09/17/2009 12:00AM

Show-bet bonanza reflects breakage inequity


NEW YORK - Last Sunday's Washington Cup Day at Emerald Downs featured seven consecutive $50,000 stakes races for horses sired or bred in Washington State or British Columbia, several of them apparent mismatches, including an odds-on favorite. This did not escape the notice of some out-of-state simulcast bettors who thought it would be better than stealing to bet them to show.

The first opportunity came in the third race of the day, where Atta Boy Roy was 1-10 in the six-furlong Chinook Pass sprint stakes. The straight mutuel pool for the race was $87,991, about $50,000 higher than usual, with most of the extra money being bet to show on Atta Boy Roy, a 10 3/4-length winner in a track-record 1:07 flat. He paid the minimum $2.10 for $2.

Koala Beach, a 1-2 shot, won the next race by eight lengths, but the show bettors sat it out and the pool was back down to $35,635. Half an hour later, though, the pool soared to $199,315 - in a race where the exacta pool drew only $23, 608 - because of the presence of 1-2 Gadget Queen, who fell 1 1/2 lengths short of catching the winner but was easily second-best, again rewarding the show betters with another 5 percent profit at $2.10.

The third time was not the charm. The Diane Kem stakes for 2-year-old fillies featured Knight Raider, who had already won three stakes at the meeting by a combined 23 1/2 lengths - at 7-10, 8-10, and 3-10 - and was now dropping in class facing fellow statebreds who had mostly been toiling in the maiden-claiming ranks. Show bets topping $150,000 swelled the mutuel pool to more than $201,000, and Knight Raider was the 3-10 favorite.

Knight Raider dueled with a 37-1 shot named Niftys Crystal in 21.60 and 44.20 seconds, won the battle, but had nothing left and was passed by three fillies in the final sixteenth of a mile. That $150,000 in losing show bets financed the three highest show payoffs in Emerald Downs history, shattering the record of $38.80 set in 1997. Have'n a Wild Time, the 27-1 winner, paid $56.40 to win, $21.40 to place, and $187 to show. Private Fortune finished second at 35-1 and paid $23.40 to place and $108.60 to show. Pistolpackin'gal was third at 29-1 and paid $156.40 to show.

You'll see this happen a few times a year, sometimes even at the highest levels of the sport. In the 1981 Coaching Club American Oaks at Belmont, Wayward Lass, Real prize and Banner Gala paid $35.40, $61.60 and $51.20 to show when the Woody Stephens-trained entry of Heavenly Cause and De La Rose ran fourth and sixth at 2-5. These situations are all predicated on an odd and possibly anachronistic stipulation in every state's betting laws: the requirement for a minimum payoff of $2.10 for $2. (The minimum is even $2.20 in a couple of stray jurisdictions.)

The $2.10 minimum is widely viewed as a public protection, as if a horseplayer has some sort of constitutional right to a minimum 5 percent return. (Wouldn't it be nice if banks were subject to the same requirement?) It's the lure of getting this guaranteed return that gets so-called "bridge-jumpers" (since that's what they might do if they lose) to plunge on seeming cinches in the show pool, even though odds-on favorites do not run 1-2-3 the 95 percent of the time they would need to just to make it a break-even proposition.

The $2.10 minimum ultimately is a loser for all players, though, because it keeps in place a justification for the system of breakage that exists throughout parimutuel racing - the rounding down of payoffs to the nearest 10- or 20-cent increment. Most people think of breakage as insignificant, but in fact it is an insidious addition to takeout. When a horse should pay $2.39 to show and the payoff is rounded down to $2.20, a bettor is being rounded out of 48 percent of his profits, on top of a 16 or 17 percent takeout. For someone making a $200 bet, it's the difference between winning $39 and winning $20.

Breakage has been justified in the past as a way to save mutuel clerks from having to count out pennies that no one wants anyway. But the amount of money being bet in cash in increments that would involve pennies has greatly diminished in a game increasingly dominated by simulcasting, account wagering and the use of vouchers at self-service machines.

The time has come for racing to switch to digital payouts: If a horse should pay $2.04, or $2.39, or $102.93, he should pay off at those precise price points. Over time, the extra pennies and dollars and twenties will accumulate and be churned through the machines again and again, making up the any shortfall on breakage revenue. Racing's customers are entitled to their full payoffs instead of facing an additional tax based on an outmoded fear of pennies.