Good Gambling Play Should Near Always Reflect the Rake of the Game

Yesterday's post about Fantasy gaming sites led to an interesting discussion. These sites keep between 5 and 10% and payout the rest.

During the discussion, some felt that because they are difficult to win at - even though you may get paid near half the time in a 50/50 contest - losing can get old real fast. Others feel the market is so large, and a fair portion of users are used to playing props and sports lottery type games with terrible takeout, that that level can be withstood.

Currently, for example, if you bet $50 in a 50/50 game and land in the top half, you get back $45. One post on twitter noted this:

@Pullthepocket @o_crunk To be blunt,it needs to be installed/accepted as a loss leader, to start. Clock the handle -- and public reaction.
— Richard Witt (@rich_witt1) November 28, 2014

So, in effect, you would win $47 instead of $45. That's lower takeout. But if this is advertised, people would flock to it. Why would anyone want to enter a 50/50 game when they get back $45, instead of $47, even if it's "only $2"? They would, and they'd be flocking to "lower takeout", the big bad wolf that some think does not matter.

Meanwhile in horse racing, it should be that simple, but it's not. 

You are not betting a 3-1 horse and getting paid $8.00. You are betting a horse "around 3-1, that might go down to 2-1 at the bell, or might even go up". There are different races, you may have different opinions and different tracks, there are exotic bets, and sweeps and everything else. It's muddy. It's not in your face like this.

When we get down to it, however, the rake should matter a lot, and just like FanDuel and others, higher payouts should be used by any good gambler as a part of his or her play.

A serious fantasy player might play 2,000 games at $50 per game in 50/50.

At $45 win, with say a 53% win rate (slightly better than an average player)

Handle: $100,000
Return: $100,700
Profit: $700

At $47 win, with the same hit rate

Handle: $100,000
Return: $102,820
Profit: $2,820

Player B is certainly encouraged to bet more, get better and use the lower juice to his advantage.

In racing, we as players should act exactly the same way. By keeping track of bets we learn what our hit rates are, what our ROI is, and can learn from it.

If you have a hit rate of 27% on 3-1 shots on $4,000 a year bet at a high takeout track:

Handle: $4,000
Return: $4,320
Profit: $320

At a lower takeout track, say that pays $8.60 instead of $8 for a three to one shot:

Handle: $4,000
Return: $4,644
Profit: $644

If you multiply this by thousands of bets, that profit difference, just like at FanDuel, can be huge.

This is why win bonuses work to encourage play. It's an increased payout on that $8 horse, and can turn a $50,000 a year bettor into a $500,000 year one in a a flash.

As for non-bonused players, I often hear, "I know this track and I can beat the 22% rake, rather than at that other track at 12% takeout". I am sorry, but if you are profitable, that's nonsense. If you are good enough to have a hit rate of 27% on 3-1 shots over a long period of time at the Big A, you should be able to translate that to Gulfstream. If you don't and are that variant between tracks, it likely means that hit rate is inflated due to smaller sample size, or it doesn't exist in the first place.

If you are good enough to win at a track with 22% takeouts, and one opens next door with 12% takeouts, run as fast as you can and bet the lower rake track.

Most players aren't good enough to win at 22%+ rake racetracks and push volume - I'm not that's for sure - so in reality almost 100% are losing. I am not comfortable with losing and neither are you. We have to take every edge we can find if we want to make money.

I, for one, take a page from the FanDuel users and flock to those '$47 games, instead of the $45 games'. It might "only be $2" like at a racetrack it's "only 2%", but over time, as things regress to a mean in my hit rate, I end up making more money.