Exotic bets: Are racetracks headed down the wrong path?

“I think exotic wagering is the worst thing in the world for racing.”

That's what Oaklawn Park owner Charles Cella told the Daily Racing Form in 1988 after the Arkansas racetrack added two exactas (and then four) to its daily wagering menu.

Today, like just about every track in the U.S., fans wagering on Oaklawn Park races can bet exactas and trifectas on every race, plus superfectas, Pick 3s, Pick 4s, and a Pick 6. And of course there is win, place and show wagering and the original exotic bet, the daily double.

Oaklawn was not alone in resisting a full menu of exotic wagers when racing was healthier than it is today and enjoyed more of a gambling monopoly. Santa Anita Park was the most successful track in America when it offered just two exactas a day (and with a $5 minimum) in addition to the daily double, WPS, and the wager that became a sensation in California in the 1980s, the Pick 6. It was a paternalistic attitude by Santa Anita owner Robert Strub, who wanted to “save the customers from themselves.” He knew horseplayers would drift toward higher risk, higher reward bets and didn't think that was good for the horseplayers or the racetrack's long-term success.

Daily doubles on races one and two were designed to give fans a reason to get to the track early and many track managers celebrated when favorites would win the double, putting more money in the hands of more horseplayers. That money would then be churned back into mutual pools in subsequent races. Ten dollars successfully wagered on favorites in the daily double could lead to $50 dollars being bet on race 3.

Conversely, when East Coast tracks began to add trifecta wagers, it was often on the last race of the day. It gave horseplayers a last chance to “get out” on a day that wasn't successful, but this higher risk bet more likely would send a fan home with empty pockets.

Back then, unless you were in New York or had a bookmaker to call, you had to bet at the track on a live race. Today, with imported simulcast signals and ADWs making virtually every track available to everyone, tracks that limit their exotic wagering menu are at a competitive disadvantage.

But the results are the same. More horseplayers are losing today, and the winnings are winding up in the hands of fewer individuals. The game is being increasingly dominated by professional gamblers betting through rebate shops and utilizing computer or batch betting. Customers aren't being “saved” or protected from themselves, and many are finding it's not as much fun losing while chasing a jackpot Pick 4 or superfecta as it is winning a few bucks on a win bet or daily double. For many, horseracing has become a tougher bet, and they are finding other types of gambling more enjoyable.

Some blame rising takeout, which increased with the proliferation of exotic bets. The rebate players alone are able to combat this, effectively lowering takeout on these bets and increasing their chances of winning. But when they win, there is a much higher chance that the average horseplayer will lose.

Many tracks, under pressure from horseplayers and because of competition with one another, have introduced low takeout opportunities on a specific bet, primarily the Pick 5.

This reduced takeout bet, in theory if not in practice, is counterintuitive. If the goal is to increase churn, the amount wagered on every race, then why are racetracks dangling a 12% or 14% takeout Pick 5 to customers that will effectively lock up their money for five races? At Santa Anita last Sunday, for example, the largest exotic pool of the day (other than the Pick 6, for which there was a carryover) was the Pick 5 on races 1-5, with over $327,000 bet. That money sat in a single pool for two hours.

Doesn't it make more sense for the lower takeout wagers to be the single race bets: win, place, show, exactas, trifectas, or superfectas? That would encourage churn and raise overall handle.

Many track managers are convinced the majority of people betting on the races have no idea what the takeout is on any given bet. I would argue that as the pool of bettors gets smaller and smaller, their collective intelligence increases. Lowering takeout on bets that will offer horseplayers a higher probability of success and in turn increase the churn of money back into the pari-mutuel pools is a more logical roadmap toward a healthy future.

The toothpaste is out of the tube, and there is no going back to the days when paternalistic tracks could “save” customers from themselves by limiting exotic wagers. But can't they at least try to steer those horseplayers in the direction of bets that have greater probability of success through lower takeout and that also make better business sense for the racetracks?