About These Rebate Shops …
Bill Finley’s recent column on rebate shops, in which he argued that their existence was win-win for all of racing, had me about 75% convinced that rebate shops were forces for good. I took exception only to this section:
“At the very worst, the three rebate shops involved in the indictment, none of which have been charged with any crimes, are guilty of nothing more than accepting bets from some allegedly disreputable characters without going to lengths to identify them. When the individuals opened accounts and apparently started betting huge amounts the three shops involved, Lakes Region Greyhound, Euro Off-track and one run by the Tonkawa tribe, didn’t ask many questions. Who would have? There’s not a racetrack in America that would have turned that level of business away or had any reason to do so.”
What Finley seems to be suggesting here is that if enough money is involved, there’s no need for ethics: If a bettor or a bunch of bettors all using the same social security number throw hundreds of thousands or millions of dollars at a rebate shop, there’s no reason to verify their identities or ensure that everything is on the up and up. Actually, doesn’t the shop have more of an obligation to check out these customers?
A couple of recent mentions (Left at the Gate, Derby List) of Oaklawn mutuel manager Bobby Kreiger’s remarks on the Del Mar forum site last summer have me rethinking the issue of rebate shops as a whole.
Finley basically argues that rebaters work for racing because they’ve substantially increased handle. What Kreiger says is that rebate shops create conditions that aren’t fair to all players, which is why Oaklawn cut them off during the 2004 meet. Two things stick out in his comments: Bets from rebaters do drive up handle, but none of that increased handle goes to purses; and,
“Direct access to the wagering network enables the computer player to electronically scan and analyze wagers placed by all other players. Just prior to the start of a race, the ‘linked’ computers comb pools seeking underplayed wagering combinations relative to the merits of the horses. The program pays special attention to exacta combinations; it can look at all of them in a blink.
“When the program robotically pulls the trigger, a complex array of wagers, mostly exotics, is spread over the underplayed combinations. Essentially claiming all overlay value the pools for that race had to offer. They are taking the cream off the top.
“Getting this electronic ‘last look’ enables the computer program a consistent win of 97-cents on each dollar wagered. That’s a steady loss of three cents on the dollar.
“However, add the ten cent rebate and it’s a seven cent winner on the dollar. Consistently!”
Oh my. That’s great news for a big bettor, but bad news for the industry.
