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Equinometry 101

HRN Original Blog:
Equinometry 101

Takeout: You Can't Avoid It, But You Must Consider It

 

There are countless variables involved in deciding which races to bet and how to bet them and one of the most important is often overlooked, especially by new and inexperienced horseplayers.  It is a variable that affects every race and every horseplayer.  It is the takeout rate.


The takeout rate is the percentage of each wagering pool that is withheld by the track.  This money is used to pay for many things including purses for races, for operating the facility and for profit to the track owner.  Takeout is necessary in order to put on the show.


The takeout rate varies from track to track and from wager type to wager type.  From a horseplayers perspective the lower the takeout rate the better because more money is being returned to the players that have winning tickets.


Here's a quick example of how the takeout rate affects the payouts of a race.


At Utopia Downs, which loves horseplayers, the takeout rate is 10% on Exacta's.  The Exacta pool is $50,000 and $800 was bet on the winning combination.


Pool = $50,000

Takeout = $50,000 x 10% = $5,000

Winning Bets = $800


The Exacta payout is calculated by subtracting the takeout and money bet on the winning combination from the pool then dividing the remaining amount by the money bet on the winning combination then multiplying the result by two to get the $2 payoff.


$50,000 - $5,000 - $800 = $44,200

$44,200 / $800 = $55.25

$55.25 X 2 = $110.50


At Players Park the takeout rate on Exacta's is 15%.  Using the same pool size and money bet on the winning combination as the example above produces the following result.


Pool = $50,000

Takeout = $50,000 x 15% = $7,500

Winning Bets = $800

$50,000 - $7,500 - $800 = $41,700

$41,700 / $800 = $52.13

$52.13 X 2 = $104.25


At Corporate Downs the takeout rate on Exacta's is 20%.  Using the same pool size and money bet on the winning combination as the example above produces the following result.


Pool = $50,000

Takeout = $50,000 x 20% = $10,000

Winning Bets = $800

$50,000 - $10,000 - $800 = $39,200

$39,200 / $800 = $49.00

$49.00 X 2 = $98.00


To recap the $2 Exacta paid with a:


10% Takeout Rate = $110.50
15% Takeout Rate = $104.25
20% Takeout Rate = $98.00


As you can see increasing the takeout rate reduces the winning payout and thus reduces the amount of money available to be re-bet on future races.  The differences in payouts in the examples above were not that large but when you consider that every bet you make is impacted by this, it will quickly add up.  Over the course of the year you could be costing yourself hundreds or thousands of dollars by betting into pools with unfriendly takeout rates.


Additionally the examples above had a modest pool size.  When applying the same examples to major tracks that have pools four or five times that size the negative impact of higher takeout rates is amplified and the positive impact of lower takeout rates is amplified.


Not surprisingly tracks that offer low takeout rates have seen their wagering handle grow.  For example Kentucky Downs total wagering handle increased by 46% from 2012 to 2013 because they offer some of the lowest takeout rates in the country.  Many tracks have adopted the "Players Pick 5," which earned it's name because a group of California horseplayers came up with the idea of a low takeout bet to stimulate growth.  The low takeout Players Pick 5 is the fastest growing bet at many tracks.


Considering this often overlooked variable will make you a better horseplayer and put more money in your pocket when you win and now is the perfect time to start.  This weekend Churchill Downs begins it's spring/summer meet with higher takeout rates.  Those higher rates will also affect their two biggest races of the year next week, the Kentucky Oaks and Kentucky Derby, by returning less money to winning bettors than they did last year.

The bottom line is before you spend time handicapping a race you should check the takeout rates for the track.  If you find there are better options (meaning lower takeout rates) at other tracks you will be better off handicapping and betting those tracks.


You can find the takeout rates in some past performances and you can find a complete list in the annual Horseplayers of North America (HANA) Track Ratings.

 

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Older Comments about Takeout: You Can't Avoid It, But You Must Consider It...

people complain of the take out in pic k 3 and pick 4 bets BUT if you parlayed those same choices, you would have had to pay 15 to 18% take out IN EACH POOL
no just one of the most ill informed
And I'm the greatest mathematician on the ground I am standing on
well fields size here in one of the largest of any long meeting in North America
Takeout is important but to me field size and nice odds are more important.
As I understand it EP bought the whole area out here and had a hand in naming the streets. It is too cold and all the big stables have not arrived in toto so I would wait until it warms before making serious wagers here, although I am doing fine picking out races here and there. Writing this in the press club bar on the 6th floor awaiting the beginning of the standardbred card after the 9 race Friday card was done. Double tomorrow too
As I understand it EP bought the whole area and had a hand in naming all the streets. Wait until after mid May to bet here with any gusto. It is too cold and most of the higher class stock is not even here yet.
I was just around Woodbine Area...Had lunch around there and want to drop by to see what the atmosphere is like but it is freaking raining. Vic..why all the freaking street name around there has something to do with horse race like Queens Plate Drive and etc..
woodbine advertises 15%
When looking at advertised takeout rates, one needs to watch for misleading advertising. For example, at Woodbine, if you ask what the takeout is for Win, they'll say 11.65%. That's a big lie. Once you add percentages deducted for horsepeople (whoever they are), and provincial and federal government, the takeout is 14.95%. Same thing with Trifecta, which they advertise at 19.7%, but it effectively is 25%.
I think one needs to be mindful of takeout rates. I realize there's no handicapping in roulette, but the effective takeout rate there is 5.26%. It seems low, but you will lose money if you play it long enough. Your only hope is to quit if you're ever ahead. That minimal takeout will ensure that you will lose in the long run. The much higher takeout at racetracks makes winning a lot more challenging. Your only hope is to be a good handicapper and maintain an adequate percentage of wins at viable odds. The higher the takeout, the lower the odds in general. This means that you must achieve a better percentage of hits, but that's easier said than done. Good money management is also essential, but that is tied to a betting strategy that invariably relies on percentages and odds.
The take out rate is fantastic if you accomplish 1 thing at the track or at your wagering account. That one thing is HIT THE RACE AND CASH THE BET. So many people make so much of the takeout,they almost use it as a cop-out. Regardless if the takeout is 10 /15 /20/ or even 5 percent. You still have to handicap the race and select the bet you are making. How does a lower take out assist one in handicapping better. I have always felt that it is nonsense to follow and bet the tracks that offer the lower takeouts. If you are going to bet a race or races. Look around and handicap,bet the race you have the strongest opinion on. Do not sacrifice the degree you like a race for what you may or may not get back if you win. Remember ,a value bet on a horse is only there if you win the bet. What would you rather do>> Bet a $20 exacta that you love in a 20 % takeout pool and have it pay $15 for every $2 bet. Or would you rather play a value exacta at a 10 % takeout track,you don't love the horses as much But at the odds they present possible value. End result ,they lost. So at one track you make a profit of $130 and at the other track you lost. Do not let others tell you how and where to bet your money.Do it where you are comfortable and have the best chance of making money. Ahhhh making money,that is the name of the game.Not chasing rainbows.
Especially damaging is takeout to tracks. Why bet Suffolk and Parx when you can play other tracks for lower takeout with the same quality?
As a multi-race player a low takeout won’t entice me to play if I don’t have a strong opinion on the races in a sequence and/or if I don’t anticipate the pool being very large. A high takeout rate won’t discourage me from playing if I believe I have a strong opinion on a sequence of races and/or I anticipate the pools to be large. I’d love for the takeout to be low at every track and the 600-1 tax rule to be abolished, but unless there’s some type of organized boycott of sorts I won’t really think about it.
Higher takeout reduces the amount of money that is available to be bet or bet back into other races. This lowers the overall handle of the track and the handle for each individual better.

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About The Blog

 Lenny Moon is the founder of Equinometry.com where he shares his thoughts on handicapping and betting horses and handicapping contests.  You can also occasionally find him in the grandstand of Laurel Park and more often in a handicapping contest on Derby Wars.  He can also be found on Twitter @Equinometry.