Is the Red Mile on to something with breakage?

Pari-mutuel harness racing has been around over a century and a half with the “modern” version ushered in when the first totalizator systems were installed a little over a century ago.

The tote board revolutionized the industry with odds shown and updated in a timely fashion, usually every 45 seconds, or so.

With a 10 to 1 shot in the winner’s circle the $2 payoff will be $22.00 up to $23.80 when the “OFFICIAL” sign is posted. If the winner is 9 to 2, the winning $2 ducat will pay between $11.00 and $11.80. Splitting hairs further, an 8 to 5 winner pays either $5.20 or $5.40 for a $2 investment.

In many instances-in fact, most instances—the amount of money wagered on a particular entrant—the odds—will figure out, actually, anywhere from—taking the aforementioned 10 to 1 as an example, from an even $10 to 1 to $10.99 to 1.

But the tote board will show the number “10” with the exact payoff determined when the computers take the net pool and divide it with the amount of winning dollars.

At the vast majority of pari-mutuel facilities, the “true” odds are in pennies, I.e., $10.43 to 1 or, at 9 to 2, $4.87 to 1, or, for 8 to 5, $1.68 to 1, as examples.

The difference is called “breakage” with those odd pennies culled down to the nearest dime (or, in some jurisdictions, nickel) to determine the payout to the winning tickets holder.

So, when all is said and done, a payoff on the tote board of, say, $8.20, would have been anywhere from $8.21 up to $8.38 without the breakage.

Who cares, right? It’s only a couple of pennies!

Well, billions of dollars are wagered on pari-mutuel events every year and, with the advent of the 10 cent and 20 cent wagers, “pennies from heaven” have arrived on the pari-mutuel scene in some exotic wagers.

But win, place and show wagering, along with traditional wagers like the daily double, still are paid the “old-fashioned” way, subject to the “breakage.”

“Not a big deal,” you say?

Well, there are two ways to look at it.

The first, involving the $2 bettor, who may be shortchanged by two to as much as 18 cents on a winning ticket on a 3 to 1 shot while the second scenario would affect the $100 bettor, who could feel the sting to the tune of close to $10.

Still think it’s small potatoes?

On occasion, you will see a 1 to 9 shot on a tote board. (In actuality, there is no such thing as 1 to 9 but there are not enough bulbs in the tote board to show 1 to 10 or, for that matter, 1 to 20).

But taking a 1 to 9 tote board as an example, there may be a player who wagers $2,000 or more on what may be viewed as a “sure thing.”

That’s where Kentucky Representative Adam Koenig comes in to play.

Koenig represents his Kentucky brethren in that equine rich State and was successful in lowering the “breakage” from a dime—actually nine cents—to a penny.

Yes, he’s the guy that got the bill rolling addressing historical horse racing and pari-mutuel wagering in the Bluegrass State.

Of course, the $2 payoff on that 1 to 9 tote board entrant would be $2.20 (or, in extreme cases, $2.10) but, with Adam Koenig’s measure a reality in play at The Red Mile, that payoff could be as much as $2.38, increasing the bettor’s profit from by 95%!!! The whale would have a profit up to $380, instead of $200—yes, 95% more!

Over $12 billion was bet in pari-mutuel action last year and, with the only entities paying in pennies being the 10 cent and 20 cent exotic events, breakage—those harmless little pennies—may have taken as much as $500 million away from the winners…and that’s a half billion dollars that could have been recycled into the pari-mutuels.

In a phone interview, Koenig related, “The horse industry in our State is one of the most important and, in the past, we’ve tried to take care of the tracks and the people involved. I thought it about time we took care of the very people that support it with their wagering dollars!”

The Red Mile’s Gabe Prewitt welcomed the reduced breakage by saying, “This is absolutely one of the greatest things for our horse players and, without doubt, a very positive reform benefitting both the industry and our participants. It’s a win-win for all!”

During the first three sessions of the Red Mile meeting, every single race—and there were 41 of them—put more money in the bettor’s pocket. That includes 34 of 41 races where the new breakage rules increased the win payoffs, some as much as the maximum 18 cents—on one case $17.60 to $17.78.

Red Mile regular Billy Woodrum said it best by stating, “That guy Adam just may have saved us fans here in Kentucky. I know he saved me today. I figured I won enough extra today to take my wife out for a nice dinner—so I won THE ultimate Daily Double.

In these dire days, racing needs as much innovation it can muster and The Red Mile has the gate rolling because of a Representative named Adam Koenig.

By the way, Rep. Koenig referred to the equine industry as “one” of the most important in the great State of Kentucky. Might “BOURBON” be the other?

by John Berry, for Harnesslink