On The Long-Run Sustainability of Tote Betting Markets

For the past century, tote operators and horseracing bettors have enjoyed a mutually satisfying relationship. However, the past decade or so has seen periods of decline in tote (totalizator) betting, which many attribute to the (supposed) increasing population of well-informed and (hypothetically, in the extreme) so-called sophisticated players who are believed to be extracting disproportionate amounts from the pools such that other more “casual” players count their meager returns and stop playing. This chapter examines whether this hypothesis is valid, by considering the extreme case of many sophisticated players in the market. It also argues that, whatever factors could be contributing to periodic declines in tote betting, the damage to the markets if there existed a proliferation of expert bettors is minimal and could not (as is feared by many tote operators, governments, and players), by itself, be enough to seriously or irreparably damage pari-mutuel markets.

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