Breakage. Another thievery. Even when you win, you lose! Years ago, when payoff calculations were done manually ($2 payoffs were rounded down to the next 10-cent level) and all bets were settled in cash (paying out nickels and pennies would slow down the payment process) you could make a case for some level of breakage or rounding down. Today, with all payoff calculations being done by computerized tote systems and with the majority of bets not settled in cash (most bets are settled via vouchers or in ADW accounts) there is no justification for breakage except to remove fractions of a cent (mils) when the actual payoff odds (to $1) are calculated.

However, the practice of breakage is in place and the recipients of the funds (most often the racetracks and the horsemen) are not willing to part with those funds and see them go to their rightful owners, the horseplayers. So, breakage exists because of structure and inertia and not because it is right or because is it necessary. As mentioned above, the only justified level of breakage in today's pari-mutuel world is to remove fractions of a cent (mils) from the pools when the payoffs are calculated. This would mean that 99% of the funds that are currently taken away from horseplayers in the form of breakage, would, instead be paid to them.  Annually, it amounts to about $150 Million which definitely qualifies it as Grand Larceny!

How sweet is that? The payoff money doesn't belong to the tracks or the horse owners or the ADW outfits. It belongs to the horseplayers. But, do the horseplayers get to make the decision about what to do with their money? Nope. Depending on the jurisdiction, that decision is made by politicians, or track operators or horse owners, but it's sure as hell not made by horseplayers. How can that be? Is there no sense of what's right here on the part of politicians, track operators and horse owners? Does anybody, anywhere in this business, give a damn about the horseplayers?

How much does breakage take away from our payoffs?  The answer to that varies from one payoff to the next.  To gain some idea of how breakage thievery affects us, I've taken the takeout table with the Win payoff example and modified it to show how breakage affects those payoffs. Breakage on Win payoff prices.  From that example you can see that for a $2 bet, breakage can take anywhere from zero cents to nineteen cents per $2 payoff.  Because dime breakage when measured at the $1 level involves pennies it can be made to seem small.  But multiply it by the thousands and tens-of-thousands of payoffs that horseplayers cash each year and it becomes significant.  Why do you think that nobody is working to give it up?

Breakage is an ongoing and relentless process.  It needs to be reformed and for the most part abolished. 

BREAKAGE

Breakage robs horseplayers of $150 Million per year.  Release that money to the proper owners, the horseplayers, and you would see an immediate $600 Million annual increase in handle by virtue of that money being churned back through the mutuel pools.