The $2.10 minimum is widely viewed as a public protection, as if a horseplayer has some sort of constitutional right to a minimum 5 percent return. (Wouldn't it be nice if banks were subject to the same requirement?) It's the lure of getting this guaranteed return that gets so-called "bridge-jumpers" (since that's what they might do if they lose) to plunge on seeming cinches in the show pool, even though odds-on favorites do not run 1-2-3 the 95 percent of the time they would need to just to make it a break-even proposition.
The $2.10 minimum ultimately is a loser for all players, though, because it keeps in place a justification for the system of breakage that exists throughout parimutuel racing - the rounding down of payoffs to the nearest 10- or 20-cent increment. Most people think of breakage as insignificant, but in fact it is an insidious addition to takeout. When a horse should pay $2.39 to show and the payoff is rounded down to $2.20, a bettor is being rounded out of 48 percent of his profits, on top of a 16 or 17 percent takeout. For someone making a $200 bet, it's the difference between winning $39 and winning $20.
Breakage has been justified in the past as a way to save mutuel clerks from having to count out pennies that no one wants anyway. But the amount of money being bet in cash in increments that would involve pennies has greatly diminished in a game increasingly dominated by simulcasting, account wagering and the use of vouchers at self-service machines.
The time has come for racing to switch to digital payouts: If a horse should pay $2.04, or $2.39, or $102.93, he should pay off at those precise price points. Over time, the extra pennies and dollars and twenties will accumulate and be churned through the machines again and again, making up the any shortfall on breakage revenue. Racing's customers are entitled to their full payoffs instead of facing an additional tax based on an outmoded fear of pennies.
I don't understand breakage very well, so I have some questions.
1. If breakage were eliminated and replaced with "true" payouts, does that mean that a payout could be less than the original bet -- i.e. that one could lose money even if the horse finishes "in the money". (A la slot machines where one can put in $1, hit a combination, but only get $0.50 back.)
2. Where does the breakage from Del Mar and other California tracks go? To the track, to the State, or?
3. If breakage remains the rule, were would you like the revenue to go -- purses, equine retirement fund, disabled jockeys' fund, or?
Thanks for your answers.