A Proposal for an Improved Pari-Mutuel Model - By Cal MacWilliam

re: A Proposal for an Improved Pari-Mutuel Model - By Cal MacWilliam

johnaugustwest — Sat, 10 Sep 2011 12:27:50 GMT

Nowhere -- absolutely nowhere -- in Mr. MacWilliam's column does he mention that the better WPS mutuals he talks about will be sustained by diminished payouts in the exotic pools. No wonder I didn't "get" his point. Or his math. It wasn't until he replied in this forum that he brought up exotics pools at all.

But enough on that. I have a fresh comment: I don't believe more generous mutuals for bettors who enjoy betting the house on 3/5 shots will improve anything. Nor will attracting more so called bridge jumpers. If anything, lowering take-outs on exotic wagering is the way to go... not in the opposite direction. All the serious horse players I've known are into horizontal and vertical wagering -- not WPS.

re: A Proposal for an Improved Pari-Mutuel Model - By Cal MacWilliam

stenslat — Mon, 22 Aug 2011 20:51:59 GMT

I don't think the numbers are necessarily wrong johnaugustwest. It depends on the distribution of odds on the winners. This gain-based system increases takeout on longshot winners and reduces takeout on short-odds winners. The article just seems to be missing detail on whether the 18.5% takeout is enough to keep revenue level.

re: A Proposal for an Improved Pari-Mutuel Model - By Cal MacWilliam

johnaugustwest — Sat, 20 Aug 2011 16:03:50 GMT

Here's some more "correct" math on the subject. In a hypothetical $100,000 total win pool, with a 17% takeout, a horse with $20,000 bet on it would pay $8 and change; the track, obviously would receive $17,000 in takeout.

Under Mr. MacWilliam's proposal, taking 18.5% out of the $80,000 winnings portion, that same horse with the $20,000 bet on it, would pay slightly more. But the track would receive $2,200 less in takeout; which amounts to approximately 13%. That's hardly equivalent revenue.

Now, if Mr. MacWilliam's 18.5% is increased, so that the track does, in fact, enjoy comparable revenue, then that horse with the $20,000 bet on it goes back to paying what it would have paid under the old 17% takeout.

In closing, there is no clever way to re-slice that pie so that bettors get a bigger piece, while everyone else's portion remains the same. Can't be done. The only viable solutions for bettors to receive higher mutuals must be rooted in lower takeouts. Then, when that's done, hopefully handle will go up, thereby insuring tracks will enjoy revenue comparable to, or greater, than what the old system produced.

re: A Proposal for an Improved Pari-Mutuel Model - By Cal MacWilliam

Cal — Sat, 20 Aug 2011 12:59:26 GMT

Increasing the takeout by 1.5% will result in equal revenues if this is done across all bets. In this way the majority of WPS bets result in increased winnings, with some of them increasing by 200 or 300%. On the exotic bets, the winnings fall by up to 1.9%. This is what keeps the revenues totally equal by increasing the take by 1.5%. If this system was only used on the WPS pool the take would have to increase by 3.5% -- to 20.5% from 17%. But even this would still result in increased winnings on low odds horses, but just not by quite as much. The takeout level and the way it is applied are really two separate issues. The idea here is that applying it only on the winnings is really the far better way to do it. Once we apply it this way, we then need to determine the takeout level in order to generate optimal revenues. In the numbers I used, if we started from the assumption that we wanted to keep revenues exactly the same as they are now (though not accounting for the increased handle that would result) then an additional 1.5% across all bets does this. Hope this helps clarifies this.

re: A Proposal for an Improved Pari-Mutuel Model - By Cal MacWilliam

stenslat — Fri, 19 Aug 2011 20:34:36 GMT

Sounds like a great idea. I agree that increasing the payoffs on short-odds winners would give fans a more positive experience.

Is the 18.5% takeout enough to keep revenue the same? I did a quick calculation for a 7/2 winner and it seems like to match a 17% gross takeout you would need an almost 21% gain takeout.

re: A Proposal for an Improved Pari-Mutuel Model - By Cal MacWilliam

johnaugustwest — Thu, 18 Aug 2011 12:15:21 GMT

None of Mr. MacWilliam's math adds up. For example: He contends a hypothetical 18.5% takeout on a $50,000 winnings only portion of a hypothetical $150,000 betting pool would generate revenue for the track equivalent to a 17% takeout on the entire $150,000. Well, no it wouldn't. the track would receive $16,250 less. How is that equivalent? By coming right out of the gate with such flawed figures, Mr. MacWilliam thus undermined his every subsequent contention. Turning, say, $2.40 mutuals into $2.80 simply can't be done the way he suggests. Very disappointed that BloodHorse published this piece without first checking Mr. MacWilliam's numbers.