If horse racing industry leaders had not made the critical mistake 20 years ago of underpricing their simulcast signal, rebate operations would not exist.
But underprice they did, and racetracks found themselves losing on-track customers to off-shore and U.S.-based companies that established very profitable businesses because they had virtually no infrastructure (bricks and mortar) to support.
Let's say that customer bet $100 at the track where a race is run and the takeout is 20%. Roughly $18 comes back to the track and is divided with horsemen for purses.
If that same customer bets $100 with a rebater like RGS or Elite Turf Club,only $4 or $5 of the 20% takeout comes back to the track where the race he bet on is run. RGS or Elite Turf Club keeps the balance, and passes most of what it keeps back to the bettor in the form of a rebate.
Good deal for RGS or Elite Turf Club, which has very little investment or payroll to worry about and makes a 4% or 5% profit.
Good deal for the horseplayer, who gets a 10% or 12% rebate on every dollar he wagers, thus giving him a much better chance of being a winning gambler.
Not such a good deal for the track and horsemen where the race is run, because their dollar just shrunk from an 18% revenue stream to a 4% or 5% revenue stream.
The rebaters and horseplayers argue that rebates allow gamblers to increase their volume of wagering by 400% or 500% because they are winning. The argument follows that tracks and horsemen end up with the same revenue stream they would have had the horseplayer wagered a lesser amount on-track.
If that's true, and rebate operations are growing, then why is handle shrinking?
One argument is that horseplayers receiving rebates are winning at the expense of those who are not receiving rebates. The losers are getting discouraged faster because the horseplaying field isn't level.
Others speculate that many horseplayers are getting rebates from off-shore bookmakers, who aren't even putting the wagers into the tracks pools (and also won't return track odds on high-payoff exotic bets).
Rebate operations have become the 800-pound gorilla in racing. Tracks are afraid of raising their signal price and losing them, because they feel as though they need the handle rebate customers provide. But they dread losing on-track horseplayers to rebaters because they end up getting so little from their handle.
In my opinion, rebaters are not a friend of horse racing.
Jeff Platt is a smart guy. He's a horseplayer who has developed a handicapping software system. He also is the high profile president of the vocal group known as Horseplayers Association of North America, or HANA, which is attempting to position itself as the “voice” of horseplayers. HANA was established a couple of years ago and has done some good things, including a ranking of racetracks that uses takeout, field size, and product availability on ADW systems as its measures.
In emails he has sent out and in a sales pitch on his website, Platt has been soliciting horseplayers to sign up with rebaters that he said he is associated with. Platt said he has no “financial stake” in those rebate operations, though he admitted to the Paulick Report that he receives commissions whenever someone he recruits becomes a customer of a rebater. Platt, thus, has a financial interest in moving horseplayers from the racetrack to rebate operations. He is their pimp.
I don't know if the players Platt has recruited for the rebaters understand that he gets a commission, nor do I care. If he wants to camouflage what a financial stake is, that's his business.
But I do think racetracks that deal with HANA should know that the organization is run by someone who is actively soliciting some of their best customers to wager through a system that pays the tracks – and, as a result, pays purses – less money.
In that regard, if rebate operators are not a friend of racing, neither is Platt.
UPDATE: For those who would like to see further evidence of Jeff Platt's relationship with rebate business, please click here. It is basically a longer form version of the email put in the comments section (#33) and ends with a disclaimer that he receives a referral fee. Again, the Paulick Report has not said that HANA has anything to do with Mr. Platt's referral business. In fact, Mr. Platt told the Paulick Report he received the list free in exchange for some software programming he did and claims to not know where the list originated.
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