Rake Takes The Cake

Ex-punter Andy Kay voices his opinion

RakeWhile field sizes are an issue, at the heart of the controversy is the need to boost betting revenues which makes the wheels of this racing game go round.

This one sentence near the end of an article, Cape Owner – ‘My Horses Must Run’, regarding the threat by Phumelela towards the Western Cape Racing area – which was prompted by declining field sizes – just sums things up completely, writes ex-punter Andy Kay.

It is a fact that bigger fields attract bigger turnover.  But, I think the problem is far greater than that. And, it is a problem that has arisen in the Western Cape and will soon spread to other centres.

I have written many articles on the “RAKE” in the gambling industry.

The “RAKE” is simply the amount of money removed from a betting pool prior to dividends being paid out.

The “RAKE” itself is made up of a few components, which incorporate tax.

In horseracing, the “RAKE” is roughly 25%.

Let’s hypothetically look at a ZAR 1 billion turnover. That translates to a “RAKE” of ZAR 250 million.

Gamblers are creatures of habit. With a 25% rake, it takes about 10 ‘gambling events’  to wipe out a punter’s gambling kitty. For the wheels to keep turning, every week the gambler must refresh his gambling kitty.

gambling_4.311145126_stdIn a casino, on a roulette wheel, the “RAKE” is 1 in 37,  or slightly less than 3%.  As opposed to the high rake, it takes far more ‘gambling events’  to wipe out a punters gambling kitty. I would estimate this at a few hundred events before the gambler is forced to refresh his gambling kitty.

What is actually happening is that the amount of the “RAKE” is what is killing turnover.

Halving the “RAKE” would more than double the turnover, leading to an INCREASE in revenue.

The racing authorities need to meet with the gambling board and SARS to convince them of this solution. If they don’t, revenues from horse racing will decline further and the game will DIE.

More food for thought.

Do Phumelela really care ?

Horseracing as gambling events are costly to stage, whereas the Soccer as a gambling event cost nothing.

In essence, it would pay Phumelela to simply give up on the horseracing and focus on offering betting on Soccer Results.

Ed – Here is some more reading matter to back up Andy’s argument.

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