A minus pool in horse racing is the direct result of an established minimum payout threshold and a corresponding significant amount of money wagered in a pool on a heavy favorite.
Assuming the favorite runs as expected, the end result is a shortfall between what is left of the net pool to be distributed to the winning tickets and the guaranteed minimum.
The majority of the time minus pools occur in the show pools. But there are occasions where show pools are removed and the place pool is affected. The importance of minus pools is that they negatively impact the bottom line of the racetrack or account deposit wagering platform [ADW] that facilitates the wager. Simulcast contracts hold the guest locations responsible for covering any minus pool that is created by them wagering on the host track content.
In the 1943 Belmont Stakes, a win minus pool of $15,912, the equivalent of approximately $240,000 adjusted for inflation, took place when Count Fleet completed his sweep of the Triple Crown.
The 1969 running of the Belmont Stakes produced the first minus show pool in the history of the race when Arts and Letters won and created a minus show pool of $5,782.98 and ten years later another minus pool occurred in the Belmont Stakes when Spectacular Bid finished third at odds of $.30-1 to win, resulting in an on-track minus show pool of $19,500.81.
In recent years, field-size decline, coupled with net pool pricing, have contributed to an increase in minus pools. The availability of pool information and the ability to wager anywhere via ADW also plays a role.
The 2020 edition of the Personal Ensign at Saratoga Race Course, a nine-furlong test for older fillies and mares, provided a good example of how a minus pool is created. For the purpose of this example, the below illustration uses the gross pool and does not contemplate different takeout rates or currency conversion variances related to international guest locations.
A field of five, following the scratch of Bossy Bride [No. 5], went into the gate, including multiple Grade 1-winner Midnight Bisou. Prior to the race, the show pool was removed in anticipation of a large minus pool. A total of $419,154 was bet into the place pool. This was the corresponding percentage of the total:
No. 1 Abounding Joy – $13,055 (3%)
No. 2 Motion Emotion – $21,223 (5%)
No. 3 Midnight Bisou – $301,995 (72%)
No. 4 Vexatious – $25,758 (6%)
No. 6 Point of Honor – $57,122 (14%)
The official order was 4-3-6-2-1, as Vexatious held off Midnight Bisou by a neck for a 9-1 upset win. It was a further 6 1/4-lengths back to Point of Honor in third.
The total amount of the place pool wagered on the top two finishers was $327,753 or 78 percent.
To calculate the place payouts, the first step is to subtract the total amount wagered on the winning tickets from the total pool, then remove the takeout from the difference. The total pool was $419,154 less the total on the top-two finishers of $327,753, with the new figure $91,401. After removing the 16 percent takeout, the difference was $76,777.
Under net pool pricing with two place payouts, the next step is to divide the $76,777 in two, leaving each of the top-two finishers with $38,389. In addition to the split of the $38,389, the amount wagered on the top-two finishers should be added to this amount, less the takeout. This leaves the amount on Vexatious to be distributed to the winning tickets at $60,025 and $292,064 on Midnight Bisou. Dividing these amounts by number of winning tickets, the raw $1 pay out was $2.33 to Vexatious and $0.97 for Midnight Bisou, or $4.60 and $1.93, respectively, when adjusted for the $2 payout after breakage.
The minimum payout for a wager in the state of New York is $2.10 on a $2 wager. For every $2 that was wagered on Midnight Bisou to place, a minus pool of 17 cents was created. Factoring in where the bet was placed, host fees, and potentially source market fees, it is reasonable to assume that some of the bet takers actually lost money on every place wager on Midnight Bisou.
The impact of the minimum payout threshold is even more pronounced in the state of West Virginia – the only one of its type – where the minimum is $2.20 for a $2 wager. In an effort to avoid losing money on these pools, ADWs will remove the show pool from their wagering menu on specific races.
The racetrack's situation is slightly different in that they must first adhere to guidance or statutes from their regulators. The racetracks must then balance the risk versus reward of the minus pools they are responsible for and the potential host fees on the pool in question.
In New York, NYRA can remove the show pool from stakes races but we must offer the show pool for any overnight race that start five or more separate entries. As the industry evolves, so too will NYRA's approach to managing minus pools in the best interest of all our stakeholders.
Send your questions for Between The Hedges to betweenthehedges@nyrainc.com.
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