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.