money at a lottery than a bet at a racetrack. This from a lottery business where 75% takeouts were once considered the norm. I can't believe I typed that - I never thought we would see the day where a lottery is beating a horse bet. But we have.
This has gotten out of hand.
I will leave you with this, from gambling expert Will Cummings in his report to racing (commissioned by racing), which we quoted before here. We need everyone in this sport to sticky tab this to their cubicle:
Racing has lived with rising rates of takeout for so long that they have become a way of life. They are the line of least resistance whenever the industry needs money. It is all too easy for the industry to see that if we have a constant $100 in handle, and we raise the takeout by one percent, we’ll make a dollar more. It is much less easy to see that handle is not constant and, over the longer term if not the short, we won’t have that $100 any more.We are seeing this 2004 prognostication play out right before our very eyes, and we can't seem to do a dang thing about it.