Photo courtesy of Eclipse Sportswire
Last month Gulfstream Park’s Rainbow Pick 6 was hit for more than $3.5 million. The amount was one of the largest payouts in the history of the sport. The bet is one of the most controversial to ever be offered. Despite being popular enough to grow a prize pool that gargantuan, many gamblers have shunned the Rainbow Pick 6 as a sucker play. Andrew Beyer called it a “worse investment than the lottery.” But what makes the Rainbow Pick 6 so loved and so vilified at the same time?
Here’s how the bet works. Similar to the normal Pick 6, you must pick the winners of six races in a row in order to win. The twist here is that in order to win you have to be the ONLY winning ticket. If multiple people hold winning Pick 6 tickets, just like in the lottery they split the prize evenly. In the Rainbow Pick 6, if multiple people hold tickets with all six winners, they are all paid a consolation prize that comes out of the pool and the rest carries over to the next day. This is why the jackpots in this bet are able to swell to giant sizes.
The main complaint that sharp horseplayers have with the Rainbow Pick 6, aside from how difficult it is to structure a play that is more likely to be the sole winning ticket rather than just a winning ticket, is that the track’s takeout on this bet is staggering. Any time the jackpot isn’t hit and the money carries over, the track keeps 52% of the money for themselves! Compare this to the typical lottery takeout of 40% and you can see that Beyer was right.
So why do so many people play it? One theory is that while the classic Pick 6 requires bettors to put up $2 per ticket, making multiple tickets extremely costly, the Rainbow only costs ten cents per combination. To bet a Pick 6 ticket with two horses in every race costs $128, but that same amount of money will buy you over 1,200 combinations of Rainbow Pick 6 tickets.
I think this makes a lot of sense to me. While I can’t ignore the fact that the person who finally did snatch the big prize last month had a ticket that cost over $3,000, the fact of the matter is that playing a ticket that has a reasonable chance of taking down at least the consolation prize isn’t very expensive at all. Just this past Sunday the consolation for the Rainbow Pick 6 paid $3,741, a sum not at all unusual for a daily Pick 6 payout at Aqueduct that costs twenty times more to play.
Sure, the wager’s takeout makes it a hard one to beat over the long run, but it’s important to remember that most of us who gamble at the track aren’t professional handicappers. We don’t play year-round with a bankroll. We play on the weekends with what we have leftover after we buy the diapers and groceries. And what we want is a chance to win big money.
Thinking about all of this reminded me of a study I heard about on the Freakanomics podcast last year. A group of economists at the University of Maryland published a paper arguing that the United States should implement what are known as “Prize-Linked Savings” accounts; essentially a savings account where interest is pooled and awarded regularly at random. Accounts like these have been popular in Asia and Africa in getting poor people to save more money. The United States has a real problem with working people not saving, with nearly half of Americans not able to come up with $2,000 in 30 days according to the study. One of the economists, Melissa Kearney, makes the argument this way:
“[In a] recent national survey of a thousand adults, one in five American adults said their greatest chance of accumulating hundreds of thousands of dollars is through the lottery. That number jumps to 40 percent for folks making less than $25,000 a year. So [if] a lot of Americans think the lottery is their only chance at winning big sums of money, why don’t we take that appetite for gambling, for a product like this and attach it to a savings vehicle that offers some positive return? It’s a win-win situation.”
The point here is that while it may be mathematically correct that the Rainbow Pick 6 is a worse bet than the lottery, the fact of the matter is the lottery is already a really terrible bet. Yet Americans spend more than $50 billion a year on lottery tickets.
Horse racing would do well to figure out how to design more wagers that are appealing to a broader swath of gamblers. Professional horseplayers need not fret. When the Rainbow Pick 6 carryover inevitably gets back up to over a million dollars (which it should do this week), there will be plenty of dead money for you to chase. And even if you’re not into it, just think of all the dead money we caveman Rainbow Pick 6 players will pump into the exacta pools, not to mention the amount we all spend on hot dogs and beers. Racing fans rejoice! Our sport has a savior, and a little sucker bet shall lead them.