Understanding the Cost of the Wager
By Dana Byerly, Hello Race Fans Co-founder
What’s the cost of a $2 wager? This may seem like a trick question, and perhaps it is. While you would be correct to answer $2, you would also be correct to answer, “It depends.” When you place a winning wager and cash your ticket, the track keeps a percentage of your winnings as the cost of doing business. This percentage is known as takeout.
The money raised with takeout is used to pay the racetrack’s bills and fund purses. In other words, takeout helps keep the whole operation going. Just like any other industry, some purchases–in this case, wagers–are priced better than others. For example, you may know the store in your neighborhood or town that has best price for milk. It may or may not make sense for you to buy your milk there, depending on its proximity to your home. For example, driving 30 minutes out of your way to save $.50 doesn’t end up saving you $.50 in the long run if you factor the cost of gas.
Just as some stores sell milk at a lower prices than other, some tracks have lower takeout than others, and takeout varies depending on the wager you make: a Pick 6 wager is likely to have a different takeout than a straight win bet made at the same track.
While it’s smart to consider takeout when you’re deciding where to bet and what kind of wager to make, the percentage of takeout is only one factor when deciding where you want to play the ponies. Other factors might include the field sizes, your proximity to the track and the pool sizes (i.e., how much money is up for grabs).
In the chart below, we’ve listed the actual payout that you’d get if you won $100 on a specific wager across the various pools (types of wagers) at a handful of tracks. Instead of getting $100, you would get the amounts listed below for each type of wager.
WPS = Win, Place, Show – examples use 2013 takeout rates, see HANA for most current rates
You may be asking yourself, “Is the takeout factored into the odds of each horse?” Yes. Our resident math expert Ed DeRosa explained it this way when I inquired: “When you see 2-1 to win, it’s not because that horse has 33% of the pool, but rather because after takeout, you get back $6 for every $2 wagered” ($4 in winnings plus the $2 of your wager).
If you only play on big racing weekends, the takeout rate might not be that important to you. However, if you play regularly then paying attention to takeout will ensure you make an informed decision. Either way, playing wagers with lower takeout will stretch your bankroll further whether you’re aware of it or not.
The Horseplayers Association of North American (HANA) publishes takeout rates annually as a part of its overall track ratings. You can view that list and read more about HANA’s stance on takeout at the group’s site.
One other thing you should be aware of is breakage. What is breakage? “Breakage is the downward rounding of the odds on the toteboard that occurs at every track in the United States.” This means that a payout that would have been $5.56 ends up being $5.50.
In the long run, both takeout and breakage will take a toll, however small, on your bankroll. You can’t do anything about breakage, but you can shop around for the best prices on takeout. Should you not play your favorite wager at your favorite track because the takeout is better at another track? That’s entirely up to you. Whatever you decide, we hope you cash plenty of tickets!