08/19/2010 3:34PM

The Tyranny of the Wagering Menu


In 1960, the total handle at the four tracks that were then under the auspices of the New York Racing Association (NYRA): Aqueduct, Belmont, Jamaica and Saratoga, was $531,528,210. With a total of 219 days of racing, according to the Daily Racing Form's 1961 American Racing Manual, that comes to an average daily handle of $2,427,069.
In 2009, total NYRA handle at Aqueduct, Belmont and Saratoga was $3,027,810,064. NYRA had 250 days of racing last year, so its average daily handle from all sources, according to NYRA's 2010 Media Guide, was $12,111,240.
That looks good at first sight. In fact, it looks terrific. Handle in 2010 at NYRA tracks was five times what it was in 1960. Everyone take a bow, please, plus an extra week's vacation.
But wait a minute! According to the Dollar Times Inflation Calculator, the dollar in 1960 had the same buying power as $7.15 in 2009. At that rate, the 2009 equivalent of NYRA's 1960 $2,427,069 average handle is $17,353,542.
Looked at from that perspective, NYRA did $5.3 million less business per day in 2009 than it did in 1960.
It is a similar story at tracks around the country, of course. And there are many reasons for the decline: more tracks, increased competition from casinos, the failure of racing to properly market itself. Those are just three that come to mind. There is, however, another more insidious resaon for the decline, viz., the huge increase in the types of wagers available to bettors.
Conventional wisdom tells us that the more choices we have in any given endeavor, the happier we will be. That seems to apply to horse race betting as well, but recent research tends to debunk that thinking.
In his 2004 book, The Tyranny of Choice, Barry Schwartz offers a theory that is fast gaining credence with economists around the world. It is that the more choices people are offered in any given circumstance, the more confused they become, the less rational are their decisions, the less happy they are in the long run.
Schwartz sites an experiment at a gourmet food shop where customers were offered samples of six different kinds of jam coupled with a discount coupon to buy whichever was their favorite. A week later, the same store offered the same deal, but with 24 different kinds of jam. The results of the sale were surprising, to say the least.
The table offereing six flavors sold ten times as much jam as the table offering 24 flavors.
An experiment at the Iowa State Fair in 2003 yielded a similar result. Two ice cream stands were set up on opposite sides of the fair in areas with equal pedestrian traffic. One offered six flavors, the other 24 flavors. The stand offering six flavors outsold the 24-flavor stand by 6-to-1.
Schwartz concluded that when confronted with an increased number of choices, consumers become increasingly confused. Some merely walk away from the large choice offers and buy nothing, not because they dislike the product being offered, but because they don't want to spend the time weighing the numerous pros and cons involved in the decision making process.
Is it not reasonable to conclude that the same theory can be applied to Thoroughhbred wagering?
In fact, the tyranny of choice may be one of the main reasons attendance and handle are declining at virtuually every track in the United States. The sample involving NYRA handle in 1960 and 2009 is a perfect illustration, for a number of reasons, all of them centered around the increased number of choices available to bettors in 2009.
In 1960, every penny of the $2.4 million wagered daily on NYRA races was bet on-track. There were no off-track betting shops, there was no phone betting, and there was no simulcast wagering. Moreover, NYRA cards in 1960 rarely exceeded eight races a day. Just as importantly, there were only three types of bets available at NYRA..
In those days, you could choose form between win, place and show wagering on every race, plus a daily double on the first and second races. In 2009, bettors had those wagers from which to choose, plus a plethora of daily doubles, Pick-3's, rolling pick 3's, Pick 4's, quinellas, exactas, triples, superfectas, Pick 6's and Grand Slams.
Factor in many of those same wagering opportunities available at each track's simulcasting parlors, which didn't exist in 1960, and is it any wonder bettors today are spoiled for choice?
And yet, NYRA handle in real dollars adjusted for inflation in 1960 was nearly 50 percent higher than it was in 2009.
While the contemporary wagering menu may seem like a bonanza to regular players, the figures quoted above tend to belie that idea. More importantly, our Byzantine wagering menu is very probably a turn-off to newcomers. In a sport which has the longest learning curve even without taking betting into consideration, imagine what goes through a newcomer's head when confronted with eight or ten types of bets available on each and every race. Then think what he goes through if he stumbles across the track's simulcast wagering area.
It was a much easier game in 1960 when all we had was win, place and show and a single daily double. Since the early eighties when quinellas first made their appearance at NYRA tracks, we have added dozens of new bets. Multiply them by the increased number of tracks upon which to bet and the increased number of wagering outlets, factor in the decline in attendance and handle since then, and the theory of the tyranny of choice in American horse race wagering hits home with a vengeance.

Steve T More than 1 year ago
Some very valid points being made. I am/was a die hard fan, grew up at old Arlington Park, have owned, and bred horses for 35 years, and still do. Yet I hardly ever go to play the horses anymore. More telling I think, is that none of my children (ages 18, 22, 25), have shown any inclination to attend the horse tracks. Even when I had a horse running at Saratoga 6 years ago, and I went, nobody wanted to accompany me, because it was a track. And I really enjoyed myself, more so because they only had Monmouth, and no other simulcasts. I think back to when opening day, and closing day at my track (Tampa Downs), was a special event.
Mike S More than 1 year ago
The theory would be better served by comparing simulcast facilities and the multitude of tracks available. I think that would the appropriate comparison if anything. In the 1960's, you could only bet on your track. You couldn't go to Aqueduct raceway and bet on say, Hollywood Park. The simulcast cast era brought a lot of fragmentation with the wide array of betting offers. The problem now is that racing as an entity is unwilling to adapt to the current climate of gambling. Humans inherently enjoy gambling. Racinos are opening across the country and packing them in. Why can't this translate to more money being bet on horse racing? It certainly has little or nothing to do with the wagering menus. Poker variations aren't exactly the easiest thing to learn but people are willing to do so. This doesn't come down to a paradox of choice. It comes down to adaptation with the current climate racing. If racing as a whole, decided to get together and schedule races to go off every 7-8 minutes or so from 12pm to 12am, I guarantee you would see a rise in handle. In this technological, instant-gratification era, most aren't willing to wait the long time between races. Not only that, but tracks almost always run on top of each other. Instead of providing cooperation they'd rather cannibalize the 'competition'. Sooner or later, they will have nothing left to eat.
manuel More than 1 year ago
The take out is the real culprit, I am going to quit betting on horses because of that, for the new fun walking into a track? there is no question that too many choices turns them off and shall never come back, I am glad that some one figure it out, it was not that difficult, I've been saying that for several years. this business is done, I cry thinking about it.
Appy More than 1 year ago
Another variable seemingly unconsidered in the comparison is the population increase from 1960 to present, as well as differing living conditions for that population. In 1960 the general population had a much higher % who were rural based as compared to today, and thus a greater % of people whose interest piqued by equine competition. Top that off with saturation of the entertainment market and there is little wonder why it is tougher to make a buck nowadays. The bottom line mentality is overwhelming the sport. Horse racing today is less about horses than it is about money. Instant gambling opportunities now exist in so many variations and outlets fewer people possess the patience, or interest, to sit 30 minutes handicapping awaiting the next race. Afterall, there is always the possibilty of thoughtless indoor continuous lever pulling excitement just around the corner.
John More than 1 year ago
I couldn't agree more. My wife is a newcomer to horse racing and I suspect her experiences are typical. Start with the tote board. Fractions are so 1930. How about odds in decimal, like our monetary system? How about simplifying the bets? Make them all one dollar. Look at the tote board and you know what you're getting back without a calculator. I can dream, I guess.
PMC More than 1 year ago
What you say makes a lot of sense. But a $500 score in 1960 would pay your mortgage for at least 6 months while such a score today might not even buy groceries for 2. The plethora of available exotic wagering corresponds to the lottery mentality that now prevails made neccessary by the tremendous cost of maintaining a decent standard of living.
Tom Kenesson More than 1 year ago
There is no mention of the take-out difference between 1960 and 2009. This has a huge impact on the amount of funds available to be bet on subsequent races.
bob hope More than 1 year ago
this is an excellent theory that is to narrowly focused. the writer does not take into consideration the amount of time and additional cash necessary to handicap the various offers nor the amount of equipment required to do the math! In 1960 an individual could do his/her handicapping on track on the day of the races. The task has been magnified and is complex, necessitating a computer, various reference texts and a knowledge of the hieroglyphics related to form. He does not take into account the approximately 10 additional simulcast offers available at every racecourse. We think that the deterioration in class is the main contributing factor in making handicapping less reliable! addendum:We think that old Jamaica was out of business by 1960!
Michael Griffiths More than 1 year ago
You have laid out a good case for the decline in betting, horse racing. I think you have overlook the biggest reason for the decline, which is the per bet amount. In the 1960s punters would only bet win, place and show, however, with the menu expanded, they are Part-Wheeling bets, and with the high per bet cost, they cannot afford these new bet, so they simple say away. Take the Pick-6 at $2 per bet, if one was to make a small ticket of say, 2X2X2X2X2X2=64 bets or $128 for most bettors, thats is outside their limits. If the per bet amount was say $0.50 cents that same ticket whould cost $32, and there is the real problem. Most bettors feels that the race tracks and not looking out for them, instead only the big bettors which is not were their customers are.
Matt More than 1 year ago
The inflation compaison is a bit mislead: while $1 today is worth less than $1 1960 in everyday life (groceries, gas, etc.) that isn't really true at the track. In 1960, I could make a $2 win bet. In 2010, I can make a $2 win bet. In order to properly compare handle from 1960 to 2010, and to do so using inflation numbers as was done in this post, we would need to see a rise in the minimum bet in line with the CPI. Given inflationary pressures on the dollar, tracks should have the minimum win bet at something around $10 in today's world, but they don't. They still price their product as if it was 1960. That's a problem.
El Angelo More than 1 year ago
Nobody forces anyone to play exotics. And while newcomers are baffled by the array of bets immediately, almost everyone "gets" win, place and show bets and they're readily available. By contrast if there were fewer exotics, many like myself wouldn't bother with a game that has an onerous takeout. It's the ability to express an opinion or two and get 30-1 or greater in return that keeps many of us interested. 2-1 win bets are really not exciting.
jerry champion More than 1 year ago
In 1960, the 'Take Out' was around 9-to 11%, compared to around 16%-to 25% now. The Greed Factor just keeps getting worse, until "NO More Game". I used to live in San Diego and go to Caliente in Mexico. After it burned, and was rebuilt, they started with a takeout of 37%. Not hard to figure why they closed in a couple of months.
Kenny G More than 1 year ago
While your theory is interesting, I think it's tough to compare the two eras' handles to make comparisons. Pick 3s and Pick 4s are one bet now, while in the 60s you'd have to parlay the money after each race. For example, if you like four 2-1 shots in a pick 4, you could bet a straight $10 pick 4. In the 60s, you'd have to bet $10 to win on the first race, $30 to win on the second race, $90 to win on the third race and $270 to win on the fourth race, for a grand total of $400 bet instead of $10 in a single wager.
Bruce Friday More than 1 year ago
Andrew Beyer provided the answer to racing's handle problem in his recent DRF article on the success of Charlestown race track and the fall of Maryland racing. The Charlestown facility recently became a full fledged casino by offering table games along with the exisiting slot machines. Beyer describes the impact as follows: "When (the casino) finally opened ....., there was a deluge.” officials said. "Casinos typically set the size of minimum bets according to demand, and the demand was so frantic that Charles Town established a minimum of $100 at the tables. There are few casinos on earth (not even Monte Carlo) where a customer must spend $100 to play a hand of blackjack, and the figure seems incredible for West Virginia. But it did not faze the patrons at the newly renamed Hollywood Casino at Charles Town Races. “For the entire weekend,” (officials) said, “people were standing four and five deep at every table, trying to get a chance to play.” OK then. If I understand this correctly, race track management (NYRA in my local area) should reduce the wagering takeout to 2% and raise the minimum wager to $100. This should really pack 'em in. I say this only partially in jest. Maybe a combination of reduced takeout and reduced wagering options, as you suggest, should be considered. If the takeout on W/P/S wagers was reduced to 2% while the exotic takeouts remained at their current 20-30%, there would be a natural migration back to more basic wagers. Frankly I don't know if this would be a good thing or not. I suspect that the impact of excessive options on handle reduction relates less to new exotic betting options and more to the choice of betting outlets (lotteries, slots, casinos, online sports betting, poker etc.)
Steven More than 1 year ago
Wow, I don't even know where to start on this. I could not disagree more. I reason betting handle is down from 1960 is advent of other gambling opportunities. Slots, Poker, lottery and much easier for the uniformed to play and they have constant action. 30 minutes is way too long for most people to go without "action". Too many choices ? Not for me. I love the exotics. I want more. Go back to 1960 and the track was the only game in town. Its a shame that most of the guys running the industry are still in the 1960 mindset.
Old Timer More than 1 year ago
While I wholly agree with this premise, I'm not sure that you can blame this situation 100% on the tracks. When you look at gambling in general and consider all the options, the quantity of choices is staggering! Do I play Black jack or Craps? Do I play Saratoga or Del Mar? Do I play daily doubles in two races or exactas in one race? Being from an earlier era, I can relate to when all we could bet was Win, Place, Show and one Daily Double. That was only at the track. Now there are OTB outlets; simulcasts everywhere and casinos in many states. I question whether we can ever get back to the previous set up. For better or for worse, it is a brave new gambling world! Add in all the other myriad entertainment options everywhere (concerts, ball games, etc.) and it is no wonder that people's fun money is stretched so thin!
Patrick More than 1 year ago
Glad to see someone with a prominent outlet address the issue of inflation with respect to handle. A few initial thoughts: 1) Jamaica closed in 1959. 2) I don't think it's so much the increase in different wagering pools than it is the introduction of progressive takeout rates, which have arguably made players go bust a lot quicker than it did in the days when there was a flat takeout rate on WPS and DD wagers. What was it 1960, 14-16%? And compare that to the blended takeout of 20% today (and probably higher during the 70s, 80s and 90s). 3) Another reason why handle has not kept up with inflation is that the minimum wager ($2) has not changed in 60 or 70 years, or in some cases has dropped a lot (i.e. 10-cent superfectas). Using your figures, the basic wager of 1960 would cost $14 today. No wonder tracks don't earn money like they used to.
Terrance McLeod More than 1 year ago
Its hard to narrow your focus and concentrate with so many options. I think you are a visionary.
kyle More than 1 year ago
I don't doubt the science. I'd add a couple thoughts. First, the greater complexity sets the learning bar higher for newbies. Second, takeout is higher on exotics and therefore reduces churn. And third, along the same lines super-exotics take money out of circulation by concentrating it in a few hands.
chris martin More than 1 year ago
This is an interesting theory. I myself have spent more time on whether to bet an exacta or a quinella in the same race than hadicapping the horses I chose. Sometimes the quinela pays more compared to an exacta box, but you have to monitor the payoff probables fairly late. Same goes for choosing to key a horse to play in an exacta, tri, super. Many times when all was said and done, the amount played on the exotics would have given a better payoff as a win play. Now add in the availability of multiple tracks. There is nothing more frustrating than playing one of two like races at different tracks, at same post times, only to lose and see your choice at the other romp. The frustration of "coulda, shoulda, woulda" was a major factor contributing to me losing interest in betting though not in the sport itself.