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Breakage
 

Experienced handicappers already know about breakage, however, many bettors at the track don't know what breakage is or how it affects them.

by Miles Michelson

What is Breakage?

Breakage is the downward rounding of the odds on the toteboard that occurs at every track in the United States. In certain situations it can have a signifigant impact on the effective takeout rate you get at the track and thus can hurt your overall profits.

All tracks in the United States currently use dime breakage which means that the fair odds on a horse are always rounded down to the nearest tenth. For instance if the odds on a specific horse were 6.73/1, they would be rounded down to 6.7/1 before calculating payoffs. Since you need multiply the odds by two and add $2.00 to get a payoff, dime breakage has the effect of rounding payouts down to the nearest multiple of 20 cents.

Without breakage, it wouldn't be uncommon to see win payoffs such as $3.43 or $14.36. Instead when you see prices on the toteboard they are always rounded off. The two prices listed above would show up as $3.40 and $14.20 respectively.

How it Affects You

Percentage of payout lost to breakage
Odds Payout Range Maximum Effect of Breakage Average Effect of Breakage
1/9 $2.40 -0.0%* -0.0%*
1/5 $2.40-$2.60 -7.3% -3.5%
2/5 $2.80 -6.4% -3.2%
1/2 $3.00 -6.0% -3.0%
3/5 $3.20-$3.40 -5.6% -2.7%
4/5 $3.60-$3.80 -5.0% -2.4%
1 $4.00-$4.20 -4.5% -2.2%
6/5 $4.40-$4.60 -4.1% -2.1%
7/5 $4.80 -3.8% -1.9%
3/2 $5.00 -3.7% -1.8%
8/5 $5.20-$5.40 -3.5% -1.7%
9/5 $5.60-$5.80 -3.3% -1.6%
2 $6.00-$6.80 -3.1% -1.45%
5/2 $7.00-$7.80 -2.6% -1.26%
3 $8.00-$8.80 -2.3% -1.11%
7/2 $9.00-$9.80 -2.1% -0.99%
4 $10.00-$10.80 -1.9% -0.90%
9/2 $11.00-$11.80 -1.7% -0.82%
5 $12.00-$13.80 -1.5% -0.73%
6 $14.00-$15.80 -1.3% -0.63%
7 $16.00-$17.80 -1.2% -0.56%
8 $18.00-$19.80 -1.0% -0.49%
9 $20.00-$21.80 -0.9% -0.45%
10 $22.00-$23.80 -0.8% -0.41%
11 over $24.00 < -0.7% < -0.35%
There's no way to tell ahead of time how much breakage is going to affect a particular wager. The amount can fluctuate wildly in a parimutuel pool and there's no way to know or predict what the effect of breakage will be when the windows close. Instead, bettors just need to realize that on any given wager, breakage will reduce their expected payout by a maximum of 19 cents and a minimum of 0 cents. On average, over the course of many bets, one would expect that breakage would reduce a bettors overall payout by 9.5 cents.

When you're talking about larger payouts of more than $10.00, 9.5 cents isn't a large percentage of the overall price and really doesn't really cost the bettor a whole lot. However, when fair payouts approach their minimum possible values ($2.40 for win wagers, $2.20 for place wagers, and $2.10 for show wagers) an extra 9.5 cents can be a heafty price to pay.

The table to the right shows how much breakage can deduct from your payout at different odds levels. From the table, it should be pretty apparent that breakage can have a signifigant impact on your overall earnings when you cash tickets at the track. Breakage amounts to essentially a 'hidden' sales tax you pay at the track that is often downplayed as a minor transaction fee.

One interesting tidbit that you should pick up from the table is that breakage plays no role at all when the posted odds for a horse are listed at 1/9. This is because there's a minimum $2.40 payout for win wagers. At 1/9, the fair payout for a horse is lower than $2.40, but the track is forced to pay the minimum. As a result, breakage doesn't factor in at all. In fact, you should be more wary of playing a horse that's listed at 1/5 than you should playing one at 1/9. To the experienced handicapper, this may not seem logical, but it's the way things work.

The impact of breakage can be even more pronounced in place and show pools. When a heavy favorite finishes in the money, you may have to pay up to 7.9% of the fair payout.

Neutralizing Breakage

Takeout Breakage
None
Nickel
Dime
# Pools Odds Payout Additional Takeout
1
2
3
4
5
6
7
8
9
10
11
12
Total
* - Odds are actually less than
displayed, but there's a 0.2
minimum for Win wagers
Ideally, if you wanted to wipe out the effects of breakage, you'd simply avoid bets where breakage figures to be excessive and play those where its effects are minimal. Unfortunatly, that's not possible. Even with a computer doing all the number crunching for you, there's no way to predict ahead of time how much of an impact breakage will have on a given race.

Instead, you'll need to approach the problem realizing that sometimes it won't affect you and other times, you'll get bitten. Over time, the two should even out and you should be moderately affected by breakage.

You should take into account the effects of breakage before making your wagers realizing that its more pronounced for favorites than longshots, a larger issue in place and show pools, and less of an issue for exotic wagers like exactas and trifectas. You can do this by simply realizing that breakage can essentially add a percent or two to the posted track takeout.

If you want, the calculator to the right can quantify exactly how much breakage is adding to the takeout for any given race (note that the takeout rate is preset for racing in California). It might be a good idea to enter the win pools from a few races into the calculator to get an idea of how much additional takeout you can face when you play a given race. Some handicappers may find the results surprising seeing that they may be paying a few extra percent on the takeout on any given wager. Unfortunatly, trying to use something similar at the track will only cause you headaches because the numbers can change drastically during the course of betting.

Final Notes

Many experienced handicappers have probably noted that takeout rates for exotic wagers are higher than those for conventional WPS wagers. The effects of breakage can partitially explain why tracks can get away with higher takeout rates on exotic wagers. Since these risky wagers generally have very high payouts, breakage generally doesn't figure into the equation. On WPS wagers however, tracks can generally count on breakage adding a hidden percentage or two to their posted takeout rates. It's not something the average handicapper notices when he/she is playing the horses.

Hopefully this article has shown you not to ignore the effects of breakage at the track.

Copyright ©1999 Miles Michelson. All rights reserved.

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