What Do Bettors Want? Determinants of Pari‐Mutuel Betting Preference

Abstract

This paper is an analysis of the demand for thoroughbred racetrack wagers, examining evidence that would support the existence of two types of bettors: the risk-averse informed bettor versus the uninformed bettor. Looking at 12 major racetracks over the fall of 2002, we undertake an empirical examination of the determinants of bettors' preferences for particular wagers on specific races. The goal is to try to determine what individual aspects of a race (conditions, surface, participants, etc.) will encourage increased wagering dollars. With the advent of simulcasting, the competition for the wagering dollar is fierce, as the bettor can choose from more than 100 races daily, each race offering numerous betting options. We find for most wagers that higher quality participants, larger and more competitive fields, and turf races increase betting volume while higher pari-mutuel takeout, poor track conditions, and other races run concurrently reduce volume. However, more competitive fields reduce betting volume in the show and trifecta pools. Optimal field size is determined to be between 10 and 12 betting interests. Overall, we find support for the existence of a significant share of risk-averse informed bettors.

The Demand for English Premier League Soccer Betting

“…This has hardly been done in the past. Gramm, McKinney, Owens, and Ryan (2007) investigate what drives betting volumes in horse racing. They find that the day of the event is important as the quality of the participants raises betting volume, while a larger number of simultaneous races has a negative effect.…”

Business cycles, stock market wealth, and gambling at the racetracks

“…Lottery and other forms of gambling, including Indian casinos and sports betting, are viewed as competing gambling products that may adversely impact horse wagering. The empirical evidence, however, is somewhat mixed; Gramm et al . (2007) find that the lottery does not have a statistically significant impact on horse wagering.…”

“…Large purses attract higher quality horses, resulting in bigger wager pools. Gramm et al . (2007) assert that higher purse per race is a good proxy for “race quality.”…”

What Can Bookies Teach Us About Pari-Mutuel Wagering Reform? Applying Australian Lessons to the U.S.

“…6 New York, for example, mandates minimum takeout rates of 15% for win/place/show bets, though it appears that only Tioga Downs since its recent reduction is presently at those minima. 7 Churchill Downs 2009 annual report, p. 48. 8 The Interstate Horseracing Act of 1978 (Public Law 95-515) stipulates that off-track betting facilities are subject to the same regulations regarding takeout as the racetracks themselves and that such facilities Fixed odds gambling in horse racing (as can be found in Australia, Ireland, the United Kingdom, and several other countries) differs from pari-mutuel wagering in several ways.…”

“…Previous researchers have used variation in takeout rates and amounts wagered to estimate price-elasticities for U.S. pari-mutuel gambling (Gruen, 1976;Suits, 1979;Mobilia, 1993;Thalheimer and Ali, 1998;Gramm et al, 2007). These studies have generally found 1 Laurel Park halved its takeouts across the board for ten days in August 2007.…”